• Archive

Negotiating as a Team

 
8/8/2005
Do you know how to find strength in numbers? The secret, according to this article from Negotiation, is to agree on the substance of the negotiation, then identify, leverage, and smoothly coordinate each team member's unique abilities.

Pauline, the CEO of a biotech start-up, is about to enter a major negotiation with another company to license one of her firm's technologies. She is hoping to form a long-term relationship with the other company, which is much bigger and more established. The end result of these talks, she knows, could make or break her firm. Pauline could go into the negotiation alone, but she's tempted to bring along the entire VP team—marketing, sales, finance, IT, and legal. Is the team approach wise, or is she better off going solo?

The widespread belief in "strength in numbers" suggests that having more players on your team should be a benefit, not a burden. But this belief can lead team members to underprepare for negotiation, a common mistake. Think about the times during a negotiation when you wished you could retract a concession or bit of information that slipped out of a teammate's mouth.

The key to taking a team approach to negotiation is understanding the psychology of how teams work. Here I'll show you how, with thorough preparation, you can ensure your team negotiations run smoothly.

When teamwork is the best option
Bringing a team to the table offers several benefits. First, negotiating teams can create new opportunities for integrative solutions. Researchers Leigh Thompson, Erika Peterson, and Susan Brodt compared three types of negotiation situations: teams versus teams, teams versus solo negotiators, and solo negotiators versus solo negotiators. The presence of at least one team at the bargaining table led to higher joint gains. Teams stimulate more discussion and more information sharing than individuals do, particularly concerning issues, interests, and priorities.

If team members disagree on the key issues ... they are unlikely to take advantage of their differing skills.

Teams also feel more powerful and more advantaged than solo negotiators. Even under highly stressful situations, as when they're accountable to constituents, team negotiators feel less competitive and pressured than do solo negotiators, professor Kathleen O'Connor of Cornell's Johnson Graduate School of Management has found. With greater numbers comes a sense of security.

However, the promise of teams can elude us. Suppose one team member has strong analytic skills, another has vast technical and industry knowledge, and a third has strong relationship-building skills. These ingredients should add up to a formidable team. But if members disagree on the key issues—such as when to make concessions—they are unlikely to take advantage of their differing skills.

Teams whose members had not worked together before were unable to pool information and failed to solve a problem, Deborah Gruenfeld, Margaret Neale, Katherine Phillips, and I found. Team members who are less familiar with one another lack the preestablished group norms needed to engage in high-level problem solving without destructive consequences. In contrast, teams made up of individuals who were familiar with one another had little difficulty pooling unique information and effectively solving the same problem. Familiarity with one another allows team members to share divergent information and engage in the constructive conflict necessary to find a solution.

Clearly, teams can be an effective presence at the negotiating table—but only if team members are able to uncover, leverage, and efficiently coordinate their diverse abilities.

Better teamwork through preparation
Creating a true team environment requires a great deal of preparation, coordination, and internal negotiation before you even meet the other side. Then, much like a perfect golf swing, the negotiation itself becomes all "follow-through."

Some executives protest that too much preparation crowds out creativity. Actually, the opposite is more likely to be true. As my colleagues Randall Peterson of the London Business School, Kristin Behfar of Northwestern's Kellogg School of Management, and I have found, the most adaptive teams are those that meet often and work intensely, developing effective methods to face and resolve their conflicts. The deep knowledge created through preparation is likely to result in greater flexibility and creativity at the bargaining table.

Agree on the information your team is willing to reveal to the other side and the information that must never be revealed.

According to professor Roy Lewicki of Ohio State University's Fisher College of Business, when a deal is very important, you should spend at least twice as much time on preparation as you devote to the negotiation itself. One team member should facilitate the preparatory meeting and another should serve as secretary, taking notes for later distribution to all team members.

A new negotiating team's preparation phase should include three components: (1) a substantive discussion of the negotiation, (2) a skills assessment of the team members and assignment of team roles, and (3) a plan for the negotiation process.

1. Discuss the negotiation's substance.
Before entering into the negotiation, the team must agree on the basics of the negotiation's substance, striving for complete unity. After all, at the first sign of cracks in your armor, the other side will try to divide and conquer.

Imagine an American couple in Fez, Morocco, browsing in a shop at the medina that is piled high with colorful, luxurious rugs in all shapes and sizes. They choose a few rugs and brace themselves for what is sure to be a fairly tough negotiation. After all, the rug seller has been haggling day in and day out for years. If the wife likes a particular rug more than her husband does, she may agree to a price before he's ready. Is it possible to take back that "unwanted concession"? Of course not! The rug seller has made a deal, and the couple has bought a rug—and perhaps an argument on the way out of the shop.

Such missteps are always a hazard in group negotiation. For this reason, you should begin your preparatory meeting by brainstorming a list of issues that you would like to discuss in the negotiation—rug size, quality, price, and shipping, for example. Next, prioritize the issues and consider potential tradeoffs. The couple may figure out they're willing to pay a bit more for a high-quality rug if shipping isn't a hassle.

How can the issues be packaged? At this point, it's time to agree on your BATNA (best alternative to a negotiated agreement); your reservation point, or the worst outcome you will agree to; and your aspiration level, or the best outcome you can imagine. The team can use these critical limits to discover alternative scenarios, search for disconfirming information, and test its assumptions. For example, the couple in Morocco may realize that their BATNA could be to wait to buy a rug during a planned trip to Turkey. This alternative might lead to an entirely different search, thus raising their aspiration level for a Moroccan purchase.

Now it's time to consider the other side. What information do you have about them? Generate a list of the issues they are likely to find most critical, and do your best to estimate their priorities, BATNAs, reservation point, and aspiration level. This is where a team can be extremely helpful; be sure to explore your full range of knowledge and expertise. Next, make a list of information that you wished you knew. You may be able to find some answers before the actual negotiation, or else seek them out during talks.

Finally, agree on the information your team is willing to reveal to the other side and the information that must never be revealed. For example, suppose that Pauline's biotech firm is considering an alliance with another firm. At what point should this be revealed during the negotiation, if at all? Remember, you can't take anything back once it's been spoken. Make sure that everyone is on the same page before the negotiation begins.

2. Assess skills and roles.
Now that you've assessed the negotiation's substance, it's time to figure out how to take advantage of the diverse skills of your team members. Begin with a skills assessment. What technical knowledge is required? It would be helpful if one member of the rug-buying couple were capable of assessing the value of Moroccan rugs—their age, workmanship, and so on. Other important abilities may include listening and other relationship skills, a knack for observing and analyzing behavior, patience, foreign-language skills, acting ability (to convey toughness, for example), and past negotiation experience.

The next step is to match skills with essential roles. First, you'll need a team leader—the head decision maker who ultimately runs the show. As the CEO of her company, Pauline is likely to take on this role. For a less formal negotiation, such as the couple haggling for a rug, it can still be useful to appoint a leader ahead of time.

The leader typically, though not always, serves as the team's chief negotiator. In certain complex negotiations, you may want to separate the two roles, particularly if the leader is not an experienced negotiator. The spokesperson must be articulate, not easily rattled, and able to follow the team leader and the team's predetermined negotiation plan. Pauline might choose to make her corporate counsel the chief negotiator, for example, if she doesn't feel confident about her own negotiation experience. The couple in Morocco might also split these roles, perhaps making the wife the team leader and the husband the spokesperson. This role assignment would fit the local culture; the rug seller would expect to negotiate with a man but would not be surprised to see a woman examining the rug's quality.

Data analysis and relationship building also deserve attention. Suppose the start-up's marketing VP is known for his ability to listen, observe, and read other people. This would make him perfect for the role of relationship analyst. The finance VP is obviously comfortable working with numbers, so she is likely to take on the role of number cruncher. As for the couple in Morocco, they will have to divide up their roles depending on their skills.

3. Plan the negotiation process.
The substance of the negotiation and the diversity of roles come together in the third step as the team makes decisions about the central process features of the negotiation. What opening offer should they make? When should they make the first concession? How many concessions should they make? Whether you're working with a group or flying solo, such questions deserve to be worked out in advance.

The leader typically, though not always, serves as the team's chief negotiator.

One process feature is unique to the team: the recess, or caucus. Teams should take advantage of opportunities to break away from the other side, whether to raise new issues, do a "reality check," or resolve internal disputes. The team leader may need the relationship analyst to report on the other side's reaction to a recent offer or ask the number cruncher to analyze and assess new data. Any differences within the team should always be handled in a recess, out of earshot of the other party. The team leader should ultimately resolve any arguments about concessions or tradeoffs.

You can also call a caucus for strategic reasons—to signal your willingness to abandon the negotiation, for example. The couple in Morocco might prearrange a strategic caucus and walk out to "argue" about the price, simply to see if the rug seller will rush after them with a concession. Caucuses can also slow down talks that are moving too fast, giving both sides time to consider options and make offers. Plan out signals to use to request a caucus in advance. You might communicate electronically via laptops or handheld computers, or simply pass notes on slips of paper.

By committing to a strategy of rigorous preparation—which includes an analysis of the negotiation's substance, a wise division of labor, and a plan for the process—your team will gain the communication and coordination capabilities it needs to achieve optimal solutions.

Reproduced with permission from "Strength in Numbers: Negotiating as a Team," Negotiation, Vol. 8, No. 5, May 2005.

See the latest issue of Negotiation.

Elizabeth A. Mannix is a professor of management and organizations at Cornell University's Johnson Graduate School of Management. Her research and teaching focus on negotiation in teams, the performance of diverse groups, coalitions, power and alliances, and knowledge sharing in teams. She can be reached at negotiation@hbsp.harvard.edu.

When to Use a Team

Working as a team can be particularly beneficial in the following situations:

  1. The negotiation is complex, requiring a diverse set of knowledge, abilities, or expertise.
  2. The negotiation has great potential for creative, integrative solutions.
  3. Diverse constituencies and interests must be represented at the table, as in union negotiations.
  4. You want to display your strength to the other side, for example, in international contexts where teams are expected.
  5. You want to signal to the other side that you take the negotiation very seriously, as in a merger or acquisition.
  6. You trust and respect available team members.
  7. You have sufficient time to organize and coordinate a team effort.


Reproduced with permission from "Strength in Numbers: Negotiating as a Team," Negotiation, Vol. 8, No. 5, May 2005.