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Honesty and Trust in Transactions

8/31/2019

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The current political and constitutional events sweeping the UK at the moment has made me think about best practice and behaviour in transactions and in particular negotiating long term outsourcing contracts. These are intended to create an ongoing relationship and always work better if there is some form of proper partnership.
 
So unlike in a war where any tactic including lying to and deceiving the enemy may be a legitimate approach, a negotiation if successful ends in a contract where the parties have to work together for a number of years. Whilst of course wanting to represent my clients and do the best possible deal for them, I have found that honesty is a far preferable approach to deliberately misleading the team on the other side of the table as to your motives or even business goals. This sort of behaviour tends to come out and can severely damage the long-term relationship the parties should be striving to achieve for their mutual benefit.
 
And not being truthful can go spectacularly wrong as illustrated by the English court case of BskyB V EDS in 2010 in which the supplier representatives in the negotiation of an IT contract made such exaggerated and untruthful statements about their company’s ability to meet an implementation plan that the judge found their actions fraudulent - which voided the contract limit of liability. See this summary in Computer Weekly.
 
Here is an interesting Harvard Law School blog Trust and Honesty in Negotiations: Dealing with Dishonest Negotiators which poses the question as to whether you should deal with dishonest negotiators at all with reference to diplomatic discussions. See also this CNBC post Why you should never be dishonest during a negotiation which refers to a book “The Only Negotiating Guide You’ll Ever Need: 101 Ways to Win Every Time in Any Situation, ” by Peter B. Stark and Jane Flaherty who write: “The more confidence your counterpart has in your honesty, integrity and reliability, the easier you will find it to negotiate.”They advise not to use deception for short-term gain, because, they write: “It does not build long-term relationships or encourage your counterpart to come back and negotiate with you again at a later date.”
 
This older article about lawyers’ approach to negotiation Practical and Ethical Limits to Lying in Negotiations: Protecting Your Reputation as a Trustworthy Negotiator May Matter More than You Think cites research by Andrea Schneider published in the Harvard Negotiation Law Review Shattering Negotiation Myths: Empirical Evidence on the Effectiveness of Negotiation Style, which distinguishes between effective problem-solving negotiators and adversarial negotiators and concludes the former are likely to be more effective negotiators commenting:
 
Interestingly, attributes involving honesty affect how a negotiator is perceived. In the Schneider study, effective lawyers were ethical, trustworthy, and fair-minded. The adversarial lawyer, who was generally perceived as less effective in negotiations, showed attributes that arguable reflected negatively on his or her honesty: manipulative, suspicious and a bluffer.
 
Ultimately the world is a small place and you may well have to deal with the same people again. Plato through Phaedrus said Whoever is detected in a shameful fraud is ever after not believed even if they speak the truth.
 
As Thomas Jefferson commented “Honesty is the first chapter of the book wisdom”.
 

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Naysayers in Teams

8/25/2019

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We are clearing out our garage this bank holiday weekend and turning up some interesting material including a photo from many years ago of a European legal team I was a part of, based in London but for a global company. There were lawyers from the United States, Germany, Greece and England all as I recall with diverse backgrounds and characters. Yet it was a great team with clear focus and no “naysayers” - which made it a pleasure to work in.
 
A “naysayer” is a person who habitually criticizes, objects to, or opposes something. In my experience they are anathema to a professional team because they ultimately prevent any progress and hinder development activities. These people may be acting like this because it is their nature, which is difficult enough to manage, or they could be pursuing an alternative agenda trying to undermine the team and its leadership. They are the team member who we all recognise and who will typically start their point with “Let me just play devil’s advocate here.”
 
Whatever their motivation, they need to be managed back into a more positive mindset or frankly must leave the team or they will bring everything down around the team’s ears. Here is an interesting Harvard Business Review Article on How to Handle the Naysayer on Your Team which recognises the benefit of opposition but says it has to be managed commenting Not only did every team have an opposer (or two), but almost every team was annoyed by the behavior, considered it unhelpful, and wished it (and the person) would go away. In some cases, reactions to the opposer were quite intense, ranging from stonewalling or the silent treatment to aggressive outbursts.
 
See also this Forbes post which describes a typical if rather extreme naysayer as follows: He will sit with his arms folded and jaw clenched and wince at just about every idea.Or this article which advocates helping naysayers to reform and be a “recovering naysayer” suggesting Every organization has one or two negative people. Ignoring them is not a viable option. If you have a trusting relationship with them you should be able to successfully point out their impact and help them adjust.
 
I am a bit sceptical about this and think as Jim Collins said in his book Good to Great you need the right people in the right seats on the bus. Whilst constructive criticism is healthy, downright opposition to every new idea really isn’t. A former partner of mine in a law firm once described the chaos in a previous law firm he worked with when they brought the wrong partner on board.
 
And very worryingly naysayers often seem to become leaders, rising to the top according to the New Scientist because we naturally treat them as leadersNegative, critical people often ascend to positions of leadership because their disregard for social niceties makes them seem powerful, research suggests.
 
This article Does Being a Naysayer Make You a More Powerful Leader? says It turns out that even though we say we want compassionate and empathetic leaders, we perceive naysayers as being more powerful than their non-critical colleagues. However, it also goes on to determine that Constant negativity and criticism causes people to view the leader as a malcontent and they eventually remove their support.
 
The English philosopher John Locke said New opinions are always suspected, and usually opposed, without any other reason but because they are not already common.
 
Whilst the American philosopher Ralph Waldo Emmerson advised Whatever you do you need courage. Whatever course you decide upon, there will always be someone to tell you that you are wrong.

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Saying Thank You

8/17/2019

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I am a great believer in showing respect in the workplace, partly because it is good manners, but also because it creates a better working environment and, in my experience, improves the quality and commitment of work contributions.
 
An easy way to achieve this is to find time to say a genuine “thank you” where it is merited. This can be a manager appreciating the hard work or innovative ideas of their colleagues – or a worker showing how he or she values direction or support from their boss.
 
This Forbes article How An Authentic 'Thank You' Can Change Your Workplace Culture is right on point, commenting Showing a little gratitude in the office could be the simplest, yet most effective way to boost morale and promote a healthy culture. Yet, many leaders hesitate to show their appreciation.
 
It backs this up with empirical supporting evidence such as: Researchers at the University of Pennsylvania discovered that grateful leaders motivate their employees to be more productive. In one study involving fundraising calls, employees who were thanked by their managers made 50% more fundraising calls than their co-workers.
 
This short article from the news site of the Australian HR Institute refers to  Research conducted by Gallup, which surveyed four million employees worldwide, shows a clear and compelling link between recognition, and organisational performance – “Recognition not only boosts individual employee engagement, but it also has been found to increase productivity and loyalty to the company, leading to higher retention.”
 
The Gallup research cited says:
 
Our latest analysis, which includes more than 10,000 business units and more than 30 industries, has found that individuals who receive regular recognition and praise:
 
  • increase their individual productivity
  • increase engagement among their colleagues
  • are more likely to stay with their organization
  • receive higher loyalty and satisfaction scores from customers
  • have better safety records and fewer accidents on the job . . .
 
Expressing appreciating extends beyond our internal operations. Thanking customers and clients, without whom we would not be in business, is equally important. As this post The power of saying “Thank You” when connecting with customers says One of the simplest, but arguably most effective, ways to evoke those emotions is to express gratitude. Thanking customers helps make them a part of your company’s story on and offline and it is one way Breakout Brands can successfully connect with consumers.
 
John F Kennedy advised We must find time to stop and thank the people who make a difference in our lives.
 
Or as Mother Teresa said Kind words can be short and easy to speak, but their echoes are truly endless.

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Understanding True Motivation in Negotiations

8/11/2019

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​I once acted for a software company when I was a lawyer in private practice. On one negotiation the CEO perceptively suggested that we should seek to understand what the individuals in the customer we were dealing with would get out of the transaction. If they were owners of the business, like partners in a professional practice, they would have a different perspective from a salaried employee in a large organisation.
 
Business owners might take a strategic view of the value of the deal to the development of their business. However, a salaried procurement officer would simply want to continue to get his or her salary plus any bonus they may be entitled to and to meet any related objectives. Sometimes procurement advisers may be tasked to reduce spend by a given percentage – and that is what they will seek to do regardless of the quality of the deals they strike.
 
And that is fair enough. They are beholden to their employer who pays their wages. As Alexander Hamilton the American statesman and one of the Founding Fathers of the United States commented In the general course of human nature, a power over a man’s subsistence amounts to a power over his will.  
 
Being armed with this understanding of what makes the person on the other side on the table tick, what fundamentally drives them is a critical part of achieving a successful outcome. This means as a crucial part of the preparation for a negotiation taking the time to research and understand who you will be dealing with and their background and likely motivation. Are they for example part of the business itself or are they external advisers whose motivation may include making money or doing a good job to impress a new client – or simply showing off how good they are at their job.
 
It may also mean it is easier to recognise when there is no point in dealing with a given individual and they will either have to be side-lined or the matter escalated to somebody who will make a more reasoned and rational decision. 
 
It is also quite interesting to turn this exercise around and examine what drives your team. Does the sales lead have so desperate a need to meet his quarterly sales target that he will agree to any risk? Are the technical people more interested in proving their technology works than in actually selling it? Are external advisers “showboating” to demonstrate how good they are to their client?
 
And until robots using artificial intelligence negotiate dispassionately on our behalf these emotional or human drivers will motivate us all. A Harvard Law School blog quoting Carnegie Mellon University professor Laurie Weingart suggests there are:
 
Four basic types of social motives drive human behavior in negotiation and other competitive situations. These types of social motives correspond to four basic negotiation styles:
 
Individualistsseek to maximize their own outcomes with little regard for their counterparts’ outcomes. About half of U.S. negotiators have an individualistic negotiating style, according to Weingart.
Cooperators, about 25% to 35% of U.S. negotiators, strive to maximize both their own and other parties’ outcomes and to see that resources are divided fairly.
Competitives, comprising about 5% to 10% of U.S. negotiators, seek to get a better deal than their “opponent.” They behave in a self-serving manner and often lack the trust needed to solve problems jointly.
Altruists, who are quite rare, put their counterpart’s needs and wants above their own.
 
Understanding what is going on in the hearts and minds of people across the table may not only influence how to negotiate a good deal, but whether it is worth doing so in the first place. As John F Kennedy said You cannot negotiate with people who say what’s mine is mine and what’s yours is negotiable.
 
Howard Baker the American politician and diplomat said The most difficult thing in any negotiation, almost, is making sure that you strip it of the emotion and deal with the facts. And there was a considerable challenge to that here and understandably so.
 
I think that’s true up to a point. You also have to understand and deal with the emotion and the motivation and the pure facts and bring them all to the negotiation party.

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Changing Hearts and Minds

8/3/2019

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I saw a communication at work this week that suggested change is not just about adapting to new technology in our increasingly digital world. It is more about changing ways of thinking and acting and behaving. I think this is exactly right.
 
Effecting any change can be challenging – I suspect there is an inherent inertia in all of us that resists doing things differently. Even if as a manager you go on an inspiring leadership course, putting the new ideas and changes into practice with your team back in the office (real or virtual) is a completely different matter.
 
As I mentioned on this blog a couple of years ago, I had this experience after attending a thought-provoking Harvard Business School course on managing professional firms. The professors taught through case studies exploring the strengths and weaknesses of professional practice and suggesting how to improve in many areas. I went back to the office of my then firm in London with an almost religious zeal to put what I had learnt into practice. 
 
But it was really hard. Nobody else seemed to get why we needed to change. I realise now that sustain change is not just about inspiring leaders. The manager can direct but the whole team has to go there. We sent three people from my firm to Boston – we should have sent twenty or more of our leading partners if we really wanted to change.
 
You can then take the key decision makers who can together mould the firm to change. See this London Business School article which suggests Build a group of people around you – an alliance, a coalition – who share your beliefs and your passion for what you’re trying to make happen.
 
Doing this with any organisation is difficult. In the world of professional business it is even harder because everybody has their own view and perspective on how to run their particular practice. See for example this articleHow to bring about change in law firms which says Bringing about change in a law firm remains extraordinarily difficult, and the more fundamental the change, the greater the difficulty.
 
This McKinsey podcast on How to implement and sustain organizational change explores this topic with an implementation expert commenting The concept is, I have now taken a group of people or an organization and fundamentally changed the way that they think about doing their work or whatever processes that are now put into place and am building their skills and capabilities along the way.
 
This excellent article from Strategy& (the global strategy consulting team at PWC) on how to make and sustain change comments Few organizations have escaped the need for major change in the past decade as new technologies and global crises have reshaped entire industriesand says Change is, at its core, a people process. It maintains that Two-thirds of transformation programs fall short of their objectives, because they do not capture hearts and minds.
 
As Leo Tolstoy sagely said Everyone thinks of changing the world, but no one thinks of changing himself.
 
Maybe we should all follow the advice of Mahatma GhandiBe the change that you wish to see in the world.

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