Chapter 6 Researching the Other Party

In Chapter 4 we discussed gathering data to help you understand the requirement you’ll be negotiating and your custom-er’s needs, as well to help you develop your own negotiating positions. The data you gathered through market research focused mainly on the acquisition itself, not on the folks who will be sitting on the other side of the table.

In this chapter, we shift gears and look at how to collect data and other information that can give you clues about what to expect from the other side during the negotiation event. To prepare for the negotiation properly, you want to get as much general information as possible on the company you’ll be dealing with. You’ll also want to know as much as possible about the individuals who will be sitting across the table from you. This chapter shows you where and how to gather this important information.

RESEARCHING THE COMPANY

Do a little research into the company’s past negotiation history. Look for the following: Do they have a reputation of driving a hard bargain? Do they have a habit of using certain negotiation strategies and tactics in the past? How effective were they? How concerned are they about their reputation in the marketplace? About their reputation of being perceived as fair?

What are the company’s goals—both long term and short term? What do they pride themselves on? What are their published core values and vision? Can you find insight into the company’s unstated goals? Sometimes goals on paper are just that; the company may have other, unstated priorities that influence how they will act.

Where do they stand in the marketplace compared with their competitors? Are they a new company? An old company? Are they considered a market leader in their industry? Follower? Innovator? Are they trying to expand into a new market? Is this their first government contract? If not, what percentage of their business is with the government? Are they small or large? Are they a subsidiary of a larger company? What are their limitations and market pressures? The answers to all these questions will give you important clues to how they are going to behave in the negotiation and how you should craft your approach to dealing with them.

Also do some basic homework on the company’s cost structure. I’m not talking here about the specific acquisition you have in front of you to negotiate, but on the company in general. What’s their standard profit margin? How do they price their goods or services? Are they profitable? Are they considered the “low-cost bubba” or the “high-priced icon?” Are their business or profit margins expanding or contracting? Are they starved for cash or desperate for business? What’s their debt ratio? Are there takeover rumors? Are they unionized? What kind of relationship do they have with their employees? What do their employees think of working for them?

Finally, see if you can discover any (what I call) standard company tendencies. These are things like standard terms and conditions that they habitually adhere to or ask for. What’s their discount policy? What kinds of warranties do they offer? How do they usually try to limit their liability or risk? What do you know about their overall risk tolerance? Do they walk away from deals they perceive are too risky? Do they have a reputation for trying to “buy in” on contracts?

Obviously, there is much more research you can do on a company, and you’ll see soon how readily available most of this information is. What I hope you understand is how useful this company research can be to you during negotiations.

RESEARCHING THE COMPANY’S NEGOTIATORS

If you can, you also want to gather as much “intel” as possible on the person who’s representing the contractor in the negotiation. True, it’s useful to research all the personalities on the opposite team, but you are safe concentrating on the team leader—your counterpart across the table—because he or she will set the tone for their entire team. Remember, negotiating is a process, culminating in the actual sit-down meeting. Don’t wait until then to get information about the company’s negotiator. Start as early as possible. Of course, if the negotiation session is the first time you meet the negotiator, some things can’t be discovered until then. But you should start your research as soon as you know who you’ll be negotiating with. You need to “go to school” on them.

How do you find out who’s to be your counterpart? All you need to do is ask the contractor! You could even consider asking in your solicitation to have them identify this person when they submit their proposals. Or you could ask when you send the contractor a copy of your draft agenda for them to review (we’ll talk about draft agendas later). The earlier you start this personal research, the better. One caution, however: The contractor may switch negotiators on you. Hey, they know this game too! If they do, well, that’s sometimes how negotiations go. Whoever they submit, especially if they do make a switch, make sure that person has the authority to negotiate and bind the company. When we talk about the ambiguous authority tactic later, you’ll see why this is important.

Once you’ve nailed down who your counterpart is going to be, check out that person’s history in previous negotiations. If you haven’t had previous dealings with him or her, contact someone who has (like another CO). Remember, you don’t have to limit yourself to COs you know or who are within your own office. You can search agency-wide or even outside your agency. How will you know who to call? Just check the contractor’s proposal. Chances are, you have requested and received past performance information from the contractor. This information will tell you what contracts they have had in the past and will identify the points of contact for these contracts. Call these folks and talk to them about the contractor.

What’s this person’s job title in the company? Does he or she even work for the company as an employee? Or are they a hired gun, a professional negotiator brought in on a fee or contingent basis? How many government negotiations has this person been in? What agencies were the contracts for? Are they new to the company? Are they new to government negotiations? What’s the historical range they usually hit between going-in position and the final negotiated price of the contract?

Is he or she a well-known negotiator? Well respected? Do they have a reputation for being trustworthy? Are they known for ethical or unethical behavior in the past? Do they have a reputation of making concessions or driving a hard bargain? When do they habitually make most of their concessions—up front, during, or right at the end of negotiations? Were they pleasant to negotiate with or a pain? Are they known as a “people person” or a loner? Are they sloppy or well organized? Are they a technical subject matter expert in the function they’re negotiating or simply a business expert or “number cruncher”? What’s their reputation in the company? In the industry? Are they egotistical? Prone to make snap judgments? What can you find out about their personal values and background?

What kind of negotiation style and tactics is this person known to use? Do they change their style and tactics, or are they predictable? Are they perceived as using “negotiation tricks”? If so, which tricks do they like to use? Are they known to be a talker or a good listener? (It’s important to notice how some people seem to dominate conversations and talk about themselves. You can turn this into a great advantage at the negotiation table.) Do they like to take risks or are they cautious and risk-averse?

Probe for this person’s personal strengths and weaknesses (I sometimes call these hot buttons) that are peculiar only to him or her. What are their true underlying motives? Are they predictable? Do they have a family? What are their hobbies? What other outside interests do they have? Are they a member of any professional associations or clubs? Are they seen as a “fast-burner” on their way up? Or a “has-been” on their way down? Do they have a desire to be liked and to please people? What outside pressures are pushing in on them personally? Professionally? What’s their personal stake in the negotiations? Could a promotion be tied to how well they negotiate or how much they can get out of the negotiation? Could they face the possibility of demotion or disgrace if they are perceived to do badly during the negotiation? What are their time pressures and deadlines for this deal?

As you gather this information on your counterpart and start assessing it, try to put yourself in their shoes. How do you think they see the situation? How do you think they see or perceive you? This exercise (of putting yourself in his or her shoes) will help you assimilate the pieces of information you have collected or observed into a general picture of that negotiator as a real, live person. With this picture in mind, you can better predict how that person will act and react in the negotiation room. And that, folks, will help you prepare your own strategy, tactics, and countertactics.

Two last points on researching the other side. First, be very careful about the information you get from other government COs who have been in negotiations with that person or that company. You can’t always take what they say at face value. These COs may have unknowingly been the victims of effective tactics used by the other side. For example, you may ask another CO about a company negotiator and be told something like, “Oh yes! She was great! You’ll have no problem dealing with her. She’s very pleasant to deal with.” The reality may be that this CO fell victim to any number of negotiation tactics a professional negotiator can use, which are designed to make that CO feel just that way! Hopefully, after reading this book, that person will never be you. We’re going to go over many of these tactics: how to recognize them and how to counter them.

Second, you may ask, “Hey, is it ethical for a government negotiator to collect this kind of data, especially since some of it can be extremely personal in nature?” Or, “Ethics notwithstanding, is it worth my time and effort to collect this stuff at all?” In my opinion, the answer to both questions is a resounding yes! In a negotiation, information is power, and the most informed side becomes the most prepared. The side that’s most prepared for the negotiation usually comes out on top. Don’t feel bad about researching the other side. If you’re up against a professional negotiator, I guarantee they’re already busy collecting this same information—as much of it as they can—on both your agency and you. Later in this book, when we discuss some of the tactics that you can use or that can be used against you, you’ll agree with me that it is well worth your time to learn everything you can about the other party prior to negotiations.

Here’s an example. Have you ever had a contractor call you out of the blue, and say something like, “Hey, I just happened to be in town, and I thought it would be nice if I came by and met you in person so I could connect a face to a name,” or something similar? I’m sure you thought it was an extremely customer-oriented, friendly gesture. What a nice person! You probably responded with something like, “Sure! Come on up to my office and we’ll get acquainted!” And that’s just what the professional negotiator was betting on.

He or she may truly want to be friendly, but their ultimate goal is to get into your office, your own private space. Give a professional negotiator five minutes in your office and they can find out more about you than you even know about you! As they engage you in friendly banter, their eyes will dart around your office and they’ll pick up important clues about you as a person—clues that will help them in future negotiations with you. Your office tells volumes about you. Are you a neat person or are you a slob? Are you married? Do you have children (pictures on the wall or on your desk)? What are your hobbies? How devoted to them are you? What sports do you like? What teams are you a fan of? What do you like to read? Are you in an office or a cubicle? How big is your office compared with others? Do you seem particularly proud of receiving recognition (plaques on the wall)? Do you have items with competitors’ logos on them, such as mouse pads, pens, coffee cups, and so forth?

From that quick study of your office, the professional negotiator will have picked up volumes of useful information about you—information he or she will attempt to exploit the next time they negotiate with you. How tidy you keep your office, for instance, can be an indicator of the type of person you are and how you will act in a negotiation. If you have an extensive “I love me” wall full of plaques and awards, they will deduce that you crave recognition and will slant their next negotiation tactics accordingly. Pictures on the wall of spouses, children, or sports will give them future topics of conversation to use to bond with you and win your confidence, as do diplomas, books, and magazines. The size and location of your office will tell them where you are in the “pecking order” of your organization. They’ll know whether you’re someone to be reckoned with or whether you are a “worker bee” required to get approvals “from above.”

I’m not saying not to meet with contractors if they drop in. I just don’t suggest you take them back into the inner recesses of your building or into your own personal office space. Meet them in your conference room or some other neutral ground. Don’t let them “go to school” on you!

INFORMATION SOURCES

Now you know it’s important to do research on the other party—both the company and the negotiator. But where do you go to get that kind of information? Do you have to break into the company after hours and snoop around? Actually, that could land you in jail and complicate the negotiation a bit. No, you don’t have to become a corporate spy to gather the information you need to research the other party. We’ve already talked about getting information on the other negotiator by talking to folks who have dealt with him or her before. Now let’s look at some information sources for researching the other side’s company in general.

Getting information about the other side is not as daunting as it first seems. There are plenty of sources out there that are easily available that you can tap into. I’ve never found amount and availability of sources of information to be a problem, especially with the Internet just a click away. In fact, you probably have a lot of what you’ll need already lying around as a result of your previous market research efforts for the acquisition.

In Chapter 4, we looked at ways to gather data to help you identify and set your negotiation positions and priorities. Many of these same sources you’ve already tapped can now give you a “double bang” by revealing general clues about the other side. The contractor’s proposal, for instance, usually contains useful management summaries that give a glimpse into the company’s overall motives, values, and objectives.

As the negotiation process continues, you’ll also have many chances for any of a number of prenegotiation exchanges with the contractor (clarifications, communications, fact-finding, and so on) to obtain certain proposal-specific information. All these exchanges are opportunities to expand the usefulness of the exchange well beyond just the information you’re seeking. You can use these exchanges to research the company and the negotiator: attitude, how they react to certain approaches, how forthcoming they are, how willing to please they are, and so forth.

We’ve talked about how you should get information from other COs who have done business or negotiated with the contractor before. You may also want to expand this source base by talking to government customers, technical personnel, and even auditors who have had some experience dealing with that company. Often, their assessment of a company and their people is “dead on.” Certain professions and technical fields develop bonds between their practitioners that can transcend company and even company/government boundaries. Because of these ties, these other government folks may know a lot more about the real situation than their COs do!

One of your best sources of information about the company is straight from the contractor you’ll be dealing with. Any company in business usually has publicly available catalogs, brochures, news releases, and the like, that contain a wealth of useful information. But the best way to get information on the company or the negotiator is one we often overlook: Simply ask them! We tend to shy away from asking questions, especially ones we don’t think will be answered or will offend someone. If that’s you, you’ve got to get over it. We’ll discuss tips on how to ask questions later.

Government databases, such as the Central Contractor Registration (www.ccr.gov), and past performance databases from various government agencies, such as the Past Performance Information Retrieval System (PPIRS; www.ppirs.gov), can yield important information. Although PPIRS is quite robust, and more and more agencies are signing on to participate in it over time, we don’t yet have one truly centralized government past performance database. So if your agency does not yet use PPIRS, you’ll have to check your agency’s particular system.

Also, be sure to check other agency systems that aren’t in PPIRS yet for information on the contractor you’ll be dealing with. You will be amazed at the useful information you can pull from just these past performance databases alone.

There are a host of private sources out there that compile information on companies that can be useful to you. Most of them are on the Web. You’ll want to check out industry and trade association Web sites for the particular goods or services you’re negotiating for. Other private database sources include Dun and Bradstreet (www.dnb.com) and the Thomas Register (www.thomasregister.com).

Finally, another fantastic source of information, particularly on a company, is the Internet. Just punch the company name into a search engine like Google and you’ll be amazed at the information that will pop up. Many times you can get similar results searching on the name of the negotiator you’ll be dealing with. Also be sure to do a search of the topic (the goods or services) you’ll be negotiating for. This search should bring up useful Web sites, like professional organizations.

INFO-GATHERING TIPS

Quite frankly, I don’t think government negotiators, as a whole, do a good job researching the other side before negotiations—and it’s not from the lack of accessible information. The most common reason I hear from government negotiators for this lack of in-depth research on the other side prior to negotiations is time. A common observation goes something like, “Yes, I know I should devote more research into this negotiation, and in an ideal world I would, but I just don’t have enough time.” There always seems to be a short time fuse on what you’re asked to negotiate, and then there’s all the other work you have.

Sound familiar? I’m sure I’m guilty of using these same excuses for not doing in-depth research when I was a government negotiator. And they’re not just excuses; there’s some truth behind the time constraints you face today as a government negotiator. But do you see how important it is to gather this information and do this research so that you can achieve a best-value solution for your customer and the taxpayer?

You know you should do the research; you know it will result in you doing a better negotiation job, but you have these nasty time constraints. What to do? You’ve got to learn to use your limited time wisely and learn to develop shortcuts that get to the essential information you need quickly and efficiently. Here are a few suggestions to accomplish this.

First, just as you do for negotiations, treat researching the other side as a process, not an event. Break it into bite-size chunks. If you set aside, for example, a particular day to cram it all in and “get that block checked,” you’ll get bored, frustrated, and you’ll miss a lot of important information. If you plan just one day, or hour, to get that information, your information-gathering antenna most likely will shut down after this time and you’ll miss the stuff that pushes its way to you automatically or by accident.

So, pace yourself. Cut the research into manageable chunks and stretch it out. In addition, be aware that some of the information you need could find its way to you without you seeking it. Always be in information-receive mode.

Second, don’t kill yourself trying to find this information. Remember to tailor your research effort to the situation. Your time, energy, and effort have a real dollar cost, not only to you personally, but to your agency and the taxpayer. So don’t spend an inordinate amount of time doing elaborate research for small-dollar, non-complex negotiations.

Tailor the amount and complexity of your research effort to the dollar value and complexity of what you are doing. You can also cut down on effort if you already have experience with the company or their negotiator, or know a trusted source who does. You’re an important asset, so try to manage your vital time wisely.

Third, don’t be afraid to ask questions directly to the contractor! You’re using the power of basic human nature here. Most human beings have a natural tendency to help people they see as less informed—or weaker, or less knowledgeable, or even less intelligent than they are. They can’t help it; it makes them feel superior, or at least good inside.

One way to create this perception (of being less informed) is to admit you don’t have all the answers. Use this weakness as a strength by phrasing questions such as, “I don’t understand your market. What kind of competition do you have? Please help me.” Admitting you don’t know all the answers humanizes you. You’re no longer “the bureaucratic, all-knowing government.” It makes people more receptive to you.

When you ask questions, make sure never to phrase them so that you get a simple yes or no answer. Encourage elaboration. Ask open-ended questions.

When you ask for help, you’re also tapping into our natural human tendency to talk about ourselves and what’s important to us. Even if you don’t get a direct answer when you ask a question, you gain information. You now know they won’t answer that question for some reason, and you can note the negotiator’s reaction to being asked for more information. You can also use questions to confirm information you already know and to gauge whether someone will be truthful with you.

By the way, once you ask a question, be quiet. The vast majority of us aren’t great listeners, but it’s a habit you need to develop if you want to be a successful negotiator. Resist the urge to elaborate or butt in after you’ve asked a question. You can’t learn anything from talking, only from listening. By listening, you pick up a lot more information than just the little tidbit of information you asked for.

Unintentional slips, verbal intonations, or a certain emphasis could send a message quite different from the words being spoken. Train yourself not only to hear what is being said, but to hear what isn’t being said. Regardless of whether you realize it, your negotiation has already started when you start asking questions and researching the other party.

We’ve assembled our team, gathered market research data about our customer’s requirement, established our prenegotiation objectives, and researched the other party’s company and lead negotiator. Chapter 7 will take us into the next step: developing the negotiation plan.