I recently read a short interview of Stuart Diamond, a professor of Negotiations at the Wharton School at the University of Pennsylvania who has also authored “Getting More: How to Negotiate to Achieve your Goals in the Real World” (Crown Business).
While he spoke about seeking solutions that responded to both parties’ needs, avoiding aggressive tactics, and making sure you truly understand the needs of the other party in the negotiation – I was most enthused to hear him dive a little deeper on what kind of understanding he felt was most important. In fact, he suggested that the best way to start a negotiation is to ‘address emotions first.’ That is particularly good advice in the context of negotiations in a family business, where emotions are often raw and intense. Diamond underscores something behavioral psychologists have studied for years, that is – the more important a given negotiation is to a person, the more irrational that person may act around the process of making this decision.
In our work with family businesses, we often find ourselves in situations where the most intelligent and rational business people suddenly appear to be irrational, petulant children when trying to negotiate an emotionally loaded issue. While a high emotional load on a negotiation can always be difficult, when the response of one of the key players feels very ‘out of character,’ this tends to add a level of confusion and fear in the room, that can often make the negotiation process even less effective.
Family business legacies frequently offer life long benefits beyond the business.
At Christmas time each year I am reminded of the many learning experiences my brother and I had working in our small family business. My father had a fruit and vegetable stand in Milwaukee, and during the Christmas season he sold Christmas trees and wreaths to support his seasonal business. My brother and I worked the Christmas tree lot with him every year. Doing this we learned some valuable negotiation and sales skills. We had all sizes and shapes of Christmas trees, and none of them were marked with prices. Our father gave us general pricing guidelines depending on the size and fullness of each tree. The objective was never to have a prospect leave the lot without a tree. However, when a customer came on the lot, it was up to us to get the best price for each tree sold. The sale process included getting a general idea of what size tree the customer was looking for and above all how motivated he or she was to purchase. Once we got the preliminary information on tree size, we would walk the prospect around the lot and occasionally pick up a possible sale tree, shake the snow off the branches, and make our best case for a sale. Larger trees were a problem because the snow removal process usually meant snow falling down on our heads and down our backs. After our first year on the lot we lost very few customers, and we seldom sold a tree below price target guidelines.
Our greatest opportunity for both learning and profit came on Christmas Eve however. Our pay for working the Christmas tree lot each year was for my brother and me to take title to all the trees left unsold on Christmas Eve. On Christmas day the trees would be worthless, and our customers knew it. So the bargaining was difficult and became more intense as we approached 6 PM when we closed the lot. On occasion we would have to let a reluctant prospect know that we preferred to use the branches as ground cover than sell the tree for an unfair price. We seldom had more than a few trees left, and we always had enough income to more than compensate us for our work those few weeks prior to Christmas. We didn’t know it at the time, but we were learning entrepreneurship in an OJT (on the job training) environment.
Looking back on our work at my father’s Christmas tree lot, I am reminded of how our father used the experience to teach my brother and I some valuable life lessons. In addition to establishing a strong work ethic by working long hours in the cold and snow with an unknown future payoff, we learned negotiation and financial skills that helped us in our future professions in the legal and financial communities. While our family business may not have made it to the second generation, the values and experiences learned during those years are a legacy my brother and I have treasured throughout our lives.