Jane, a member of Cranberry’s Expat Advisory Group, talks about her most critical mistakes in East/West negotiating
Negotiating a contract in a foreign country can be a daunting task, and even the most prepared executives can make mistakes. This was the case for Jane, an Australian executive who negotiated a contract with a partner company in Asia. Unfortunately, Jane made several critical mistakes that jeopardized the negotiation’s success.
Establishing trust: Jane indicated that one of her biggest mistakes was failure to establish a trusted relationship with her counterpart. She came to the negotiation well-prepared, having studied the culture and customs of the country, and the hospital she was dealing with. However, she failed to build rapport with her counterpart, which resulted in mistrust and suspicion. This meant that her counterpart had to ‘check out’ her promises several times, which was time-consuming and potentially damaging to the negotiation.
“In Western business culture, trust is built on the task. In other words, the work builds the trusting relationship. I turned down dinner invitations that I thought were excessive because I was satisfied with the level of trust being built in the work of negotiating. This was a huge mistake.” Seniority and Age: Another critical mistake was underestimating the importance of seniority and age. Jane failed to acknowledge her counterpart’s status, which was more senior than hers, and she did not use the appropriate language to address him respectfully. This lack of respect caused her counterpart to feel insulted, which further undermined the relationship between the two parties.
“In my Australia experience, age simply isn’t that big a factor. In fact, in a Western business context acknowledging age in a negotiation can be seen as derogatory,” Jane said. “I was seen as a bit brash and rude at times by placing myself on an almost peer-level stance with my negotiating partner. This did not sit well, but I did not know this until much later.”
Discussing the good AND the bad: Jane also failed to invest enough energy in finding out the negative aspects of the deal. In many cultures, discussing negatives is considered impolite or confrontational. However, Jane failed to understand that it was essential to identify any potential problems to avoid misunderstandings down the track. By not investing enough energy into understanding the negatives, Jane missed critical information that could have been used to her advantage during the negotiation.
“Honestly, by not admitting that there were some minor trade-offs, I positioned myself as a ‘win at all cost’ negotiator. This created distrust. At one point my negotiating parter very quietly asked me ‘are you unwilling to see ANY downside to this deal?’ It was at that moment I knew I had not engaged well.”
Confrontation: Finally, Jane did not appreciate the importance of hierarchy and face-saving in Asian cultures. Jane was too direct and confrontational, which caused her counterpart to lose face. This led to a breakdown in trust and further impeded the negotiation’s success.
“I simply ‘cut to the chase’ far too many times. I would say ‘look, we’ve got to move past these small issues and focus on the bigger picture.’ The fact was, the small issues were huge and had to be addressed. My experience in Australia was to leave the nitpicky stuff for post-negotiation time. I didn’t expect the pushback and I told them, flat out, what I felt the issue was. I was far too aggressive for the audience.”
4 Rules of thumb in East-West negotiating
Being deliberate is the key.
Certainly, negotiating a contract in a foreign country requires a great deal of cultural sensitivity and awareness. Here are four practical tips to help ensure that someone doesn’t make Jane’s mistakes:
Build trust through non-task oriented relationship: Establishing a relationship with your counterpart is critical to building trust. Take the time to get to know them on a personal level, including their culture, interests, and family. Share personal stories and show interest in their experiences. Building trust takes time, but it is worth the investment.
Show respect for hierarchy and seniority: In many cultures, hierarchy and seniority are critical, and it is essential to acknowledge this. Use the appropriate titles and language to address your counterpart respectfully. Show deference to their status and age, and avoid being confrontational or direct.
Invest time in understanding the negative aspects of the deal: Take the time to understand the potential negative aspects of the deal. In many cultures, discussing negatives is considered important, and it can help build trust and prevent misunderstandings down the track. Be sure to ask questions and listen carefully to the responses.
Get to know your counterpart’s network: In many cultures, decisions are made collectively, and it is essential to understand the network of people involved in the process. Take the time to get to know your counterpart’s team, including their roles and responsibilities. Building relationships with decision-makers and influencers can help expedite the negotiation process.
By following these practical tips, executives can avoid making the critical mistakes that Jane made during her negotiation in Asia. By building relationships, showing respect, investing time in understanding the negative aspects of the deal, and getting to know the counterpart’s network, executives can navigate cultural differences successfully and negotiate advantageous deals.
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