Cultural Considerations in Negotiations

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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How you handle a negotiation is, in part, a result of your cultural background. In some cultures, every bit of a contract is up for negotiation, while in others even a little negotiation can be taken as insult. It's crucial for small business owners to have an idea of the cultural factors affecting a negotiation going in, whether or not you're doing business internationally. If you're based in New York City, for instance, you can easily work with customers and vendors from a dozen different cultural backgrounds who have brought their ideas of how a negotiation should be handled along as they've started businesses just down the road from your own.

The Learning Curve

Barbara Schwark owns Clear Intentions, an international people development firm. She was born and raised in Germany, operates her business in the U.S. and has done business in many different companies.

In Germany, not much is negotiated. People feel uncomfortable with it. You will know what you get ahead of time so that you can decide...In the U.S, many things are negotiable. In Israel, everything is negotiable.

When you're dealing with clients with varying cultural background, as Schwark routinely does, it is crucial to get an idea of the culture you're dealing with before you walk into a negotiation. While it is not always possible to get an in-depth understanding of the individual you're dealing with before you actually meet him or her, you can often get some sense of the culture controlling the business as a whole. Taking culture into consideration is just another necessary step to planning for a negotiation. Schwark suggests:

It is important to get to know the other culture. If it is another country it is good to do some research and maybe even practice. Germans are direct, Israelis are even more direct. Germans view Americans as superficial and American view Germans as controlling.

While these considerations may seem like simple stereotypes, they can significantly affect how you handle a negotiation.

Finding a Cultural Baseline

The information necessary to conduct a negotiation can be different for each negotiation. However, taking the steps to learn more about how those businesses you work with on a regular basis operate can give you a baseline to start from, especially with companies from similar cultural backgrounds. Rochelle Kopp is the managing principal of Japan Intercultural consulting and advises her clients on conducting negotiations across cultures. Kopp suggests that the first step is to learn as much about the culture you're dealing with as possible. If necessary, she also suggests bringing in help that specializes in cross-culture negotiations.

If possible, bring in a cultural expert for a consultation — someone who has in-depth knowledge of the culture you will be working with. Such an expert can be an invaluable resource. If that’s not possible or practical, I recommend the book How to Negotiate Anything with Anyone Anywhere in the World by Frank Acuff, as a great general reference on cross-cultural negotiation.

In general, taking a more careful approach to negotiation can be important when you're dealing with a cultural background even a little different. Kopp says:

One needs to be prepared for the fact that what seems "normal" for you will not necessarily be "normal" for the person from another culture. And negotiating gambits that work in your own culture could fall flat when working cross-culturally.

She also points out that you may be negotiating with someone who is not entirely fluent in English and suggests speaking carefully and avoiding idioms.

It can take time to become an effective negotiator in just one culture, so don't be surprised if it takes time to learn how to effectively create a win-win situation with someone of a very different cultural background. But learning to negotiate across cultural barriers can be done, if you're prepared to dedicate yourself.

Kopp's own experiences have helped her cultivate her knowledge of different countries and how to negotiate with businesses based abroad:

Very early in my career, when I was first learning how to work with Japanese, there was a delay in working out the details or something I was setting up with a Japanese organization. I responded in a way that had worked well for me in the U.S., by getting all huffy and puffy and loud. I soon realized that that approach was not getting me anywhere with the Japanese, and after I toned things down we were able to work things out and get the project details settled. Looking back on it, I cringe at how bossy I was, but I was just being the 'squeaky wheel that gets the grease' which is an effective strategy in the U.S. I now know that in Japan, the squeaky wheel gets ignored, and a more understated approach works better.

Take Advantage of Your Own Cultural Experience

It's important to be sensitive to a vendor or a customer's cultural concerns when it comes to negotiation — but you may be able to use your own experiences to your advantage. Schwarck recently visited Germany and put her American-style negotiating skills to work.

This summer, when I went back to Germany to visit my family, I decided to try negotiating in a local shoe store. The assumption in German is that it is impossible to negotiate in a store. Well, I bought three pairs of shoes and only one of them was one sale. I asked the person to give us an additional 10 percent off the shoes. Since I was not attached to her answer (a key to being successful) she said "yes." We saved about $30.

Your own cultural background will require the negotiators on the other side of the table to come to an understanding on how to best work with you, as well. Every part of negotiation requires communication, so if you aren't sure of the cultural implication of any part of the negotiation, it is not unreasonable to ask questions and learn how to best work with the particular person you're working with.