Nine Points to Help Reach Agreements
There are hundreds of books and articles on the “art” of negotiation. Many of them are helpful, but too many are filled with war stories whose instructions may be hard to apply to your specific issue.
Some people are natural negotiators. Through force of personality, an ability to read body language or intuition, these rare people are fun to know and watch. For the rest of us, training is necessary.
This is the first in a series of occasional articles on negotiation strategy and philosophy. As a predicate, the assumption is that you want something that the other side does not want to give you.
1. Have an exit strategy
It may sound strange that the top of the list is failure. The concept is critical. You simply cannot negotiate well unless you are willing to walk away, whether the object sought is an oriental rug or payment on a construction claim.
If you are not prepared to walk, you make concessions too early and too often. Worse, you will lose the respect of your opponent, an extremely important component of success.
2. Closing the books
This technique should be used cautiously. When the moment arises when you or the other side start to repeat arguments and it feels like you are going in circles, it may be time to test the other side’s resolve. Literally, you slowly, and not in anger, begin to collect your materials and to close your books. Such actions give your opponent an exit. The response is often something along the lines of, “Hey, let’s take a few minutes to cool off and then regroup.” Translation: The other side wants to settle.
If your opponent allows you to leave, see No. 1 above.
3. Partial settlements are important
Try to get agreement on facts, even trivial facts, such as, “So we can agree that this is the contract,” or “We agree the project started on time, Nov. 1; that the original completion date was June 1 and actual completion was Sept. 1.” These partial agreements help focus the negotiation on the more serious issue of money.
Write down all agreements and concessions even if the first meeting does not resolve all disputes. Have your opponent initial this list so that the second meeting (maybe with different people) does not start from scratch.
For internal use only, list in the broadest terms your goals for the meeting. For example, your objective may be to settle a change order, get a time extension or convince your opponent of your professionalism and experience. The list will keep you from being diverted by unimportant matters and helps center the negotiations.
List your specific goals on a separate sheet of paper. Each goal should be backed up by references to contract clauses, correspondence, daily reports, etc. In making these two goal lists, you will develop the secondary benefit of learning where your strengths and weaknesses lie.
5. The agenda
Detailed agendas can be off-putting. The other side may feel that you are dictating. Also, the overly detailed agenda tends to be the first victim of negotiations and will get ignored, leaving the meeting unstructured. My experience is that broad topic headings are best (see No. 4 above). The typed agenda should have space for notes between the headings and should be sent to the other side with enough time for them to make additions. Add-ons by your opponent help with his or her buy-in of the concepts.
6. The cast
The agenda or other outline for the meeting should cause both sides to disclose the cast of characters. Knowing your opponent’s cast can help you predict the direction the negotiations will take. Will the meeting be attended by field people and project managers, who are usually quite detailed in their knowledge and approach, or will the meeting concentrate on the big picture with the financial officer and other company executives in attendance? Generally, your top decision-maker should not attend the first meeting or even subsequent ones, until his or her involvement is called for to reach a final resolution.
7. The range
This issue is one of the hardest to face for the initial meeting. Certainly, your top executives, along with your attorney, should predetermine the dollar range for a settlement. I normally do not reveal that number to my entire negotiation team. If they knew, their tendency in negotiations might be to dive to the low end early and offer that “lowest acceptable settlement,” which then, of course, becomes a ceiling and your actual settlement figure sinks from there.
8. Know your facts
Too often, a negotiator will argue that the meeting should avoid getting too detailed. Without heavy preparation, your side, it is argued, will save time and money on lawyers and consultants.
What are you really communicating when you say that? Actually, you are insulting your opponent and telling him that meeting is not worth any extended effort.
A subsidiary to this strategy is that your team is all on the same page. The worst thing is a loss of credibility where your side disagrees with its own arguments and facts.
Take two passes at your negotiations, with a break in between. The first pass is your presentation and your opponent’s rebuttal. A break after the first pass allows both sides to reassess, lick their wounds and decide what is worth fighting for.
It is best if goals for the break itself are established so that it is recognized as a cooling-off period. Consider asking your opponent to break and then come back to address your position (see No. 1 above). Concessions should be made, if at all, after the break.
Minor concessions at the second stage indicate your respect for your opponent and will increase your credibility. Do not concede on contract or legal points but only on very specific dollar values. Also, see No. 7 which concerns who on your team has advance information on your strategy.
There is a lot more to successful negotiation, and I will write about it in future articles. These nine points are, in my view, a sound introduction to good negotiating. Treat them as crucial to developing your strategy for negotiations so you can achieve quicker, better and more lasting results. EC