Thursday, July 15, 2010

Qualities of an Effective Negotiator

I'm currently in Boston to teach a class on Real Estate Deal Structures at the Harvard Graduate School of Design. I am always excited to engage with my students, who come from a wide variety of professional backgrounds and a mix of countries. Though my role at Harvard is as an instructor, I find myself being challenged by and learning from my interactions with these bright individuals.

An important focus of our class discussion is how to negotiate a favorable deal structure. The students have to role play being either a land owner or a developer, and some of them get quite aggressive in their negotiations with each other. However, contrary to what some may think, the most effective negotiators are not those who squeeze the most for themselves or their clients, regardless of the cost to the other side. Sadly I've been on the other side of such negotiators. While they eke out short term gains, their tactics only build mistrust on the other side. More often than not, the agreements resulting from contentious negotiations end up breaking down in the long run. This is mainly because the other side feels it has been taken advantage of, and there's a lack of trust resulting from the adversarial negotiation tactics.

Effective negotiators seek to understand the true goals of all parties involved, and then find a comprehensive solution that allows the parties to achieve those objectives. Certainly, they will try to negotiate favorable terms for their side, but within parameters that the other party will find reasonable.

Some of the best negotiators I have met are empathetic individuals who can truly understand different points of view. They have a rich understanding of human nature, and use humor to diffuse tense situations. Effective negotiations requires excellent communications skills. It should be no surprise that as in most other endeavors, experience is important. An experienced negotiator who has handled a diverse array of transactions, disputes, and personalities is more likely to have the skills and knowledge required to negotiate any particular matter effectively.

In every negotiation I am involved in, I bring these qualities to the table. My mission is to craft creative solutions where all parties can feel their objectives are recognized and satisfied, while still endeavoring to reach the best result possible for my clients. Over the years, my clients have been more than satisfied with the results.

Besides acquiring practical knowledge of how real estate deals are structured, hopefully my students at Harvard will leave my class with a good sense of the qualities of an effective negotiator. Some more thoughts on mediation and negotiation to follow on this blog when I return to California!

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