09/06/2015

By Matthew Hill, Senior Consultant with Farnham Castle Intercultural Training


Corporate globalisation means that senior executives often find themselves on a plane flying out to lead international assignments – but how many are prepared for the task in hand?

Whether these professionals are trying to clinch a sale, oversee a company merger, or troubleshoot staffing issues, their negotiating skills will be business critical. A mistake could cost both money and reputation.

No company would send an employee untrained in accountancy to scrutinise the balance sheet of a business it planned to buy - or ask someone lacking in people management skills to sort out pay negotiations in an overseas’ office.

Yet many multinational companies send senior staff - skilled in their own areas of expertise - to countries they know nothing about to lead sensitive negotiations. Without understanding the culture, etiquette, social norms and values of the country, even the most skilled technical negotiator can cost an organisation dearly.

Here I will outline the seven costliest mistakes in international negotiations:

1. Avoid stereotyping nationalities

We are all familiar with – and probably guilty of – stereotyping other nationalities. Rather than trying to understand another culture, we make false assumptions about it. Known as the ‘halo effect’, our overall impression of a person influences how we think and feel about them. A biased, fixed view of other nationalities makes us blind to around 80% of what other people represent and we do not see their full potential.

2. Assess cultural risks

Each culture experiences risk differently and behaves in a unique way that must be understood for negotiations to be successful. Cultural relativity is a term used by anthropologists to explain that all cultures are worthy in their own right – and that we shouldn’t judge good or bad, right or wrong by the values of our own culture. Examine your own values and culture from an outside perspective – most people don’t do that. Learn the local etiquette of the country you’re in and be culturally inquisitive.

3. Avoid dirty tricks

The old colonial idea that the British have an innate superiority and can behave as they like abroad lies behind the notion that underhand tactics can be used in negotiations. Anyone stooping to using dirty tricks will be found out – and the damage will be long lasting. Morality can change regularly across the globe so executives are advised to do their homework on the current rules in their host country – and respect them.

4. Understand the country’s laws

Few people realise how culture impacts on this critical area of negotiation. In some countries laws that we are familiar within in the UK mean practically nothing. For example, in China intellectual property is difficult to enforce. In other cultures bribery acts are unknown and secret relationships or private clubs trump the laws of that particular country. By falsely assuming that other cultures are like us in the respect of morality and laws, we are setting ourselves up for failure at the negotiation table.

5. Learn to ‘haggle’

The British reserve means that we are uncomfortable with what we perceive as ‘haggling’ – frankly, it’s a bit beneath us! We must overcome our cultural modesty in order to negotiate successfully in other countries where trading is the norm. Go into negotiations prepared to trade a concession that has low value to you but high value to someone else.

6. Understand tone and language

All good intentions to communicate effectively can be undone by the ability of the receiver to understand and interpret that message. Even where all parties share a common language, such as English, communications can literally break down. Plain speaking, without any thought to diplomacy or tact, is the cultural norm in some countries. However, this could be perceived as rudeness by someone who is used to more ‘sugar coated’ messages. And it is not simply the words spoken, but the tone of voice, that can result in messages being lost in translation.

7. Know what constitutes trust

Various cultures have different expectations of what constitutes trust. Every word spoken can increase or decrease the level of trust at the negotiation table. Without understanding the etiquette around trust across diverse cultures, you risk smashing the deal and leaving empty handed. Empathy, mindfulness and real engagement are the keys to building trust.

As increasing numbers of companies look to trade internationally, companies cannot afford to enter negotiations on a wing and prayer. With the potential loss of millions of pounds in business, and risk to corporate reputations, clued up businesses need to ensure that their executives are trained to be culturally competent.