by Pamela Meyer
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Your preparation should start with a checklist that includes:
Information You Need That You Don’t Have. Draft questions that allow you to ask for the missing data in a way that’s appropriate to the bargaining process. Try to anticipate what will be covered throughout the negotiation and decide when you’ll bring up each question.
Information You Will Be Expected to Share. Imagine what you would want to know if you were sitting on the other side of the table, and be prepared to provide it in the same detail you might request of others. Prepare for the unexpected as well. Make sure to have all your data printed out or backed up well ahead of time, so that a mistake doesn’t make you look as if you’re trying to hide something when in fact you’re just a victim of poor planning or a technological glitch.
For example, let’s say you’re merging a Web site with a larger one in the market. At the last minute, your buyer requests the traffic data directly from the server logs that would back up your contention that you’re the second biggest site in your market. You readily agree…and then your servers crash, your buyer gets skittish, and the deal falls through. Nothing raises red flags faster than promising information and then being unable to procure it. Don’t let this happen.
An Outline of How You Believe Your Bargaining Partner Perceives You. This should include specific beneficial outcomes you think he’ll gain from a closed deal.
Your Real Bottom Line. What’s a guaranteed deal breaker? What’s the likely outcome should you decide to walk?
The Issues That Must Be Discussed. Tedious, but a necessary discipline; list them ahead of time in detail.
The Concessions You Are Willing to Make. Talk possible concessions through ahead of time with all members of the negotiating team so the group presents a unified front as the difficult work of parsing through concessions arises.
Once your checklist is complete, mentally rehearse the nonverbal negotiation. Imagine you’re meeting your partner, sitting down, opening the conversation, asking questions, expressing disagreement. Athletes call this process “visualization” and use it to prepare for upcoming games. You can do the same thing so that you can be relaxed, confident, and open during the meetings.
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WHAT NEGOTIATORS LIE ABOUT
Their bottom line. Experienced negotiators know that a final offer isn’t always a final offer. There’s often some degree of bargaining. Most people enter into a negotiation knowing that a buyer or seller’s reservation price, or “walk-away” point, can be flexible, and there are few legal consequences (if any) to bluffing about these.
Their interests. Twenty-eight percent of negotiators lie about common interests,29 saying things like “We are also in no hurry to close.” They may also misrepresent the importance they place on certain issues in order to gain concessions. “Oh, I really wanted the blue car, not the red one. Could you bring the price down just a little more?” There are rarely legal ramifications when someone misrepresents their interests, though the ethics are questionable.
Their intentions. Negotiators often gain concessions by lying about their intentions. The CEO of an acquiring company may reassure the head of a family-run business that if she sells, her employees’ jobs will be safe—and then eliminate the entire staff once the sale goes through.
Elastic information. Liars often find it easy to justify distorting “elastic information”—data that can’t be verified with certainty30—such as renovation estimates or projected growth rates.
The material facts. Both parties in the negotiation have a legal obligation to be truthful. Misrepresenting verifiable facts is generally considered to be fraud.31 And if you know someone is mistaken about a material fact relating to the transaction, you must correct him.
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3. Take Control of the Setting, the Ground Rules, and the Conversation
Taking Control of the Setting
Demand a Face-to-Face Meeting. Yes, your travel expenses might go up if you want to protect yourself against deception. It’s worth it. Face-to-face meetings should be your priority whenever possible. One of the reasons Caitlyn lost her deal was that each of the key issues was negotiated by phone, e-mail, and lawyers.
Set the Stage. If you have control over the meeting environment, make it warm and friendly. Some might suggest creating an environment that is purposely intimidating, but it’s not necessary. A relaxed meeting environment encourages your negotiation partner to let down his guard. He will be more inclined to reveal what you need to know.
Make sure that the setting provides a clear view of his face and body. A jittery foot could suggest a case of nerves, but if he twitches just as you start asking questions about company debt, you’ll realize you may need to probe the issue in more depth.
Bring a Witness. Once you’ve developed a rapport with your negotiating partner, consider bringing in a third party to witness the negotiation. In fact, you could encourage the other party to do the same, thus transmitting your intention to tell the truth.32 When you signal that you’re intending to be truthful, others will be far less motivated to deceive you.
Taking Control of the Ground Rules
Clearly Articulate the Issues. As the negotiation begins, insist that both parties outline the topics to be discussed. This was another of Caitlyn’s mistakes. An all-cash deal was critically important to her, but she allowed her potential buyer to bypass any real discussion about it. Insist that once the issues have been agreed on, neither party can introduce new ones. This will help eliminate last-minute curve balls. Finally, both sides should agree on an estimated timeline for the negotiations.
Draft a Confidentiality Agreement. Don’t just ask for a signature. Discuss the details of the agreement and confirm that all parties understand who will, and will not, be privy to information that comes up during the negotiation.
Taking Control of the Conversation
Though high stakes often compel people to lie, it is precisely the heightened importance of the negotiation that can make it easier for you to catch a liar. High stakes elicit high emotions; the more intensely felt the emotion, the more likely it is that it will leak out through verbal and nonverbal behavior.33 Use the methods you’ve learned in this book to guide the conversation and get the information you need. Midway through each face-to-face meeting you have with your negotiating partner, ask yourself, “Whose conversation is this? Are we on track?”
If you suspect you’re not getting entirely truthful answers to your questions, request that the details be sent to you in writing. Remember, deceivers tend to fabricate less in e-mails than they do in person or on the phone.
4. Lie-Proof the Close
Frame the Outcome as a Gain. According to management consultant Jolyon Hallows, “You may recall the plea sure of leaving a meeting or reading a report or applauding a speaker with a surge of elation at having spent your time well. It was not an accident. The speaker or author, consciously or otherwise, framed an outcome, got you to accept it, and delivered. To the extent that you frame your outcomes properly, you and your people will consistently become more effective.”
You can dramatically influence the outcome of your negotiation by framing the outcome. Let’s say that a buyer initially offers 20 percent less than a seller’s asking price, but ultimately the two parties agree on a price 10 percent less than the seller’s asking price. The buyer can look at the result in two ways: he can decide that he paid 10 percent more than he wanted to, or that he got a 10-percent-off deal. How positively or negatively he frames the outcome depends on whether his reference point is his original offer or the initial asking price. Framing outcomes in terms of losses causes people to bargain harder and operate less ethically. Frame outcomes as gains wherever possible.
Make It Clear That There Is a Relationship at Stake. If the negotiation is a one-shot deal—as is often the case in, for example, real-estate transactions—there are few long-term risks to deceiving the other side. But if you make it clear during your negotia
tion that you are not just closing a deal, you are beginning a relationship, you will make it harder for your negotiating partner to take the risk of lying to you.
Use Your Empathy. In addition to considering which negotiation-specific lies someone might tell, keep in mind the nine reasons people lie (see page 35). Use your empathy to imagine what might be at stake for your negotiating partner, and what steps he might take if he’s unable to get what he wants. Can you anticipate which issues he might feel compelled to lie about? Perhaps if Caitlyn had been less focused on what she wanted to extract from the deal—and remembered to investigate the acquiring company’s cash position, and to consider its priorities—she would have been prepared to work out a compromise.
Make It Public. Publicly traded companies should let both negotiating parties know ahead of time that the transcripts of the negotiation will be available. The knowledge that others may be reviewing the deal’s details, eager to expose anything that isn’t 100 percent truthful, will go a long way toward keeping everyone honest.
Ask the Final Most Important Question. When you think you’ve gotten all the available information from your negotiating partner, cover your bases with one final but extremely potent question: “Is there anything important you haven’t told me?”
You can then insist on including a contingency provision in your contract—one that outlines the consequences and remedies should new material information emerge later.34
Review. Remember that negotiators lie about their bottom line, their common interests, their intended plan of action, and most egregiously, material facts. Review each of these areas carefully with your partner. Make sure that his answers are consistent with what he told you at the beginning of your conversation.
Confirm. Read your notes out loud for accuracy, and have the opposing party confirm them by e-mail. People will be much less likely to lie when they realize they have to commit to their lie in writing. With written documentation, there’s no escape—no way an accused liar can say you misunderstood, or he expressed himself poorly, or you’re flat-out misremembering what he told you.35
A SPECIAL NEGOTIATION: THE JOB APPLICATION
One common high-stakes negotiation that elicits some of the highest rates of deception is the job application process. A study of 2.6 million résumés by the background-check company Avert revealed that 44 percent contained exaggerations or fabrications.36 Another study found that 83 percent of undergraduates had lied to obtain a job. They frequently saw nothing wrong with it because they believed that employers expected candidates to exaggerate their qualifications.37 Nearly a quarter of résumés submitted for corporate president, vice president, and board director positions contain falsehoods.38
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BIG-LEAGUE LIES
Some of the biggest whoppers come from those with the most to lose:
David Edmondson, CEO of RadioShack, stepped down after it was revealed that on his résumé he had inaccurately claimed he had received degrees in theology and psychology.
George O’Leary, former Notre Dame football coach, claimed to have a master’s degree in education from NYU’s Stony Brook University—which does not exist—and to have earned three letters while playing college football at the University of New Hampshire. Though O’Leary was a student at NYU, he never earned a degree, and UNH states that he never played in a game.
Ronald Zarrella, CEO of Bausch & Lomb, did not actually have the MBA he claimed to have received from NYU’s Stern School of Business.
Kenneth Lonchar, the CFO of Veritas Software, said he earned an accounting degree from Arizona State University and an MBA from Stanford, but all he actually had was an undergraduate degree from Idaho State University.
Jeff Papows, CEO of Lotus Development Corporation, resigned after The Wall Street Journal exposed several inaccuracies on his résumé: he had been a lieutenant air traffic controller in the Marines, not a captain and jet fighter pi lot; he had earned a master’s from Pepperdine University, not a Ph.D.; and he was not an orphan.
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Why Job Applicants Lie
Why are people so likely to lie on a résumé or during a job interview?
One obvious answer is that when the economy sinks and jobs are hard to come by, people feel more pressure to do what ever it takes to land a job. Another reason could be entirely cultural. Many believe that companies are inherently untrustworthy. If someone approaches a negotiation or a job interview believing that the opposite side will have no compunction about taking advantage of him, he has little reason to feel guilty about lying.
Others harbor a justifiable fear of ageism. Says Teresa Ghilarducci, director of economic policy analysis at the New School for Social Research, “Unemployed workers between the ages of fifty-five and sixty-four have the toughest time finding new jobs; thirty percent of older men are out of work for almost thirty weeks compared to twenty-five-to thirty-four-year-olds who get work in ten weeks. One reason is that health insurance can cost an employer twice as much for a worker over age forty.”39 With odds like that, one can see how tempting it would be for an older worker to change some dates so he’ll look younger. In addition to ageism, one pervasive form of sexism in our culture also causes many women, in particular, to fear being penalized for taking time off to raise children.
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COMMON RÉSUMÉ FIBS
According to Forbes.com, the nine most common ways people fib on their résumés is by:
Lying about degrees they’ve earned
Falsifying dates of employment
Exaggerating numbers and metrics
Increasing previous salary
Inflating titles
Lying about technical abilities
Claiming language fluency
Providing a fake address
Padding grade point averages40
In addition, the security firm Kroll found that people lie about their credit history and their driving records.41
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It’s possible that many high-powered people who get caught lying on their CVs started out simply trying to get their foot in the door, and were then too ashamed to rectify the error. Marilee Jones, admissions dean for the Massachusetts Institute of Technology (MIT), fudged her credentials. She claimed degrees in biology from Rensselaer Polytechnic Institute and the Albany Medical College and also lied about having a doctorate. As Jones explained in a statement, “I misrepresented my academic degrees when I first applied to MIT twenty-eight years ago and did not have the courage to correct my résumé when I applied for my current job or at any time since.”42 George O’Leary’s apology expressed a similar theme: “Many years ago, as a young married father, I sought to pursue my dream as a football coach. In seeking employment, I prepared a résumé that contained inaccuracies regarding my completion of course work for a master’s degree and also my level of participation in football at my alma mater. These misstatements were never stricken from my résumé or biographical sketch in later years.”43
Small Lies Lead to Big Problems
In a 2002 article for Slate, Daniel Gross pointed out, “There’s no evidence that exaggerating academic prowess is a contra-indicator for competence…What’s more, some of the most egregious recent episodes of financial chicanery were perpetrated by people who told the truth about their education. Jeffrey Skilling surely never lied about having attended Harvard Business School.” Still, padding a résumé is more than a slap-on-the-wrist offense. As Scott Phillips said after downgrading Veritas following the Lonchar disclosure: “Our first concern is that the CFO’s falsification of his educational credentials could suggest the financials are suspect.”44 Veritas’s stock lost nearly $1.14 billion on the news of Lonchar’s resignation. Falsehoods on résumés can cause big trouble later if they’re not detected during the interview process.
So it’s imperative that anyone responsible for hiring employees—from managers to HR personnel—develop liespotting skills. Researchers have found that deception-detection interviewing techniques, when
combined with background checks, revealed 32 percent more cases of past job dismissals, 60 percent more criminal convictions, and a whopping 82 percent more cases of alcohol abuse during work hours.45 These behavior problems are not trivial. They each have the potential to inflict major damage on the effective operation of your business.
The same can be said, of course, about lies at any level of your business, from the first negotiation to the exit interview. If only there were a way to purge deception from the fabric of an organization, and even create a shield against it…Wait, there is. It’s called a deception audit, and it’s the subject of the next chapter.
EIGHT
THE DECEPTION AUDIT
If one activity, successfully accomplished, could be proven to make all other tasks significantly easier, then it would be worth the effort to focus on that one. Building trust in relationships with employees is that one task.
—AMY LYMAN, DIRECTOR, CORPORATE RESEARCH, GREAT PLACE TO WORK INSTITUTE, INC.1
For Eric Rayman, being told untruths goes with the job: he’s a lawyer. Years ago, though, he was a victim of deceit in a way he never expected, and the guilty party was not one of his clients or adversaries.
It happened during the pre-computer days. The secretaries in his law office filled out weekly timesheets, including overtime, and submitted them to Rayman in person, faxing them out of state for processing by a payroll service once they’d been approved. Eventually, Rayman noticed that the firm was paying huge amounts of overtime to one legal secretary. It emerged that she was changing the figures on her timesheet after it had been approved and before faxing it out of state to the administrators. “Wite-Out on a fax—the perfect method.” Instead of one or two hours of overtime a week, this woman was claiming ten or twelve. It was obvious enough once it had been spotted, and it should have been easy enough to stop. But there was a hitch.
The secretary was African-American, and when the lawyers in the office told her they wanted to meet to discuss her timesheets, she got very hostile and accused them of racism. “She was very likable, and she was very good at turning accusations back on us. It sort of…stunned us.” After all, no one likes being called a racist. Baffled, Rayman and his partner backed off until they had gained some clarity on the issue. Was it really worth fighting an employee over maybe thirty or fifty dollars a week, especially in the face of such an ugly accusation? Finally, they decided: “We clearly wanted to do the right thing. And the right thing was to fire her and prosecute.”