The Confluence Of

THE CONFLUENCE OF MANAGEMENT AND NEGOTIATING

By

HENRY H. CALERO

Throughout my entire business career I have been very interested in the words "management" and "negotiating." The dictionary definition of "management" centers on such words as "control," "direction," in the process of making decisions. A "manager," therefore, is someone that uses their skills in leading and directing others towards achieving specific goals and objectives. The definition for "negotiating" is "to deal with and settle matters, to complete, accomplish."

Never-the-less, it is amazing how many executives and managers don't realize the two words are interchangeable and function like their right and left hands in life. For example, if someone said "He negotiated the turn at high speeds while driving his car." You would immediately understand the individual had "managed" a very sharp turn while driving. The purpose of this article is to awaken a realization of how important these two words are to a person's success, happiness and fulfillment in life.

Unfortunately, I didn't come to the realization of the confluence of these two words until much later in my business life. I first became aware of their confluence while consulting with the C.E.O. of a company. He was in the process of informing me of the many problems his organization faced and the great difficulty he and his staff were having in solving them.

As a consultant, I sometimes feel like a "shrink," because when my clients discuss matters with me I take a lot of notes, especially about certain words that are often repeated. while analyzing my notes After this particular meeting, Irealized that the word "management" had been used 21 times and "negotiate" only 4 times.

Since that time I have established a certain belief that the higher up in an organization a person is, the less they tend to use the word "negotiation" when describing their function in a company. It is almost as though they believe negotiating is the responsibility of subordinates, and not theirs. Sadly, in business, C.E.O.s are responsible for everything, but not anything. As a result of this, when something goes wrong in an organization, a C.E.O. can always find someone at a lower executive level to blame.

After forty years of consulting, managing companies, conducting seminars and writing books on the subjects of communication, success, management and negotiating, I'm shocked at how many executives are unaware of the importance of negotiating skills for their management survival. To illustrate this, I will use three articles published in 2004, by Time Magazine, The Wall Journal and Business Week.

The Time Magazine article concerned a new breed of executives that "will be setting the global standards for management, ethics, marketing and innovation." In the article, a portion of an interview with each executive was printed. After reading all the interviews conducted, I found that the words "manage" or "management," were used ten times more than "negotiate" or "negotiating." Additionally, when the executives outlined the methods or business strategies they planned to utilize in achieving corporate objectives, the words "negotiate" and "negotiating" were once again omitted.

The Wall Street Journal article covered advice Chief Executives would give to subordinates that might help them in successfully climbing the management ladder. Here are some of the "verbal jewels" they offered: "You have to establish a sense of confidence with everyone you interact with." "You must establish credibility quickly and then build momentum." "Don't make promises you can't keep or try to do too much." Another said he would tell all his subordinates, "If there are any politicians in this company, I will figure out who you are and I'll fire you." And lastly, one Chief Executive recommended using questions as a method for management promotions. He recommended using such questions as, "What do you want to keep?" "What do you want to change?" "What are you afraid of doing?" Plus others.

To me it is absolutely amazing that none of them offered the following simple advice that would further their careers in management: During your business career you will constantly be faced with many problems that need to be solved. I have found out the best method of achieving this is by asking questions in order to understand the nature and cause of the problem by getting all the necessary information and then, by negotiating with others, coming up with the right answers and action.

The third article, published by Business Week, listed those individuals who in their opinion were the best and worst executives for 2004. Without mentioning names or organizations, the following are comments the magazine made concerning specific management styles or the lack of one. I'll cover the best executives first. "He repositioned the firm’s portfolio with major acquisitions in health care, entertainment and commercial finance." "Created a more diverse, global and customer driven culture." "Launched an initiative to sell low-cost PC's in developing countries." "Increased membership profitably with innovative service offerings and smart financial management." "A ruthless drive for efficiency, such as centralized purchasing and investing in technology." "Made $3.6 billion worth of software deals," (which surely must have taken a lot of negotiating to accomplish). "Kept a tight lid on costs which helped boost profits." And finally, "Turned the company from the butt of talk-show jokes into a leader in customer satisfaction."

Now let's see what Business Week wrote about the "rotten apples." "Any exec can make a bad situation worse, but it takes a certain talent to take it into a near catastrophe." "He was supposed to be a political risk manager, instead he compounded the problems." "He expanded too fast after the lPO, saturating markets with so many stores that the brand name quickly lost its novelty." He dropped the ball on quality." (The company finished the year earning 50% less than it did in the previous year.) Another CEO's poor performance was based on "Aggressive and premature bookings." And another was cited for "Accounting misdeeds and obstruction of federal investigations." And finally there was the exec that "Mislead investors about the impact of a hostile takeover."

There was absolutely no mention of negotiating skills or the lack of them in all three magazines. Since the magazines failed to do so, I would like to mention two former Continental Airlines executives that truly understood the confluence of management and negotiating. The first is Gordon Bethune who pulled the airline from the brink

of bankruptcy a decade ago through his negotiations with customers and labor unions. The second is Larry Kellner whose expert negotiations led to refinancing the airline’s fleet of planes at much lower interest rates. Their combined negotiating skills had a positive effect on the airline’s financial balance sheet. And as you read this article some of you will no doubt remember individuals that also displayed outstanding negotiating abilities in fulfilling management responsibilities.

I guess I should also give an example of the consequences of a lack of negotiating at a high management level. Some years ago, the CEO of Air Berlin, Joachim Hunold, was about to place a very large order for 737's. He expected Boeing to negotiate the price with him. Instead, Boeing ignored his request to negotiate the final cost per plane. As a result of Boeing's seeming unwillingness to negotiate, Mr. Hunold flew to Airbus' headquarters in Toulouse, France and had lunch with the company's executives. Afterwards, they shook hands on a $7 billion dollar order for 110 single-aisle airplanes.

Afterwards, Boeing was in a state of shock because they never thought Mr. Hunold would do that. The company made the mistake of "taking a customer for granted" and not with negotiating them. The order from Air Berlin was a blessing to Airbus, because after four years of losing ground to Boeing, the order made up some ground and also woke up Boeing from their slumber to realize there were serious competitors in the commercial aircraft business.

There are so many areas in which senior executives must negotiate in order to successfully fulfill their managementduties, let me list and discuss just one more to reinforce the point. Let us look at one internal management area that I believe is of major importance:the negotiation and management of staff meetings

. In order to negotiate staff meetings more effectively, I recommend the following:

1.) Begin with a clear statement of the importance of the meeting …

Whoever has called the meeting should not use parables in the description of why the meeting is being conducted. I once attended a meeting in which the executive simply started it by saying, "I don't know about the rest of you, but if this company doesn't get its [expletive deleted],' I'm going to have difficulty in making my monthly mortgage payment." The importance and/or urgency of the meeting should be clearly announced at the beginning so none has any doubts of its importance.

2.) Create an informal atmosphere …

Create an informal atmosphere in which humor will prevail and not a serious atmosphere in which those attending are fearful of thinking or saying something unusual, strange or funny. Humor is a very important element in creativity. And the stage for such informality may be established by the one that called the meeting ... a bit of humor at the beginning of the meeting may plant the seed for some great thoughts, concepts and ideas.

3.) Establish a non-threatening environment …

It is also important to create an atmosphere in which individuals are willing to freely express their feelings without fear of being reprimanded or criticized. When a person is afraid to openly state their thoughts and beliefs, an organization will not benefit. At a typical meeting, individuals from various departments or disciplines attend; some have engineering, marketing, production, plus other experiences. You should encourage those that don't have a background in those experiences to ask question those that do.

4.) Develop a problem-solving atmosphere …

During the course of the meeting, encourage individuals to be assertive and to discourage those who have "thin skin" from reacting defensively. Developing different views on the way and means of solving problems is the fundamental basis for new concepts and ideas. As opposed to meetings in which those who are dominant tended to humiliate or intimidate others.

5.) Request thoughts in writing after the meeting …

In every meeting there will always be those who are gifted in communicating their ideas and those with less such abilities. Many years ago I learned a very valuable lesson from a boss I worked for in the Aero Space Industry. He began the meeting by simply saying he realized some would be very verbal in communicating how they felt, while others had the same compelling feelings, but found it more difficult to communicate them. Therefore, he said, "After our meeting today, I want each of you to sleep on what has been suggested and tomorrow, I want you to put your thoughts in writing. And please, don't write a lengthy novel, one or two pages will do." Since then, I have found how more beneficial a meeting may be by allowing those who are less gifted in what they sayto put their thoughts in writing.

I sincerely hope the foregoing is of valuable assistance to the reader in making them more aware of the importance of the critical confluence of negotiating and management in every organization. They are the inseparable keys to executive success.