Tips On Negotiation - Business Insider

Mark Shapiro did not win many arguments with his father growing up in Baltimore. Although he is now the president of Major League Baseball's Cleveland Indians, his father, Ron, has a reputation as a master negotiator, and did not hesitate to use his skills on his ambitious son.

"But I did get the greatest modeling for behavior and interactions," said Mark Shapiro, who appeared with his father at a recent Wharton Leadership Lecture to talk about the skills necessary for negotiating. "He taught that you have to have compassion and tolerance, whether in daily interactions or complex negotiations. [He never focused solely on] achievement, but [on] effort. He never stressed the grade, but the effort I put into it.

"That is the key to a good negotiation -- the effort and the preparation, not just the supposed outcome," Mark Shapiro noted.

Ron Shapiro has advised corporations, universities and executives in negotiations, but he is also a longtime sports agent who has worked with a number of teams, particularly in his native Baltimore. In addition, he has also consulted with the National Football League Ravens, the Major League Baseball Orioles and the University of Maryland athletic department, which he helped guide last year in its quest to move from the Atlantic Coast athletic conference to the Big Ten.

"That [negotiation] could have been my hardest," he stated, pointing out that university officials went into the talks thinking the move was a done deal. "I think [they] forgot the words of Harry Truman, who said, 'It is what you learn after you know it all that really counts.'"

The university had previously cut seven sports from its athletic program to save money, which presented a potential roadblock in convincing leadership at the Big Ten that Maryland would be a good addition to the conference. Maryland president Wallace Loh was convinced that they would win easily, Ron Shapiro said, but the sports agent pointed out that the school was dealing with a savvy negotiator in Big Ten commissioner James Delany. Shapiro's recommendation to Loh was that he needed to play Devil's advocate during the talks.

"[Loh] picked up the script and pulled off the deal," the elder Shapiro noted. "He showed that the greatest leaders are vulnerable people who know there are many things to learn."

According to Mark Shapiro, the difference between his father's negotiations and the talks that he (Mark) engages in on behalf of the Indians is that the public is quick to voice an opinion on anything to do with the direction of the team or its players. When the Indians, for example, make an offer of $56 million to a hoped-for star outfielder like Nick Swisher -- as they did this winter -- the media, analysts and casual fans all rush to weigh in, even though none of them are actually sitting at the negotiation table.

"You have to remember that emotion and momentum are the two biggest sources of bad negotiating," the younger Shapiro said. "I wake up and I read headlines in the newspaper about, say, a player who might come to the Indians. I turn on the radio and hear some other opinion. I drop the kids off at school, and the principal tells me what he thinks. I go to the coffee shop, and there is someone who is emotional about it. The barber talks to me about it.

"You want those people to be happy, and no matter how good a negotiation strategy you have, if you do not think [input from others] will emotionally impact you, you are fooling yourself," Mark Shapiro added. "But that is just the time you have to stop listening and remember that it is research and preparation that got you there, and that emotion will just lose it for you."

Giving In to Win

Another key to sound negotiation, according to Ron Shapiro, is understanding what the other side wants and being prepared to offer a concession. "We very much believe in the win-win," he said. The title of the first of his three books, in fact, is?The Power of Nice: How to Negotiate So Everybody Wins -- Especially You. "I have trained companies all over the country to never forget that the power of negotiation is to look out for the other guy and still get what you want."

Chances are, Ron Shapiro added, if you are involved in one high-stakes negotiation, a similar situation will arise again someday, and it will likely involve someone you have faced off against before. "You can grab all the marbles if you want, but in the long term, it is always better to leave your opponent with something, or he will never negotiate with you again. The bottom line is that relationships are all-important in negotiations. You maximize what you can get, but you have to think about something that will be acceptable to them, too. What goes around really does come around."

He pointed to the negotiations of peace treaties after World War I as an example. The Allies exacted significant reparations from Germany, which took such a toll on the country that it paved the way for Adolf Hitler's rise to power and the onset of World War II -- a much more devastating conflict, Shapiro noted.

"This is not a 'Kumbaya' world," he said, referencing the popular song with its themes of unity and compassion. "It is hard work ... and sometimes I have to scrape for everything I can get. Still, at the end of that negotiation, you want to be in a place where when the next time comes, that person across the table will respect what you are asking for."

The Art of Listening

Ron Shapiro never planned on going into the sports world. After earning a law degree at Harvard, he returned home to Baltimore to practice law and work in government. He served as Maryland State Securities Commissioner from 1972 to 1974 and founded a law firm, which is now known as Shapiro Sher Guinot & Sandler.

Then he got a call from Orioles third baseman Brooks Robinson. Robinson was near bankruptcy as a result of bad business choices and needed someone to negotiate what would be his last player contract with the team. "I went in there with every detail and every argument," Shapiro recalled. The man across the table was longtime Orioles general manager Hank Peters, who did not say a word while Shapiro spoke. "I finished and I said, 'Hank, you see, this is why Brooks deserves his $100,000. What do you think?' And Hank looks at me and says, 'Ron, I will get back to you.' He had listened, said nothing, and in the end, he did not give me a thing.

"I realized that this was a man who had negotiated 500 contracts by that point, and he knew that the most important thing was to listen, not talk like I did, endlessly," Ron Shapiro noted. "That is negotiation at its best."

Ron Shapiro went on to found Shapiro, Robinson & Associates, a sports management firm. He became one of the first big sports agents of the free agent era, with a client roster that has included the Baltimore Orioles' Cal Ripken, Jr. and Jim Palmer, Kirby Puckett and Joe Mauer. Puckett and Mauer famously took less money to continue playing for the Twins in Minnesota -- rather than move to a big market like New York or Los Angeles -- because they loved playing there and were a vital part of the community.

"Cal Ripken, Jr. was like that, too. He wanted to stay in Baltimore, and going in to negotiate when the other side knows that makes it difficult. But you realize that part of a negotiation is about what you want to achieve besides money," Ron Shapiro said. "I remember sitting with Joe Mauer and his parents in a soda fountain as we were negotiating his contract, which was $184 million in the end. His parents were just so happy that he got what he wanted -- to make all that money and still be home. There are some agents who only care about money and what they can make off their clients. But to represent people with values, that is the real winning negotiation."

A 'No-win' Situation

When Mark Shapiro became general manager of the Indians in 2001, he immediately realized that he was facing a potential no-win situation. Shapiro, who graduated from Princeton in 1989, started working for the Indians in 1993 as director of player development. He took over as general manager at a time when the team had done well for several years, both on the field and on the business side, including selling out its stadium for more than 400 straight games. But Shapiro now had to contend with an aging roster and a fan base whose attentions were about to be divided as the Cleveland Browns football team prepared to return to town.

The best player the Indians had at the time was pitcher Bartolo Colon. Mark Shapiro realized that the only way to restock the team was to trade Colon for fresh prospects. Fans were livid, since they had never heard of the three players the team picked up in return, who were then in the middle minor leagues. (The trio -- Cliff Lee, Grady Sizemore and Brandon Phillips -- later went on to become all-stars.)

"It was a lonely moment, a tough moment, so I had to tell everyone in the organization and in our constituency that this is what had to be done -- which is a negotiation in itself," the younger Shapiro said. He held meetings with in-house staff, players, owners and scouts. "When you take the time to tell everyone why you did something, they develop a trust and a loyalty, which is invaluable."

It is those qualities that make Ron Shapiro proudest when he has the chance to watch his son at work. The elder Shapiro recalled visiting Progressive Field in Cleveland before a game and being called over by a maintenance worker.

"'Are you Mark's father?' he asked me. 'Your son is the best. He always says hello to me and asks my opinion of things. He genuinely cares about me,'" Ron Shapiro noted. "That is what I would tell everyone: Be kind to the man who drives your car or the woman who does your laundry. All of life is that kind of negotiation, where respecting everyone and knowing what they want will get you what you want, too, in the end."

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This story was originally published by?Knowledge@Wharton.

Source: http://www.businessinsider.com/tips-on-negotiation-2013-4

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