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“Threats Are What Beginners Do” 

Be tough when you negotiate, but remain fair and credible—that is the motto that the Zurich-based Schranner Negotiation Institute teaches and advises companies for their negotiation strategies. “Negotiations on the Edge” is a series of seminars that the Institute offers in cooperation with the GWA (German Association of Communications Agencies) on a regular basis for its member agencies to prepare them for negotiations with the often well-trained buyers on the customer side. 

Mr. Schranner, what “Edge” are you talking about in your GWA seminars?  

There is the classic win-win approach to negotiations, which means that each party wants the other party to leave the negotiation with a positive result as well. Such negotiations are usually based on a very long-term partnership and the resulting relationship of trust. 

But there are also negotiations where, for example, the buyer suddenly negotiates not for the long term, but pursues a short-term goal instead, which can usually be measured in monetary terms. The agency arrives at the negotiation and probably still believes in a common win-win approach; but the buyer on the other side is not interested in the relationship, not even the performance. His goal is simply to pay ten percent less. If the agency is unprepared it gets close to the edge because it does not even know how to deal with this unforeseen situation. 

Is there a basic rule on how to approach a negotiation? 

There are generally two types of negotiators: One type considers negotiations as something playful and acts according to his notion that “the better party should win”. This type consciously applies negotiation tactics—fair tactics to be sure—to get the best possible result for himself. 

But then there is the negotiator who thinks that he is right, and because he is convinced of it, this is exactly what he wants. This type acts according to the motto, “I want this, and nothing else, because I deserve it. I am right, so do as I say.” Such people are at a high risk of getting to the negotiation's edge very quickly—for if they do not get exactly what they want they become emotional, and that means pure stress. 

Does that mean that emotions should generally be avoided during negotiations? 

As far as I see it, you can never separate the person from the issue. I do believe that every negotiation has a certain amount of emotion. It is not so important to leave emotions outside the negotiation room, but to control them and to steer them. 

There is now an increasing tendency among agencies to send not the account manager who normally deals with the client into the negotiation but another person instead. Does that make sense? 

This is exactly our philosophy. The account manager should never be the lead negotiator because it is he who needs to be able to maintain the relationship with the client after the negotiation as well. That means that he must not be damaged in any case. 

We work with the so-called FBI model; that means that there is a lead negotiator who is little involved emotionally and who is not interested in a long-term agreement either. The current negotiation alone is what counts for him. Then there is a second person, the “Commander”, who makes sure that the negotiation goes in the right direction. The account manager can be present at the negotiation, but he may not lead it. On the other side, especially when it comes to large corporations, you won't get the head of the dedicated department, but you negotiate with procurement. 

You have a background in police work where you negotiated with hostage-takers, for example. Now you advise clients in their business negotiations. Would you say that negotiations always follow more or less the same rules, independent of the negotiation subject? 

Definitely yes. There are certain rules, written and un-written ones, that apply to every negotiation—whether it is politics, business terms, or hostages. Those who do not know these rules will have an incredibly hard time with any negotiation. 

What are the typical mistakes when people have no training and do not know these rules? 

A common mistake is to enter the negotiation with the notion that “I am right”. But being right is not negotiable, failure is therefore inevitable. 

Inexperienced negotiators also often make the big mistake of negotiating intuitively rather than strategically. They make decisions following their gut instincts rather than a strategy, a mental guideline. 

Another typical mistake is to overreact emotionally when under stress. Such an overreaction could be that I offer a compromise much too early because I am getting afraid. Or I start threatening the other party because I do not know what else to do. 

Do you mean that I threaten the other party to break off the negotiation? 

No, much worse. If an account manager with no training in negotiation strategies is leading the negotiation, she could, for instance, say to her client, “If you are not willing to pay these additional costs, I will withdraw my team from the project tomorrow, and you'll see where that'll get you." In agency business it does happen that a certain service has not been defined exactly, that the client is convinced that this service was covered by the originally negotiated fee, and the account manager thinks it was not. This is a very classic case. The threat corners the client, they no longer have a chance to negotiate. At the same time, the account manager cuts herself off from getting back to the negotiation table. When I leave a negotiation with a threat I am left without any options as well. I am then forced to follow through, otherwise I would lose face. Threats are something beginners do—but unfortunately there are many of them. 

You say that one should never enter a negotiation without having a strategy. Does that mean that one should play out possible scenarios as to how the other party will behave? 

No, that would be wrong. This is not about reacting, but the critical question is, how do I act. The art in preparing for a negotiation lies in analyzing one’s own negotiation position and to link it to one’s objective. One must draw a line between the two points of “Where am I?” and “Where do I want to go?”, and this line is the strategy. But this is not easy. Before I can prepare a strategy, I really need to understand something about negotiating. 

When the point is reached in a negotiation where both parties are unable or unwilling to move, what should you do? 

This is the classic edge. Both sit there, and neither moves. Then the question arises whether this escalation was created intentionally, i.e. is it part of a strategy from which one party hopes to benefit? The buyer, for instance, could provoke this escalation to get the agency’s managing director to the negotiation table in the next round. Because the buyer learned that when the boss comes, I get more than when the boss is not involved. 

But then there is the unintentional escalation. It often happens when two negotiators with little training meet; they suddenly find themselves in a situation where they no longer know what to do. There are different strategic approaches to get out of that situation; but the one thing I must never do is to react emotionally. There is great risk that I get angry and say something because of it. Instead, I must reduce the pressure and slow down the negotiation to make sure I can get back to a negotiable position. 

Let us go back to the intentional escalation. Should one respond and bring the managing director in? 

Goodness, no! Many purchasing departments use the intentional escalation frequently to get the agency’s boss at the table. One should never do that. The likelihood that the boss makes more concessions than the account manager or a third person is very, very high. The boss does not want to have the ultimate conflict with the client, and the boss usually has a different perspective on money than the account manager. 50,000 Euros are usually more money for the latter than for the managing director, who thinks at the level of hundreds of thousands or millions. 

When you talk about how to get out of a negotiation deadlock you often mention a firefighter uniform. What do you mean by that? 

Our philosophy is to be very, very tough in our negotiations. When the negotiation leads into a dead end, we do not even want to avoid it, because we are well prepared and know how to solve it. But at the end of a deadlock one must give the other party the chance to save face. This is what we mean when we talk about a “firefighter uniform”: When the police manage to convince a suicidal person standing on a rooftop to give up, that person is often disguised in a firefighter uniform, which allows him to come down without losing face and being laughed at. 

But it is also possible to reach a point where one or even both parties say that it no longer makes sense to negotiate. 

Is there also a strategy on how to break off a negotiation without breaking too much china? It is possible, after all, that I will see my negotiation partner again in a different situation. 

It is also thinkable to break off a negotiation for tactical reasons because one thinks this will be advantageous. One could, for instance, break off the negotiation not because one has truly reached the end but to just pretend that one has reached the end. 

But when there is truly no way to find common ground, the negotiation must be broken off in a very positive light. It is important to highlight the common points and to point out that one believes strongly in the future of the partnership. Both sides must be able to save face in that they need to “sell” the broken off negotiation internally. 

You have advised companies in the most diverse industries. Are there any negotiation errors that are typical for agencies? 

There are two aspects that are risky for agencies: Agencies have a tendency to dramatically overestimate their relationship with the client. People get along well, are maybe even on a first-name basis, or they went out for a beer together, and then they think that it is no longer necessary to have a tough negotiation. “I know him, I work it out with him”—this trust in a relationship is a huge mistake because a relationship does not solve any negotiation problems. 

And when a client wants a certain service for ten percent less money, many creative people consider these ten percent less to be an attack on how their work is regarded—the client doesn’t even see what a “genius” they are. Things then become emotional, because suddenly the negotiation is no longer about the ten percent but about the regard for their work. But that is incredibly difficult to negotiate. 

Mr. Schranner, thank you for the interview.

Matthias Schranner was the responsible negotiator and negotiation instructor at the Federal Ministry of the Interior for negotiations with hostage-takers and bank robbers. Today he supports and advises the United Nations, global corporations, and political parties in difficult negotiations. Schranner has written several books, including “Negotiations on the Edge”, “The Negotiator”, and “Costly Mistakes”.  He is the CEO of the Schranner Negotiation Institute AG in Zurich, Switzerland, teaches at several universities, and is President of SNI Ltd. New York. He developed the “Negotiation Scorecard” that supports a number of Fortune-500 Companies.