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Negotiation Equation #2: T = (C x R x I)/S



"Honesty is such a lonely word. Everyone is so untrue." –Billy Joel, Honesty


I remember speaking on the phone with the COO of a major multinational, talking about his next career move. I asked him why he doesn't just ask his boss for the next post he was seeking. (He didn't want his boss to know that he preferred to stay in Tokyo.) He replied, "Let's be honest, Andrew. Nobody's honest." Given that many young people are turning against capitalism and business, and given the expressed view that "nobody's honest," along with the counterpoint–that trust is the foundation of good communication and good business, where does that leave us? What roles do honesty and self-disclosure play in a successful negotiation?


Short answer: They play BIG roles. David Maister, in his excellent book The Trusted Advisor, introduced an equation that I have used and modified over the years. Why do I share it? Because every businessperson I know ranks "trust" and "trustworthiness" as attributes they desire in themselves and in those they work with (even Mr. "Nobody's Honest" COO wants it).


Maister's equation is: Trust = (C + R + I)/S, where C represents Credibility (based on reputation, competence, certifications, experience, etc.), R represents Reliability (how likely a person will do what they say they will do), I represents intimacy (how well and in how many different contexts the parties know each other), and S represents self-orientation. Using a scale from 0 -10, you can see that the higher the numbers in the numerator, and lower in the denominator, the higher the overall Trust.


A note on the formula: I replaced the plus signs with multiplication x's because if you or the person you're assessing has a zero for any of the three variables in the numerator, the overall Trust will be zero, no matter how high the score for the the other two variables. I've also modified the way of introducing "I," or intimacy, simply because the word carries connotations that may confuse my clients or students. I usually share what Maister means by intimacy by answering, "How comfortable are you with your counterpart?"


Also note the "S," self-orientation, and its close tie to our first equation "Curiosity > Ego." Ego and "self orientation" are closely correlated, so close as to almost be interchangeable. Those with high ego tend to be focused on themselves. So both Equations 1 and 2 suggest managing what for lack of a better word I'll call "selfishness." Yes, while you need to know and articulate your own needs, you want to frame the whole discussion with your counterparts' needs top of mind and mouth.


Almost nothing perplexes a conscientious negotiator more than how much self-disclosure and honesty to demonstrate. As with so many questions, the answer is, "It depends." Why? The dilemma of honesty is plain and simple: If you’re too open, you risk being taken advantage of; but if you're not open enough, you may appear sly, disingenuous, overly skeptical, or worse. And there's the equally simple dilemma of trust: If you believe everything they say, you can be taken advantage of. But show lack of trust and you can truly aggravate your counterpart. During a recent interview of Ye (formerly Kanye West), Ye told his interviewer, "I don't trust you." This nearly derailed the whole conversation as the interviewer wrestled with the fact he'd never been told such a thing before. In a negotiation, you need not use the exact words in order to consciously or unconsciously communicate, "I don't trust you." These are classic "simple" issues that are not so easily solved.


How much you choose to reveal to your counterpart at least partly depends on the scores you and would give each other on the Trust Equation. Especially the I variable, Intimacy. If you're long-time associates, who've done many successful (or even some not-so-successful) deals together, you will surely feel more comfortable letting your counterpart know your true objectives, constraints, other factors that affect your negotiation. The more projects, the more opportunities to increase (or decrease) the "I" variable as well. As we'll continue to explore, so much goes into preparing for and then performing in a negotiation.


Don't Negotiate with Frank

Whenever I hear, "To be honest," "To be frank," or "Frankly speaking," and many similar expressions, I immediately think, "Why are you suddenly being honest? What was the rest of your communication, a pack of lies?" Maybe not that bad, but you get the idea. There are certain phrases to use, and others to avoid. And despite so much pressure to "satisfice," that is, to get to an "acceptable" outcome, our aim is the often more challenging but ultimately more rewarding optimal solution.


Speaking of my "maybe not that bad" exaggeration about the "pack of lies" above: Have you noticed the curious fact that in business negotiations, most of us accept and almost expect people to exaggerate, bluster, bluff, or even at times to outright lie? It seems to be part of the game. Heck, in the Art of the Deal, Donald Trump's autobiographer/writer Tony Schwartz invented the phrase "exaggerated hyperbole" to explain what he later says was Trump's "lying all day."


We'll get more into these distinctions later in this series, but suffice it to say we can distinguish between exaggerations/bluster/"exaggerated hyperbole" (often used to lighten the mood) that many negotiators accept as part of the game; and on the other side, cheating. You never want to disclose provably false information, such as your credentials (see George Santos!), publicly available facts and figures, or anything of that sort. If you do, be ready to suffer major hits to your C (credibility) and R (reliability), thus lowering your overall trust. As Paul Simon sings in The Afterlife, "No one here likes a cheat."


Know these first two equations, (Curiosity > Ego and Trust = (Credibility x Reliability x Intimacy)/Self orientation and then keep them at top of mind. As you do, better outcomes are on their way. Meanwhile, you may be asking yourself, "This is all fine and good, but what about when any or all of those variables are lacking?" We'll look into that next time. As a preview hint, it starts with Energy. Meanwhile, I'm going to listen to some Billy Joel, maybe Scenes from an Italian Restaurant and the negotiations between Brenda and Eddie. Or maybe Paul Simon's The Afterlife. I like that one more.


Do you have any methods to build trust or to check whether you're expressing the right amount of it? Let us know here in the comments or write andrew@amt-group.com.


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