What Greece teaches us about the human factor in negotiations

Today’s decision-makers are supposed to embrace the virtues of big data, relentlessly pursue quantitative metrics, and then adhere to the optimal course of action that these powerful tools supposedly indicate. Yet if there is one thing that the Greek crisis has made clear, it is the importance of the human factor in negotiations. People and their personalities, and the way they perceive one another, can make small debts seem unserviceable or large debts disappear with a handshake.

In a world that feels increasingly unstable, many seek reassurance in the illusion of certainty that data provide. We want it in our journalism. We want it in our investment decisions. We even want gadgets that count our every step and heartbeat. We want to bring our wellbeing and our future fully under our control.

But the Greek financial crisis serves as a reminder that life is not governed by data alone. In the end, outcomes may – and often do – depend on the amorphous yet essential qualities of integrity, trustworthiness, and interpersonal “chemistry.”

The importance of such factors was no less clear in the negotiations over Iran’s nuclear program. Whereas partisan grandstanding and nationalist posturing in the Greek negotiations have eroded confidence in the entire European project, the negotiators on the Iran deal overcame an even deeper trust gap. With arguably more at stake, and despite the involvement of more players with overlapping and, at times, antagonistic agendas, entrusting the process to professional diplomats, rather than elected politicians, clearly paid off.

There is an important lesson here for Europe. People selected to lead countries or companies must have the technical competence – and the number-crunching support teams – needed to make good decisions. But that is never enough. Effective leaders must be able not only to represent a point of view, but also to work well with others to realize their vision. If deals – whether on bailout arrangements, nuclear programs, or corporate mergers – could be concluded on the basis of quantitative data alone, they would be. But they never are.

For Greece and its creditors now, the latest agreement is only the first step. The six months of finger pointing and brinkmanship that preceded the deal have created a mountain of mistrust among leaders and citizens alike.

When multiple ceasefire agreements fail in South Sudan and eastern Ukraine, or a humanitarian truce in Yemen collapses within hours, one or more of the parties is said to lack “credible commitment.” Similarly, when the Greek side proposes essentially the same deal that it just called a snap referendum to reject, or when the Eurogroup of eurozone finance ministers, following Germany’s lead, simply ignores the unsustainability of Greece’s debt, the ability to execute any deal must be in doubt.

What will make this deal work is quick ratification and credible follow-through in terms of day-to-day implementation. Both sides need incentives to stick with it and deterrents to defecting from it. Above all, conditioning further, essential debt relief for Greece on its execution of the deal should be used as a way to commit both sides.

A track record of failed implementation – of accepting bailouts without implementing the reforms needed to regain solvency – creates a climate in which deal making becomes ever more difficult. The risks are too high, especially when every development in the talks is spun for partisan advantage, to make leaders look smart, to label winners and losers, or to undermine progress by nit-picking the data.

It is to the credit of European leaders involved in the negotiations that they have been able to reach a deal in the face of enormous uncertainty. They have committed not just financial resources but also significant political capital at a make-or-break moment for Europe.

Given the lack of trust between the parties to the deal, the situation will remain extremely volatile for some time. Quantitative data will be necessary to monitor Greece’s progress on carrying out the agreed reforms, as well as to determine the extent of further debt relief. But neither Greece nor Europe will regain a sense of stability merely because the data add up. Their leaders’ personal qualities – their unshakable will and determination to make the deal stick – must add up, too.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Lucy P. Marcus, founder and CEO of Marcus Venture Consulting, Ltd., is Professor of Leadership and Governance at IE Business School and a non-executive board director of Atlantia SpA. Stefan Wolff is Professor of International Security at the University of Birmingham.

Image: People walk past a Greek national flag on main Constitution (Syntagma) square in Athens. REUTERS/Alkis Konstantinidis.