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So Just How Do You Negotiate With Pirates?

Thursday, December 18th, 2008
Pirates Aren't Just In Movies - So You Had Better Be Ready To Negotiate With Them!

Pirates Aren't Just In Movies - So You Had Better Be Ready To Negotiate With Them!

Negotiating is both an art and a science. We study what works and what doesn’t in order to make sure that the next time that we are in a business situation in which somebody has something that we want, we are able to negotiate to get it. But what about pirates?

The newspapers are all abuzz about the pirates who are operating out of Somalia. So far this year, there have been 96 pirate attacks this year. 40 of these attacks have resulted in pirates boarding a ship, taking over control, and then demanding a ransom for the ship and its crew. World wide there have been 83 reported pirate attacks in the 3rd quarter alone.

When pirates capture a ship, they then demand a ransom in order to release it. These ransom demands are generally in the range of $1 – $2 million dollars. However, in the case of a Saudi oil tanker the ransom may have been as high as $15 million dollars.

What is a ship owner to do if his ship is captured by pirates? Apparently a lot of them are calling Holman Fenwick Willan, a London maritime firm. HFW has 6 lawyers who are currently working on pirate cases. Ashby Jones wrote an article in the Wall Street Journal in which HFW stated that they are working on “over a dozen” of the 20 pirate hijackings that have occurred in the Somalia area.

So just how does one negotiate with pirates? At HFW, their first job after being notified of a pirate highjacking is to calm their customer’s fears – nobody seems to know how to react to this sort of thing.

The next step is straight out of the negotiators handbook – do some research. HFW then works to find out just where the hijacked ship was registered, oh, and where exactly the hijacking occurred. This will set boundaries around the negotiations and will determine what laws are in play and will determine who is liable.

The issue of paying a ransom is, of course, a big deal. One key question that the negotiator needs to resolve right off the bat is if it is even legal to pay a ransom. It turns out that under U.K. law, paying a ransom IS legal and that’s important because for some reason most marine insurers are located in England.

The actual negotiations with the pirates are, to put it mildly, stressful. The negotiations are conducted by negotiators that HFW obtains for their clients. Forget suits and ties, this special breed of negotiators generally come from the miltary special forces. Probably the right men (I think that I can be sexist here) for the job.

Once a deal has been struck and the ship has been returned to the crew, the negotiations are not over. Indeed, they are often just beginning. The boat owners will now start to negotiate with the firms who were shipping cargo on the boat in order to get them to reimburse them for part of the ransom that was paid. These negotiations can drag on for a very long time.

We are all privledged to live in the 21st Century; however, sometimes aspects of the 1800′s, such as pirates, intrude into our world. Thankfully the negotiation skills that have been developed over the centuries serve us just as well now as they did then.

If you were called on to negotiate with pirates, what research would you do? Do you think that they would have the power in the negotiation or would you? Would creating a solution with mutual satisfaction be important to you in this type of deal? Leave me a comment and let me know what you are thinking.

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Posted in art of negotiation | 2 Comments »

Negotiation Do’s & Don’ts From The Master Negotiators

Thursday, December 4th, 2008
Master Negotiators Use Many Different Skills To Achieve Their Goals

Master Negotiators Use Many Different Skills To Achieve Their Goals

If only there was some book, some DVD to watch, or some class that you could take that would provide you with access to all of the secrets of those master negotiators whom we are always reading about. You know the ones, they negotiate the billion dollar business deal, the hostage negotiations, they settle the labor strikes, and they come up with solutions to lawsuits before they hit the courts. Just what are their secrets?

As we’ve discussed before, there are no such courses, DVDs, or courses to take because of the nature of negotiating: it’s not just a couple of key ideas, but rather a whole bunch of very small things that when taken together make a master negotiator.

However, there is no need to despair! The good folks over at Karrass have been doing research into what makes a good negotiator for quite some time. Based on this they have been able to pull together a list of ten things that a master negotiator needs to be able to do.

What I’m hoping that you’ll get from this list is the awareness that there is nothing earth shattering here. No great secrets are revealed. No hidden negotiating ninja secrets are being brought to the surface for the first time. Rather, a set of skills are being identified as being those skills that a master negotiator needs to have.

It’s not that a master negotiator has just one of these skills that makes them so skillful. Rather it’s the fact that they have ALL of these skills that makes them a master negotiator. Now there’s something to think about! Here’s the list, let’s see how many of these negotiating skills you already have:

  1. Nothing Is Fixed: Don’t let the other side of the table try to intimidate you with “last & final” offers, firm fixed prices, or even “take it or leave it” statements. Remember -  this is a negotiation and that means that everything is negotiable.
  2. Deeper Is Better For Both Sides: Although you are negotiating directly with the person(s) on the other side of the table, you are really negotiating with their entire organization. This means that before your negotiating partner can agree to your terms, they are going to have to get buy-in from their organization. During your negotiations you need to cover all of the key details in enough depth that the other side will be able to thoroughly explain the deal internally.
  3. Got To Get Satisfaction: Forget win-lose, win-win, etc. Negotiating is all about making sure that both sides come away feeling satisfied with the outcome. Although it’s easy to focus on the stated negotiation issues, be sure to look for other “hidden” issues that are also important to the other side. Addressing these issues will boost satisfaction and increase the probability of reaching agreement.
  4. These Boots Are Made For Walking: One of the most powerful negotiating techniques is also one of the most difficult to do – leave & walk out. This by itself would kill a negotiation, so you also have to master the other half of this skill – you need to know when to return later.
  5. Conflict Is King: The very reason that you are negotiating is because there are differences between both sides. Differences mean that there will be conflict. You need to be able to deal with conflict. If you have an overpowering need to be liked, then you will end up giving too much away during the negotiation just to be reassured that the other side likes you in the end.
  6. Too Much: In any negotiation, you can screw up. You can end up asking the other side for more than they are willing / able to give. When you realize that you’ve done this is the time for you to take a step back and tell the other side that you are willing to renegotiate. No matter what, make sure that you show empathy for the other side’s situation.
  7. No Such Thing As Too Much Education: You will never know everything that there is to know about negotiation. There are so many small tricks & techniques that it will take you a lifetime to master even some of them. This means that you always need to be reading and studying in order to boost your knowledge of negotiating strategy & tactics.
  8. Aim High: Where you end up in a negotiation has a great deal to do with where you set your target. If you aim high, then you will be prepared to take the negotiating risks that go with higher goals. Lofty goals don’t come easily so you are going to have to be willing to work hard and to take your time.
  9. Be Testy: Since you can never completely know what the other side of the table is thinking, you need to always be testing him / her. You just might surprise yourself when the other side gives in to one of your demands. Once again, this type of testing requires that you take your time and be very, very patient.
  10. Take Your Team To School: Negotiating is often a team sport and you want your team to be in the best shape possible. You need to make sure that your team has been trained to negotiate the way that you want them to. This is the one area that investing in quality training (just like the training offered by Blue Elephant Consulting) can really pay dividends.

How many of these tips do you already use in your negotiations? Which ones were new to you? How do you keep improving your negotiating skills? Leave me a comment and let me know what you are thinking.

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Posted in negotiation skills | 3 Comments »

Boeing Uses Negotiation To Dodge Yet Another Strike

Monday, November 17th, 2008
Boeing Used Negotiation To Avoid A Strike With Its Engineering Union

Boeing Used Negotiation To Avoid A Strike With Its Engineering Union

Boeing’s commercial aircraft division just wrapped up the longest strike that Boeing has had in over a decade. Its Machinists have agreed to go back to work after 57 days off of the job. The press was saying that the strike was costing Boeing over $100M a day because of delays in the 3,000+ orders that they have for new aircraft from their customers. Coming on the heels of that was the ugly fact that Boeing’s contract with the 21,000 strong Society of Professional Engineering Employees in Aerospace was running out as of December 1st. Needless to say, it was time for Boeing to start to do some fast negotiating…

Already pre-negotiating posturing had started. On Thursday the engineering union had stated that it wanted its members to vote to authorize a strike. The purpose of this was to raise the pressure on Boeing’s management. Things had started to get hotter as the engineers accused Boeing of stalling the talks. In all honesty, this is probably correct because Boeing was focused on trying resolve the machinists strike and probably had dedicated only minimal resources to starting talks with the engineers. However, things had gotten so rocky that a federal mediator had already been brought in. It’s not known if this mediator was the same one that was helping out with the discussions between Boeing and the machinists.

In negotiations, timing is everything. The engineering union had started their negotiations with Boeing last month AFTER the machinist’s strike had already halted production at Boeing. There were differences between what the two unions were negotiating with Boeing for. The machinists were most concerned about having their jobs replaced with contract workers. The engineers on the other hand realized that they had more specialized talents that could not easily be replaced. This meant that their major concerns revolved around pay and benefits.

Boeing was most interested in negotiating to create a four year contract instead of the traditional three year contract. The reason for this is because in three years they are going to be at the peak of their production schedule for their new 787 Dreamliner airplane and they didn’t want to have to worry about a strike crippling their ability to deliver planes to their customers – that would damage their reputation and hurt their bottom line.

I’m quite surprised that considering that the union was preparing to take a strike vote on Thursday that they were somehow able to resolve their differences with Boeing so quickly that they were recommending to their members over the weekend to accept the tentative deal that had been reached (apparently on Friday). What the heck happened? Details are not currently available; however, the union’s negotiators were getting ready to present the deal to union management on Friday evening.

Since the union had such a strong hand and since Boeing was still reeling from the machinist’s strike, I can only guess that Boeing basically gave in to the engineering union’s demands. If that is true, then there is a big question as to if the union was truly asking for enough? This is a unique time in history for Boeing – they’ve got more orders for planes than they know what to do with. From a negotiating point-of-view the unions are in a much stronger position during this round of negotiations than they will be in four years when there is not such a large backlog of orders. As a confirmation of this, Randy Tisseth who is Boeing’s VP of commercial marketing has announced that the company “will probably feel downward pressure in terms of orders next year…”. Only time will tell if everyone got what they were looking for out of this negotiation.

What do you think: should the engineers have held out for more? Do you think that it was wise of them to agree to a four year contract instead of the standard three year contract? Do you think that asking for a strike vote was a good idea or was it too heavy handed? Leave a comment and let me know what you are thinking.

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Posted in Boeing | 4 Comments »

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