5 Common Negotiation Mistakes and How You Can Avoid Them

This article (by Katie Shonk) was selected on the internet for its interest to the readers of this blog:

Sometimes our negotiation mistakes are glaring: We accidentally reveal our bottom line, criticize the other party when patience was warranted, or get our numbers mixed up. More often, though, our negotiation mistakes are invisible: We get a perfectly good deal, but are unaware that we could have gotten a better one if we hadn’t succumbed to common errors and traps. By studying these 5 common negotiation mistakes and how you can avoid them, you can set yourself up for even better outcomes:

1. We Fail to Thoroughly Prepare to Negotiate.

The top negotiation mistake business negotiators make is to rush into negotiation without thoroughly preparing. You may think you’ve prepared thoroughly if you have strong opinions about what you want to get out of the deal, but that’s far from sufficient. Wise negotiators understand the importance of taking ample time to analyze several aspects of negotiation carefully. Start by thinking about your best alternative to a negotiated agreement, or BATNA, a term coined by Roger Fisher, William Ury, and Bruce Patton in their book Getting to Yes: Negotiating Agreement Without Giving In. Your BATNA is the best course of action available to you if you can’t reach agreement in your negotiation. It is also important to calculate your reservation value, or your walkaway point, and to try to estimate the other party’s BATNA. All of these calculations will help you make more rational decisions.

2. We Focus On Competing Rather than Collaborating.

Fearful of being taken advantage of, novice negotiators (and even some experienced ones) make ambitious, even unreasonable demands and resort to threats and other coercive tactics to try to get their way. For a more effective negotiation, focus on creating and claiming value. When you take time to build rapport and trust, both sides will feel more comfortable sharing their underlying interests in the negotiation. This knowledge will allow you to identify potential tradeoffs: if there’s an issue you don’t feel strongly about, you might be willing to concede in exchange for a concession on an issue you value greatly. Smart negotiators recognize they’ll get more by looking for win-win solutions.

3. We Fall Back on Cognitive Shortcuts.

In negotiation, we all rely on cognitive shortcuts, particularly when we’re unprepared and short on time, psychologists have found. We tend to be overconfident of our odds of getting our way, for instance. And we pay more attention to vivid information (such as salary in a job negotiation) than to less flashy information (such as the length of our commute) that might have a bigger impact on our satisfaction. Deepak Malhotra and Max H. Bazerman’s book Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond describes these common negotiation mistakes. We can improve our negotiation skills and reduce the pernicious effects of these biases by preparing thoroughly and taking ample time to negotiate.

4. We Let Our Emotions Get the Best of Us.

In addition to cognitive biases, negotiators are susceptible to emotional biases that can prevent them from doing their best. Of course, our emotions and those of our counterparts can provide us with valuable information about how the negotiation is going. But strong emotions can also keep us from making rational decisions—and lead to negotiation mistakes. Negotiators often don’t understand how emotions affect negotiations. Anger can lead us to make overly risky choices, for example. And sadness can lead us to overpay in negotiation, Harvard Kennedy School professor Jennifer Lerner has found. When negotiations get heated, try taking a break to let everyone cool down. When you regroup, talk about what happened, giving everyone time to air their concerns.

5. We Take Ethical Shortcuts.

We tend to assume that only truly ruthless people behave unethically in negotiation. In fact, research by Harvard Business School professor Francesca Gino and others shows that most people are willing to cheat now and then in negotiation and other realms when they have a financial incentive to do so and believe they won’t be caught. We find ways to justify such behavior, whether by telling ourselves that the other party won’t feel the loss or by denying that we’ve done anything wrong. It’s important for all of us to stay attuned to ethical pitfalls in negotiation and avoid letting ourselves off the hook for even seemingly minor infractions that go against our moral code.

Other articles on negotiation can be found on this website by clicking here.

The original article can be found at the following location: https://www.pon.harvard.edu/daily/negotiation-skills-daily/5-common-negotiation-mistakes-and-how-you-can-avoid-them/?utm_source=WhatCountsEmail&utm_medium=daily&utm_date=2018-09-17-13-30-00&mqsc=E3989591

Contract Management & Music, what is the perfect “negotiation chill out music”?

When you are stuck in those long negotiations. Have battled too much for your points. Can’t listen anymore to the arguments of the other side. Can’t even listen to your own arguments anymore. Then you need to chill out. Take a break or leave a subject (where your intervention is less required) to your fellow negotiators and chill out. But how? Listen 5 minutes to “negotiation chill out music”. Something thematic, something relaxing.

What’s your choice? 

Listen to the music…

My recommendation goes to “Riders on the storm” from The Doors. You can click here to listen on YouTube while you read on:

… and dream away with the lyrics

I think most people will agree that the sound is relaxing. But what about the lyrics? Is it applicable to that feeling we can get as negotiators?

Riders on the storm
Riders on the storm
Into this house we’re born
Into this world we’re thrown
Like a dog without a bone
An actor out on loan
Riders on the storm

Contract negotiations are like riding on a storm. The “house you’re born” is the company you are working for and representing. The “dog without a bone” is symbolizing the hunger of the negotiator to achieve an acceptable agreement.

Negotiating contracts sometimes feels like being an actor on a play that has to be played. You know your arguments and can foresee the arguments that the other side will bring on the table. Some part of the theatre just has to be played. Otherwise you can’t say to someone of your back-office that you’ve sincerely tried to gain what he or she made a big deal about. Something that is simply un-negotiable. You know it and, when your counterpart comes with their arguments, it’s almost a relief.

Dependence and love

The world on you depends
Our life will never end
Gotta love your man

Your company depends on the contract you are negotiating. Jobs are at stake. This is important for the future. Order intake has to be achieved. A big pressure on your shoulders.

Our (professional) life are these negotiations and they will / seem to never end in spite of your eagerness to close the deal.

If you want to be in a win-win spirit, you have to love the other side of the negotiation (your client, your subcontractor, whomever you are negotiating with). Otherwise you cannot propose that balanced deal and would feel bad about any concession you make. But it is not easy when that party is hammering on your head with their arguments, is blocking.

Equally so, your back-office should love you as their negotiator. If there is no such trust, no such respect for the efforts you put into this, no such confidence that you will bring back home a good deal, you can better stop it and let someone else give it a try.

Take a long holiday
Let your children play

When you are out there, remember that better, more relaxing, times will come. See it as a mission that you have to accomplish. But thereafter you will take that holidays and spend some time with the kids.

Be careful…

There’s a killer on the road

If you give this man a ride
Sweet family will die
Killer on the road

Be careful for aggressive tactics of the other side. If you give in on something unacceptable for your company (your “sweet family”), the consequences can be disastrous. Keep your focus on that balanced deal. Don’t be intimidated. Don’t let the time play against you. Keep patient and insist on what you need and what you can or should get.

… and ride on

Riders on the storm


Riders on the storm

It’s OK. This “negotiation chill out music” has calmed you down. You can continue riding the storm. Hopefully grab a good wave. You can go on and reach a good deal !

 

This post is part of our series illustrating important contract management subjects by music to make it more fun. You can click here to see other posts of that series.

Contract Management & Music, Time Bar struggle for Muse

When a Contract Manager receives a new contract to follow, probably the first thing she/he should look at is this: Is there a time bar for claims? 

The answer to this question will dramatically change her/his behavior during the contract execution. Together with Muse and their song “Time is Running Out” (of which we have quoted the relevant lyrics here below), we will analyze the consequences of time bars. You can listen while you read by clicking on the below link to YouTube:

What is a Time Bar?

Unfortunately, it is a not a bar where your can spend as much time as you want. Many definitions are available all saying more or less the same. I randomly present you the one given by “The Law Dictionary” (https://thelawdictionary.org) : “Stoppage put on exercising a claim or judgment after a period that was established by a law or custom.”

Original justification of Time Bars

Time Bars were introduced decades ago because Contractors / Employers used to pile up potential claims “just in case” to only launch them at a later timing most convenient to their interests. Usually this coincided with the time they had the maximum bargaining power, for example because the project was already built (for avoidance of counter-claims, no more risk of suspension etc).

In accordance with good contracting practice, both parties should be more transparent and should be pushed to table any issues as soon as they are aware of them, as soon as practical. Time Bars became a usual practice … even though one could regret it between mature and reasonable contracting parties.

The consequences of not claiming within the Time Bar

You will be
The death of me
Yeah, you will be
The death of me

Bury it
I won’t let you bury it
I won’t let you smother it
I won’t let you murder it

When you are beyond that maximum period to formulate your claim, it will simply be barred, not accepted anymore, “buried” with the words of Muse. Anyone can understand that feeling of injustice when the facts objectively show that your claim is valid but the clock says that the time is over. The three last sentences of the above citation show this feeling of resistance, this frustration.

Contractor’s feelings and reactions

Most of the claims barred by this mechanism are Contractor’s claims, so let us see with Muse what reactions this will bring to the Contract Manager.

I think I’m drowning
Asphyxiated
I want to break the spell
That you’ve created

…I want to play the game
I want the friction

The Contractor will feel asphyxiated, under huge pressure to present its claims in time. The Contract Manager, in order to protect himself, will rather formulate too many claims than too little. She/he wants to play the game.

Our time is running out
And our time is running out
You can’t push it underground
We can’t stop it screaming out

And we end up with a “claim machine”: claims for anything. You never know it will be useful. Umbrella claims, we will always be able to attach something to this.

I wanted freedom
But I’m restricted
I tried to give you up
But I’m addicted

Now that you know I’m trapped
Sense of elation
You’ll never dream of breaking this fixation
You will squeeze the life out of me

These “just in case” claims generate a lot of work for both parties, the one formulating and the one reacting. The involved resources don’t add any value if the claims are not legitimate, not substantiated. Key project players are drawn away from the real pro-active project execution. And, the positive atmosphere of the project is spoiled: “what, another claim! That’s outrageous”, …

Time Bars in FIDIC contracts

FIDIC 99 has the Time Bar in sub-clause 20.1 of Red, Yellow and Silver Books with the following wording: “If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim.”

This clause clearly spells out the hard consequences. If you are late, you loose it all. Never mind how justified your claim is and how impacting the consequences are. This also applies for late claims related to Employer’s acts and Risks. On top of that, the Employer doesn’t have an equivalent Time Bar in its claims clause, sub-clause 2.5.

Fortunately, the new clause 20 in FIDIC 17 deals with both Contractor’s and Employer’s claims in the same way. The time bar is now in sub-clause 20.2: “If the claiming Party fails to give a Notice of Claim within this period of 28 days, the claiming Party shall not be entitled to any additional payment, the Contract Price shall not be reduced (in the case of the Employer as the claiming Party), the Time for Completion (in the case of the Contractor as the claiming Party) or the DNP (in the case of the Employer as the claiming Party) shall not be extended, and the other Party shall be discharged from any liability in connection with the event or circumstance giving rise to the Claim.”

General recommendations about time bars

  • Do not set Time Bars too short; the minimum is 28 days. Setting it too short will inevitably lead to a “claim machine” environment where the parties start formulating a continuous stream of claims so that they can always find a way to argue that they started the claim in time. I would recommend time bars not to be below 90 days.
  • Make the clause symmetrical / bilateral, meaning that the same time bar and duration should apply to both parties. During negotiations, parties tend to become much more reasonable when they know the same provision will also apply to them.
  • Ideally, the entitlement to claim should only be reduced to the extend that the other party was unable to mitigate its losses due the claim being late. This will avoid barring of obvious entitlements that could not be mitigated anyway.

Let us stop with the stereotypes that Contractors are just claim machines and look for the reasons. The vicious circle of ever lower time bars is not going to help. The above post and the music of Muse allow us to rethink our ways of working in a positive atmosphere outside of the rush of day-to-day projects.

This post is part of our series illustrating important contract management subjects by music to make it more fun. You can click here to see other posts of that series.

Contract Management & Music, Delay LDs for Natalie Imbruglia

Contract Management, in general, and liquidated damages, in particular, are serious subjects. But, nothing better to learn about serious subjects than humour and fun. Therefore, we continue this series drawing ideas and concepts about contracts from music as we started with Satisfaction (The Rolling Stones).

I admit it is difficult to imagine what “Torn” from Natalie Imbruglia has to do with delay liquidated damages (delay LDs). But give me a minute and you will see. I’ll show it with extracts from the lyrics. If you want to listen while your read, here is the link to YouTube:

Projects normally start on good terms. The Employer selects the Contractor because he trusts him and expects him to do a good job, to finish in time respecting the quality & performance requirements.

I thought I saw a man [Contractor] brought to life
He was warm, he came around like
He was dignified

Unfortunately, often, at some point of time, things start to go wrong. The quality of the communication, or rather the lack of it, is almost always a good indicator of this decline:

Conversation has run dry
That’s what’s going on
Nothing’s fine

When constructive communication is not re-established and things continue to go wrong, the parties end up not delivering anymore. No more confidence, slower progress, project is late with huge potential losses for the Employer, Employer stops paying, Contractor starts complaining/claiming, ever slower progress… the vicious cycle.

I’m torn
I’m all out of faith

Illusion never changed
Into something real

You’re a little late
I’m already torn

Maybe in the emotional life of Natalie, there is no easy solution. But in construction/contracting business, there is one: Delay LDs. Delays in big infrastructure, construction, oil & gas, renewable or power projects are very foreseeable. No need for a fortune teller. Just anticipate on the issue.

So I guess the fortune teller’s right
I should have seen just what was there
And not some holy light

These liquidated damages are not a punishment, not a penalty, not something to scare the hell out of the Contractor but should be a genuine pré-estimate of the losses the Employer would face if the Contractor is late. Typical wording goes as follows: “The Parties hereby acknowledge and agree that the terms, conditions and amounts set forth for liquidated damages are reasonable and reflect a genuine estimation of the damages which shall be incurred by the Employer. The amounts of these payments are agreed upon and set forth by the Parties because of the difficulty of ascertaining on the date hereof the exact amounts of damages that the Employer will suffer as a result of the Contractor’s failure to meet the schedule under the provisions of Sub-Clause xx [Time for Completion].”

And now I don’t care
I have no luck
I don’t miss it all that much
There’s just so many things
That I can’t touch

No need to blame. Contractor can have bad luck on projects: a mistake in the design, a critical path item that was not fabricated to the right quality standards, something got damaged during installation. But Contractor will be fighting to avoid this knowing the consequences upfront. No better motivation for proper project & risk management than LDs. In all fairness, Employers should also avoid applying liquidated damages for events that are not under the control of the Contractors: Employer’s acts & omissions, force majeure events, delays by authorities etc.

Contractors must be sure that these delay LDs are exactly what they will pay and nothing else, that they are the sole and exclusive remedies for being late. Typical wording: “The payment of the liquidated damages for delay shall be the sole and exclusive remedy due to the Employer for the delay.”

The LD rates and caps should be reasonable. Contractor should not be losing all of the (small) profit they can make on a project just by being late a single day, a week or even a month. A typical order of magnitude is 2% of the contract amount for each month of delay and this capped to 10% of the contract amount, maximum 15%. Before reaching this cap, there should be no right to terminate the contract.

Last but not least, the fact of paying the delay LDs should not affect the continuation of the project execution. Typical wording: “The payment of the liquidated damages shall not relieve the Contractor from its obligations to complete the Works.”

Join the Construction/Contracting business, Natalie, and you won’t feel that bad if the someone is late! Proper delay LDs provisions protect both Employers and Contractors.

Top image: Liquidated Damages by Nick Youngson CC BY-SA 3.0 Alpha Stock Images

Contract Management & Music, “I can’t get no satisfaction” (The Rolling Stones)

Because Contract Management should also be fun, we are now launching a series of posts based on popular music. This is the first one but keep tuned to https://afitac.com if you want to read the others when they come out. Better to bookmark or to connect to the LinkedIn page by clicking on the icon on the right.

So, here we go and start with “Satisfaction” from the Rolling Stones. If you want to listen to it in parallel to reading this post, you will find your way to YouTube here:

Satisfaction in contracts

Often, we find the word satisfaction in contracts in those provisions where the “works have to performed to the satisfaction of the Employer / Engineer”. For Employers that makes perfect sense! They are paying the Contractor for the works and hope to be satisfied with the results.

What’s the problem with this?

Contractors are not in the business of selling satisfaction; there are other businesses for that ;-). What Contractors do sell is to execute the works in accordance with the contract.

What are we missing? Wouldn’t the Employer/Engineer automatically be satisfied if the works are performed in accordance with the contract?

Well, if humans were like robots and programmed as follows: [if works are in accordance with contract, then be satisfied], there would probably not be much of a problem. But human nature is different. Mick Jagger is clearly singing it. He can’t get no satisfaction. “Cause I try and I try and I try and I try I can’t get no, I can’t get no”. However white his shirts would be, he wouldn’t be satisfied because of some unrelated issue. He didn’t like the man that was promoting the detergent.

It is very difficult for a Contractor to get the Employer 100% satisfied. That’s like aiming for perfection. Reasonable contracts do good efforts to avoid this pursuit of perfection. A good example are the provisions related to substantial completion. Minor defects can be put on a punch list to be resolved after the taking-over.

How to fix it when you encounter satisfaction in contracts?

Simply replace wherever is stated “the works shall be performed to the satisfaction of the Employer/Engineer” with “the works shall be performed in accordance with the contract”. That’s an easy fix.

I see some Employers/Engineers wonder that this will put a heavy burden on preparing the contract. Yes, a contract should be well made with a clear scope of works and clear rights & obligations. Don’t forget that executing the works is even more complex than writing the contract and the Contractor should concentrate on that. Not on the pursuit of pure satisfaction of the Employer/Engineer that may be unrelated to the works. I hate to imagine the compliance problems to reach satisfaction in contracts.

Put the right people on preparing the contract, keep it simple and avoid ambiguity (often introduced by either party with the intention to benefit from it, later on, in case of conflict).

If it is too much of a burden to correct the contract at the last minute or if there is resistance to change these words (“we have always written it”), you can still “program” the Employer’s Representative or Engineer like the robots we mentioned above. Put a definition around satisfaction. Something like: “wherever ‘to the satisfaction of the Employer/Engineer’ is stated in this contract, the Employer/Engineer is deemed to be satisfied if the works have been executed in accordance with the contract”.

Thank you, Mick, for helping people-working-on-contracts have fun when thinking about how contracts should be! Music helps us to relax. And that’s good for becoming reasonable and satisfied! More to come in future posts.

 

 

Contract Management: are contracts cast in stone?

Contracts cast in stone

I share with you a post (translated by AfiTaC from French) from Jean-Charles Savornin, a thought leader in France on contract management because I fully agree with him: 

Summer is an incredible time when we live differently from the rest of the year: on vacation, elsewhere, with a different climate …

This year, I watched Fort Boyard [a typical French television show opposing two teams on a variety of activities in a fortress]. One of the tests refers to the maxim DURA LEX SED LEX written on a lintel (here is the link with the contract management …)

The law is hard, but law.

This sentence, quite explicit, makes reference to the law. What about the contract then, which applies between the parties signing up to it? Is it also hard, but the contract?

Well, that’s the beauty of the contract. It is, as I often say, the reference of the relationship between the parties, the Bible of the project … with the difference that we can change the contract, not the Bible. So, the contract is more flexible and editable. It cannot be seen as “hard” or unfair. Remember that the contract was signed by the various parties, and that there is little, in the “usual” business at least, obligation to sign (no one puts a gun to your head).

So, let’s stop saying that the contract is hard, that it is unfair, that it is badly signed, that it should have been written differently. And let’s live by Jean-Jacques Rousseau’s sentence:

Obedience to a self-prescribed law, that’s freedom.

In terms of contract management, the contract represents this law that has been prescribed. But by “whom”? I can already imagine some persons opposing that they are not responsible for the contract signed. The “whom” refers to the entity for which you work and which you represent in your mission. Clearly, if your company has signed a contract, you are part of the “those” who have self-imposed this contract. And if you do not like it, you can take action; you can propose a modification of the contract or change jobs.

What freedom have we gained?

It is all that can be done in the framework of the contract and all that the other can do as well. “One” then has the freedom to do what is written and not to do what is not written. But “one” is especially free to propose a modification of the contract if something is no longer appropriate. And “the other” has the freedom to accept, or not. This the contract defines the playing field.

I use the word “playing” on purpose. A contract must be seen as a space of freedom in which your inventiveness can express itself to realize the opportunities. Because these opportunities will make your project a success, or not. These opportunities will allow you to move forward and offset the risks. There are risks … and there will be problems. Just as there are opportunities … and there will be good news. Besides, is the pre-award phase not called the [sales] opportunity phase in many companies? The contract is an opportunity for your organization. And you must accompany the execution of this opportunity to turn it into good news!

So, stop seeing the contract as a constraint, see it as a degree of freedom.

Personally, I’ve been working quite a lot on contract negotiations at pre-award stage. Later on, during execution stage, I was often surprised about the detached way the project team spoke about the contrat: “unfortunately, the contract says the following” as if it was cast in stone. I usually replied : “yes, while making the contract, we [- to emphasize the deal between persons and companies -] agreed on the following for this reason and have tried to write it down. It is not cast in stone. If now the circumstances have changed or you want to modify something, please do agree with the other party just like we agreed before”. 

You can find the original post on Jean-Charles Savornin’s blog at the following location (available in French only): http://www.contractence.fr/de-fort-boyard-a-jj-rousseau/

Coaching YOU all the way to the top!

Let me start this post with a short personal story. You will see that it is very relevant for professional contract coaching.

This weekend, my twelve-year-old daughter cycled for the first time all the way to the top of the local “col de l’Arzelier”. That’s my favorite climb due to its proximity from home, the distance [12 km climb, 850 height meters] and the variety of views. Needless to say that I was a proud father cycling together. But how did she achieve this?

The starting conditions

  • She is in good physical shape by just being active the way kids are; she doesn’t do any intensive sports in club activity.
  • She had never done any substantial uphill cycling. When the road starts climbing, kids quickly give up when feeling the pressure in those legs.
  • Since quite a bit of time, I had been saying that my dream was to cycle with the kids up this col de l’Arzelier and, if they succeeded, they would get something really good.
  • We didn’t foresee  to take the challenge that day. It was decided at the last minute because it was nice weather. It was also a good objective to make something great and special out of that day in the middle of summer holidays.

How did it go?

Of course, it wasn’t easy. From the first kilometer onward she was already complaining. She cried three times before reaching the top. She stopped a hundred times to rest, sometimes after as little as 30 m.

What made the difference?

    • The road signposts that signal how many km are left till the top allowed us to break down the track in manageable parts.
    • Above all, what made the difference is what she could find in herself both as mental and physical strength: HER drive.
    • I never forced her, only encouraged her. I even gave her the possibility to stop at any point of time. But she had that great drive to achieve that target (and maybe to get some unidentified reward). HOWEVER without the presence of someone encouraging her (a coach), there was a 99% probability that she had given up before reaching the top.

 

Parallel with professional life:

For my daughter, it was almost unlikely that she would make it all the way to the top. It’s much easier to give up. Everything had to go well. While the achievement had to come from herself, the coaching certainly made a good contribution.

Contract negotiations are often comparable to cycling up a “col” in the Alps. I’ve participated to many. Some have taken years, in very difficult circumstances with huge pressure from the Customer, fundamental changes inside the company I was working for, impatience to conclude etc. Walking away would have been easy (e.g. by changing jobs) but the drive existed to succeed.

Due to the unforeseeable time to conclude contract negotiations, relying too heavily on external support (like external legal counsel) can get your costs to accumulate astronomically. I’ve seen this happen many times. Costs, in view of uncertain duration, are better controlled with in-house resources. But these may be lacking that bit of experience to pull it off. That is when Contract Coaching makes all its sense. Your in-house negotiators need to have that assurance that they can draw from some experience, some encouragement, someone that did it before and can make them believe they can also achieve the targets.

What can Contract Coaching bring to your organization?

Contract Coaching is a flexible way to provide support to your team over a longer period of time. It develops them. That’s where the YOU in the title comes from (the emphasis by using capital letters is on purpose ). On the personal life example, my daughter knows she did it and, even more importantly, she now knows forever that she can do it (again and again). She has changed here reference scale.

Externalizing too much your contract management and negotiation doesn’t enable your company’s staff to develop themselves. Contract Coaching brings this usually at a much smaller cost which is even capitalized as an investment in the future.

If you can make  such an in-house coach available, good for you; you  will certainly have your organization benefit from it. But, let’s face it, such internal coaches are rare, internal resources are reducing and the experienced persons are often promoted to management jobs.

If you believe Contract Coaching is interesting, you can write a comment here below or get in touch with us.

 

Mediator, good to be an expert in the subject matter in dispute or not?

This article was taken over from LinkedIn for its interest to the readers of this blog:

A mediator should always be an expert in the subject matter in dispute

(Author: Martin Burns)

Some mediator training organisations insist that, once someone is trained in the skills and techniques of mediation, they can mediate any type of dispute. These bodies say that a mediator does not need specialist knowledge about the issues involved in a dispute.

The argument goes that a mediator is responsible for managing a process, which enables the parties to negotiate a settlement. It is not necessary for the mediator to have substantial expertise in the subject matter of the dispute. They say that it is the parties, not the mediator, who need to understand technical issues. The parties will know the facts better than the mediator, and since a mediator must avoid giving technical advice to the parties, having a mediator with specialist expertise is of little value in any case.

A more realistic view is that subject matter expertise may not always be necessary but, in practice, it is almost always wanted by parties. Also, it is usually of benefit to the parties. This rational approach has been transforming mediation in the land, property and construction sector. Fewer parties are ready to accept the “hands-off” facilitative model, and are opting for an evaluative process, where mediators actively use their expertise to inform, and sometimes challenge parties, and to provide sensible options on possible settlement terms.

The recent experience we have had at RICS, the leading regulatory body for professionals working in land, property and construction, reveals that most parties want a mediator who has technical expertise and can understand the precise nature of the dispute. They do not want to spend valuable time teaching the mediator about matters they see as straightforward. The mediator’s role is to liaise between the parties and communicate in an effective and incisive way. It follows that the mediator can do this better if they have significant technical expertise in the subject matter in dispute.

A UK survey undertaken a few years ago by the Centre for Effective Dispute Resolution (CEDR) revealed a great deal about changing expectations of parties relating to the expertise they require of mediators. Mediators who responded to the survey reported that the most significant factors in determining their appointments were:

  1. Professional reputation (i.e. knowledge of the subject in dispute)
  2. Amount of fees and basis of charge
  3. Professional qualifications
  4. Availability to undertake the mediation as and when required by the parties

Lawyers representing parties in disputes routinely rate similar factors as decisive when selecting mediators, although they also suggest that a CV which demonstrates that a mediator has plenty of mediation experience is also important.

More and more parties want their mediator to really understand the issues which are at the heart of their dispute. They see the role of the mediator as more than simply managing conversations and exchanges of information. They want a mediator who will help them to make informed judgment calls. Although a mediator with technical knowledge and experience should not give personal advice to either party, they should be able to apply their understanding of the subject matter to ask questions which help both side to properly to consider the strengths and weaknesses of settlement options. If one party is being unrealistic, an expert mediator can ask hard, yet knowing, questions that get the party to reality check his or her position. If the parties require, the mediator should be able to draw on significant subject matter experience to offer possible settlement solutions in the form of reasoned, non-binding, recommendations.

Expertise in the technical aspects of a dispute allows a mediator to quickly grasp the pertinent facts and focus on the issues that really matter.

There are, however, a number of challenges facing expert mediators. These can be addressed through training in evaluative mediation procedures. The main challenge is to avoid making hasty conclusions and offering opinions too early or when they are not wanted by the parties. Expert mediators should exercise restraint and be active listeners, learning as much as they can about the parties’ relative positions and expectations. They should guide and help parties to engage in constructive negotiations. When bringing their expertise to bear, they should not dominate discussions between the parties simply to demonstrate their own expertise.

These challenges are offset by the fact that non-expert mediators can often spend much time getting parties to bring them up to speed on the subject area. Also, non-experts could be led to focus on less important issues and even reach wrong conclusions.

It is perhaps self-evident that ignorance in the subject matter seldom added value, and users preferred mediators who could grasp the issues quickly and proceed to move the parties towards informed solutions.

Part of the attraction of mediation is that parties can choose the mediator that suits them best, and it is apparent that more and more parties are choosing subject expert mediators. The rationale is that parties will more likely achieve a well-reasoned, informed and agreeable settlement with an expert mediator than with a mediator who has not been tried and tested in the relevant subject matter.

In case you would like access the original article, you can do this here.

During/after holidays is a good time to self-assess your commercial & contract competences.

Now that we are all on holidays or just coming back is the good time to do a relaxed but critical self-assessment of our competences as Commercial or Contract Managers. This will enable you to identify your development areas for the next year.

For this self-assessment, 10 subjects have been carefully selected enabling you to perform the assessment in 2 minutes. It is targeted to Project, Contract and Tender Managers mainly active in construction, infrastructure, oil & gas and renewable energy projects. Of course, if you are slightly out of this focus group, you can still give it a try.

To keep it short, we had to leave out other important subjects like indemnity, termination, force majeure etc. By no means the questionnaire has the intention to cover all required knowledge. It is only a representative sample to establish the depth of your knowledge.

Your information will be kept strictly confidential and will not be communicated by us to anybody other than to the e-mail you may indicate, but it’s not mandatory, to receive the assessment report. Without e-mail address, you can still click on “submit” and get the result.

If you have any comments, suggestions or encouragements, you can provide them as a comment to this post.


Welcome to your Commercial and Contract self-assessment

Please select the most representative answer for you on each question. Only take an answer further down the list if all of the preceding answers are also true (except the first answer, of course).

1. Are you familiar with the following types of Customers?
2. Are you familiar with any of the following types of Contracts?
3. Risk allocation between Contractors and Employers
4. Delay and performance liquidated damages
5. Limitations of liability
6. Warranty
7. Bank guarantees
8. Currency risk protection
9. Fiscal Risk
10. Insurance

Thanks for completing your self-assessment.

Please provide your email to receive your assessment report (not mandatory / confidentiality is guaranteed)

 

Win-win negotiations, lessons from watching kids during holidays

During the holidays, I had the privilege to witness my kids in a real-life negotiation involving many of the behaviours you can encounter during professional life. Interesting food for thought on win-win negotiations!

The starting point

They were hungry after the hiking trip of the day and quickly finished their kids’ menu. So, we gladly allowed my daughter and son to share together a third one. So far so good, because splitting a pizza in two is easy. Then comes the dessert where they realize they now can choose 3 for the 2 of them (within those kids’ menus). So, who gets an extra dessert? They can both defend themselves well and needed to figure it out without adult intervention. Obviously, the process starts with each simply claiming her/his second dessert.

Win-win negotiations deal reached

I was impressed because, quite quickly, they reached a deal:

  • My son gets a second ice-cream in exchange for committing to buy, with his pocket money, the next volume of the series of books they both like.
  • My daughter accepts to only get one dessert but, in turn, will also benefit from reading that volume.

Seems a good deal with mutual benefits.

When it starts to go wrong!

My son comes whispering in my ear why he believes he did a smart deal. He would have bought that volume anyway. And, his sister will naturally buy the volume thereafter that he will be able to read also. So, he didn’t really give much. The very fact of whispering in my ear made it all go wrong. That feeling of a hidden, unspoken part of a deal is very discomforting for the other party.

So often, during professional negotiations, one sees this happen after reaching a partial or complete deal:
– seemingly disproportionate satisfaction of the other party
– smiles and talks at the other side of the table, or
– merely some body language.
All the above can give a twist to what was a win-win negotiation at the start.

Then all hell broke loose!

My daughter started to doubt. My son then explained what he told me. She didn’t accept the part that she would probably buy, as she always does, another volume of that series of books they both like to read: “Ah no; then I would have given that extra dessert without a real benefit. This time, I‘ll not buy the next volume after you.” No more win-win mood.

My son, seeing that the assumptions for his side of the deal didn’t stand anymore, tried to withdraw from it. He offered the extra dessert to me to balance the situation.

My daughter didn’t agree that he could withdraw from buying that book.

And it went on like this for quite a while. Much longer than reaching the initial deal and without creation of value. Both re-interpreted the original deal: no clear agreement; only verbal agreement with no proof; no right to withdraw/terminate the agreement, etc. Very similar to real life contract disputes.

At the end, even with the good news of an extra dessert to be shared/allocated, they both felt unhappy and had gained nothing out of fear of the other side benefiting more. No more value created by either part of the negotiation. Each one looking to avoid that the other side would benefit up to the point of preferring a lose-lose situation (at the risk of being punished for quarrelling at the restaurant table).

Conclusion

When making a win-win negotiations deal:

  1. Avoid giving the impression of a hidden part. You must be able to state, out loud, the whole deal without any party feeling affected or starting to doubt.
  2. Win-win negotiations require genuine generosity with acceptance of good benefits for the other party. There should be no need to measure the distribution of benefits in detail.
  3. Make a reasonable deal quickly and then move on. No hesitation as long as there is good value in your part of the deal.

Think about your own negotiation practice. Many negotiators end up in situations like the one described above. Reflection on the dynamics of a negotiation is essential to make you better at it. Get coaching if it can make you a better professional. Win-win negotiations are essential if you want to be successful in the long run.

You can find other articles about negotiation on our blog afitac.com or by clicking on the link here below:

https://afitac.com/?s=negotiation