“International Negotiation and Support: A Multi-Company Study” by Tim Cummins

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Planning – What Planning?

Given the perception that international negotiations are complex and require specialist knowledge, it is perhaps surprising that planning is not the norm. Respondents revealed a lack of resources and methods – for example, just 10% have ‘robust methods and sources to research the country / culture before negotiation’. Just 15% take active steps to consider potential cultural differences before a negotiation. And a scarcely measurable 1% typically take the trouble to research the individuals they will be dealing with to provide negotiators with an accurate profile.
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It is common for business people to discuss cultural variation sand the impact these have upon the success of contracts and relationships. As an example, many negotiators recognize the potential importance of status and issues such as ‘loss of face’. Given all the stories, one might expect real sensitivity to these issues – yet 91% of negotiators frequently enter the room (or the electronic forum) without knowing who has authority on the other side.
We thought that perhaps local or external experts made up for the gaps in central planning, but this does not seem typically to be the case. 64% rarely or never use resources ‘on the ground’ and 80% of organizations do not use or have access to cultural experts.

But Do We Achieve Good Results?

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In view of these findings, it is not surprising that 59% of participants feel that “in the last 12 months, lack of cultural knowledge has been detrimental to one or more negotiations”. Indeed, over 30% directly attribute this as a cause of at least one failed negotiation in the last year. At this time, we have no quantitative data to describe the cost to business of these short-comings. However, it is worth remembering that the survey respondents represent some of the largest and most sophisticated corporations, with many years of international trading experience. We also know (from previous studies) that these negotiators typically handle deals worth at least $5m in value; so if 31% have personally experienced lost business in the last year, this represents a remarkable failure in corporate performance.

Why would companies make so little investment? In part, this is simply an extension of the general weaknesses we find with business-to-business negotiation – companies behave as if good negotiators are born, not made. There is typically little investment in providing a coherent infrastructure of methods or tools to ensure that proven processes and practices are embedded, or that institutional knowledge is shared. So while management recognizes that international negotiation is harder and more demanding, the fix is to apply more seasoned people.

A further factor could be simple arrogance. As Western companies expand into new markets, they assume their superiority and power. When we look at the responses that came from employees of Western multi-nationals, 58% consider themselves somewhat advantaged in negotiation, relative to negotiators from other cultures. This rises to 69% in the case of US corporations. Just 6% think they are sometimes disadvantaged. With this belief, which is probably reflected throughout the corporation, why spend time on training or planning?

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January 2007