The Hindu Business Line : So, do we have a deal?

Thoughtful planning, intelligent questioning and patient listening can make all the difference during a negotiation, say Hugh Lindsay and Michael Hudson

HOW much of your time is spent negotiating? A lot? A little? None?

Many accountants think of negotiations as formal affairs — for example, helping their client or colleague with a major acquisition or a contract negotiation. This contrasts with their day-to-day accounting responsibilities, such as attending meetings, discussing professional issues and directing and disciplining staff. These activities are not negotiations — or are they?

There are many definitions of negotiation. One of the broadest we use is "Negotiation occurs every time one person seeks to influence another." Teenagers, for example, are constantly negotiating with their parents and testing limits: "Dad, can I borrow the car tonight?" This may not be thought of as a formal negotiation. However, the experienced negotiating parent recognises the pattern and has learnt the appropriate response.

The same goes for the negotiating accountant. Negotiations may start with a casual encounter: "Got a minute?" or "Can I buy you a coffee?" The next thing you know, you are being asked for something. Even major negotiations can begin with a chance meeting or a professional networking occasion. The casual approach is useful for the person initiating the negotiation. Only when you are aware that negotiations happen all the time will you be alert for signs of the initiating stage and be mentally prepared for what comes next.

Being prepared involves recognising a negotiation and then knowing how to manage the process. It has been suggested that commonly more than 80 per cent of a negotiation's outcome is determined by how systematically you prepare. During preparation, two key questions need to be addressed: What are my objectives, and what are those of the other side? Negotiators are most successful when they understand both parties' objectives, as well as the likely strategies to be used.

How does the skilled negotiator accomplish this? Part of the answer lies in the number of questions asked. Those who are less skilled in negotiation tend to make a lot of statements and are surprised when the other party disagrees and argues. Experienced negotiators ask many questions because they understand that a question has more influencing power than a statement. They know intelligent questioning and active listening pays off.

There is a discipline to good questioning which, when properly done, can open up communication and overcome barriers. Closed-ended questions that call for yes or no answers tend to be conversation stoppers. Worse, they can create the `no' that blocks progress towards agreement. They work best if used with other types of questions in a planned sequence.

Open-ended questions, on the other hand, are a great way to open up communication. They often start with "How...?" or "What...?" and invite the other party to talk. Reflective questions are a special type of closed-ended question. They aim at building rapport by confirming you understand what the other party said.

They also indicate respect by showing you are listening. Start by asking, "So, you think/feel that...?" and restate or summarise what you heard — preferably emphasising the points of agreement on which you want to build. The skill is to carefully phrase your question to get a `yes' response, then steer the other party away from the areas of disagreement toward mutual agreement.

Directive questions can move you to areas of agreement. When (and only when) you have clearly achieved a positive climate of `yes-yes', can you use the other party's own words to confirm agreement and move the negotiation forward.

Directive questions, like reflective questions, call for a yes answer, but the directive question uses an action word like `will' instead of the softer `think' or `feel' of the reflective question ("And you'll...").

Finally, you can consider using hypothetical questions to test the waters before making a statement.

When accountants make statements they indicate their own views and do not always reflect the other party's interests. They also tend to make you appear inflexible and committed to a position.

Experienced negotiators make their statements tentative and less threatening by starting with the hypothetical. "What if...?" Or you can use a third-party reference, such as, "Another accountant I know suggests...What do you think." Those who use a tentative questioning approach invite participative thinking from which you can move the other party forward.

Making a statement (even of your very clever and clear thinking) may well create a negative response as you are `telling' the other parry rather than `involving' them.

When you package the different types of questions into a disciplined sequence, you can guide the other party towards an agreement.

The introductory phase

Here, the negotiating accountant should pay attention to developing the relationship and setting the scene. Open-ended questions are useful here. They get people talking and may offer insight into important personal needs. When the parties start presenting their positions, the negotiation moves into the differentiation phase.

The differentiation phase

This phase may well become lively as parties explore their differences and get into conflict. Inexperienced negotiators can find this upsetting and discouraging. Nothing seems to be going right and the conflict can be painful. In fact, this is normal.

Now is the time to help the parties pursue their differences by asking plenty of open-ended and reflective questions to develop ideas and locate common ground.

The integration phase

When you feel all parties have a good understanding of the issues, you can then steer the process into the integration phase. This is the time to use more reflective and hypothetical questions to search for solutions, test alternatives and identify ways to reach agreement.

The closing settlement phase

In this phase the parties make final offers and lock in their commitment to the agreement. Hypothetical and directive questions help pull things together. The negotiating accountant often stumbles when they try to move the process too quickly from phase to phase. This can be a particular problem when moving from differentiation to integration.

If people think they have not been heard, or if they still have issues and positions to present, they will resist attempts at integration. Experienced negotiators recognise this and are prepared to return to the previous phase. There is much more to the competency of effective negotiation. You must, of course, know the details and the facts — the substance of the negotiation — but understanding how to manage the process is what makes the difference.

(Edited extracts from CA Charter, a journal of The Institute of Chartered Accountants in Australia. www.icaa.org)

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