Many people don’t like to negotiate. Admittedly, negotiations can be emotionally draining, time consuming and sometimes even confrontational. Yet the process of negotiation offers you two wonderful opportunities!
The powerful but somewhat banal opportunity: to ask for what you want. (Once you’ve learned to ask for it, it’s surprising how much of the time the answer is “sure.”)
The equally powerful and more satisfying opportunity: to ask the other party what they want … and then take the reasonable next step to ask for something in return.
Yet this may not be sufficient reason for one to actually enjoy negotiating. Many view the process as a necessary evil, a tiring exercise in confrontation, compromise and eventual uncertainty about the quality of the outcome. My goal is to help folks reimagine negotiation as a process of value creation and distribution that leaves parties better off having negotiated — and even happy to go another round. Negotiation is an opportunity and art, and it’s teachable.
Most two-party negotiations result in a mutual decision to either walk away from the table or enter into a negotiated agreement; the significant thing here is that, either way, it’s typically a shared decision. We both decide that we are better off working with our negotiating counterpart or pursuing alternatives — even if we walk away, we are agreeing that we each have better opportunities elsewhere. It is important to note that multiparty negotiations are structurally quite different and are more likely to end in acrimony if parties walk away. Two-party negotiations are less likely to end in a unilateral termination in which only one party wishes to continue and the other storms off. So enjoy yourself!
As you’re trying to enjoy yourself, you may wonder if the negotiation underway will be successful. If we do end up making a deal, how do we judge its quality? Even if there isn’t a deal, did we do the right thing? How do we gauge whether we have made a good call, either way? To reach that judgment, I offer four pillars that can serve to help you think through the quality of an agreement.
The first pillar and most obvious element to consider is the contract itself. Am I satisfied with the terms and conditions of the agreement? This measure can and should be used to inform your decision while you’re still at the table. If you reach your counterpart’s last and final offer and your alternatives are better, the decision to walk to those alternatives is a good one. There should be no regrets in having walked away from this negotiation.
On the other hand, if both parties decide to formalize an agreement, each should be materially better off than with the respective alternatives. While we often second guess whether we might have done better or worry that we have left “money on the table,” we simply need to confirm that we are better off for having made a deal.
This brings us to the second pillar: Process. Having assessed the outcome — the destination — how was the journey?
Did you choose an appropriate process for the issues being addressed? Most negotiations call for a blend of cooperation and competition. Were you appropriately resolute and unyielding given a highly competitive and confrontational context or counterpart? Alternatively, did you pursue a creative problem-solving approach in working through a more complex and long-term deal? Was it an exhaustive enough process that you feel comfortable you looked at all alternatives?
Was there an appropriate balance between transparency and withholding compromising information? Was the level of honesty, respect and trust satisfactory or even positive? Did you feel heard and that your arguments were well addressed? Was the experience one that you would be willing to go through again?
The more satisfied you are with the answers to these questions, the less likely you are to be concerned about leaving money on the table. That worry often comes from uncertainty arising from the process. Gratifying processes lead to more gratifying contractual outcomes! And better outcomes leave us happier about the process. They are mutually reinforcing — and they set the stage for future negotiations.
Clearly, better processes lead to better relationships. Some negotiations are convivial and creative; others are confrontational and hard-fought. Either process can result in a strong relationship of trust and respect, depending on the integrity of the negotiators. I believe that a good relationship is one in which both parties leave with mutual respect, reputations intact and a willingness to engage in future negotiations.
It is also important to consider relationships beyond the two parties at the table. How will the outcome and process of this negotiation affect you and your counterpart’s relationships with others? Will the outcome and process compromise or improve those relationships? Will they add value or destroy it? Will those participants included in the agreement but not at the negotiating table be counted on to deliver on the agreement? Think broadly here.
The final and maybe most critical pillar of a good agreement is sustainability. Is it a deal that’s built to last — at least through the duration of the contract, if not beyond? Is the contract executable and sufficiently flexible to accommodate surprises? Was the process sufficiently satisfying to allow for working together on this and future agreements?
In the United States we use contracts and lawyers. In many other cultures we rely on a handshake or one’s word. In both circumstances — in all transactional conversations with an agreed upon resolution — it is the outcomes, the processes and the relationships that make an agreement truly sustainable and successful.