Difference between revisions of "Template:Negotiating with a Russian"

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Business Negotiations Between Americans and Russians

Louneva, Tanya, "Business Negotiations Between Americans and Russians" (2010). Wharton Research Scholars. 57. https://repository.upenn.edu/cgi/viewcontent.cgi?article=1059&context=wharton_research_scholars

Both Americans and Russians value:

1. Negotiation goals
2. time sensitivity
3. agreement building,
4. agreement form,
5. communications and
6. personal styles.

There are some differences between the negotiating styles of Russians and Americans. For instance, Russians may rely more on interpersonal relationships and indirect communications. Russians are emotionally-driven in negotiations.

Russia has a low-trust environment, because it is a high context culture. This could be due to a weak regulatory environment, historical constraints, and rising disposable income levels. Therefore, the key in negotiations in Russia is to built trust. After this is done, a competitive advantage is gained since it will take a long time to build a level of trust with another partner.

Americans have a high-trust environment, because it is a low-context culture, as there is a strong regulatory framework and a history of law enforcement. Therefore, building trust is easier, and it is not viewed as a competitive advantage; instead, counterparties often rely more on the signed contracts than on mutual trust.

In Russia, the establishment of trust is exhibited through five behaviors:

(1) putting the relationship first,

(2) having a low sensitivity to time so that trust can be patiently established,

(3) forming relationships “outside the boardroom”,

(4) focusing on top-down decision making while disregarding the details, and

(5) employing high emotions.^[1]

Focus on building a relationship first

As a general rule of thumb, investing extra time developing a relationship-based approach will pay dividends when working with Russians. This is true even if you both come from task-based cultures, such as the United States and Germany. Once an affective relationship is established, the forgiveness for any cultural missteps you make comes a lot easier. So when you work internationally, no matter who you are working with, investing more time in building affective trust is a good idea. But knowing exactly how to build affective trust may not always be so obvious.

One productive way to start putting trust deposits in the bank is by building on common interests.

An Austrian used this simple way of connecting with people to great success during two decades of work in Russia.

“When I retired and left Moscow. I was replaced by a younger Austrian colleague, who had an extraordinary track record in Austria but knew nothing about how people outside of Austria work. His task-based approach was effective for Austria, but not at all suited for Russia.”

The younger man worked diligently for months to close an attractive deal with a potential client. He invested countless hours in making his presentation outstanding, his brochures polished, and his offer generous and transparent. Yet the client dragged his feet, and, six months into the process, his interest seemed to be dwindling. At this point, the younger man called the elder Austrian up and asked for advice, given the latter’s success during all those years in Russia.

The Austiran came to Moscow and met directly with the client:

The first thing I noticed when I saw him was that he was about my age—we both have white hair. So I spoke of my family, and we spent the first half hour talking about our grandchildren. Then I noticed he had a model of a fighter plane on his desk. I also flew planes in the military, and I saw this as an incredible opportunity. We spent the next hour talking about the differences between various military planes.

At this point, the Russian client signaled that he had to leave. But he invited me to go with him to the ballet that evening. Now, in truth, I dislike the ballet. But I’m not stupid. When an opportunity this good comes along, I jump on it. The evening went beautifully and ended in a drink with the client and his wife.

At 10:00 a.m. the next day, the elder Austrian met again with the client, who said, “I’ve looked through your proposal, I understand your situation, and I agree with your terms. I have to get someone else to sign the contract, but if you would like to take the plane back to Austria today I will fax you the signed contract this afternoon.” When the elder Austrian arrived at his office in Austria the next Monday morning, the €2 million down payment was already in his account. He was able to accomplish more in twenty-four hours with a relationship-based approach than his task-based colleague was able to accomplish in six months.

You might protest that this Austrian was remarkably lucky. Just by chance, he happened to have several things in common with his Russian client, from grandchildren to fighter planes, and in fact, The older Austrian did end his account by exclaiming, “It was my white hair that saved me!” But he found these similarities because he was looking for them.

If you are working with someone from a relationship-based culture and opportunities for a personal connection don’t jump out at you, it is worth the investment to look a little harder.^[2]

Russian Business Meeting Characteristics

Russian Business Meeting Characteristics

There are a few ground rules you should be aware of about a Russian business meeting:

1. Timeliness: While Russians are not as prompt as Germans, Russians are rather prompt. So being 5 minutes late is ok, anything later needs an excuse. Preferably by calling ahead. For example, "We are stuck in traffic". Being 30-40 or more minutes late without a very good reason, such as the Italians or Spaniards tend to do, is considered very bad manners.

Note: If during the meeting you agree to set due dates or deadlines, be sure to accomplish them by the agreed upon date. Everything during the meeting will be set down in writing in the Minutes of Meeting and not meeting due dates is a major blow to one's credibility and reliability in Russia.

2. Inclusiveness

It is considered very rude to turn your back on someone while continuing your conversation with another person in the group...one to remember for non-Russians who have no such issues. This additionally means, turning to your co-workers, and beginning a conversation in a separate language not understood by everyone. This is also considered very rude. If the need arises to have such a discussion, request some time alone, a break from the meeting and maybe a separate room to do so in.

3. Emotions:

While getting into an emotionally "hot" discussion can happen, never over do it. Never get personal and never ever ever throw a temper tantrum and walk out. The author had an Engineering - Procurement - Construction (EPC) project manager who would do this. He had zero respect from the other side who had to beg him to return. This is viewed as unmanly and childish.

4. Shaking Hands:

Shake hands with everyone and anyone who enters the room after the start and before you hand out or receive business cards individually. When leaving also shake everyone's hand. Walking by some person who stops to talk to someone in your party? Shake his hand. And make it a firm hand shake. Additionally, women shake hands also, so not to shake the hand of a woman is a grave insult.

5. If a woman enters the room to join the meeting?

Get up and show respect, as if it was a senior person, and since 42% of Russian executives are women (twice that of the "progressive" West) it just may be. Additionally, if there are no more seats, surrender yours to the woman.

6. Bargain Hard

Russian price negotiations used to be described as something between a mugging and a bar fight. Its gotten a bit more civilized but....The author recalls remembering fighting a supplier over each 0.01$ of a price on forgings. The 2 groupsfinally agreed to limit it to just full round dollars or they would never get it done. This resulted in a 15% savings from already low prices which saved the author's company several million dollars.

7. Never take an initial response of "NO IT CANT BE DONE" as the final answer.

If the junior or secondary management says no, go straight to the senior leadership. If they say yes it will be yes. Equally, since Russian culture is conservative, use your persuasion skills to sell the idea, either by its merits or by its profitability.

8. Figure out who the trusted lieutenant of the general director is.

Russian chain of commands are linier except for that special lieutenant who has the ear of the boss.

9. Meetings must come to some decisions...

....why else are you in a meeting (except if its just an introductory meeting). People around the equator like to have meetings for the sake of meetings and no decisions are reached, this is very infuriating to Russians. Most meetings usually have a set agenda and the agenda is set to come to a decision.

10. All meetings will end in a Minutes of the Meeting (MoM) with all parties involved signing. Sometimes getting the MoM done takes longer than the whole meeting and all parties most definitely must sign it, so be careful what actually goes in to it, as this is a legal document.