The approach or style that you adopt when negotiating will have a considerable effect on how the conversation proceeds and on the quality and success of the any agreement that you achieve. This is especially true when the negotiating parties need to maintain an on-going relationship.
Negotiating by position
Most people when they think of negotiating imagine a situation where one party in the negotiation states a price and the other counters with a different one. The process then proceeds with the difference between the two positions narrowing until an agreement on what will be exchanged is reached. This is ‘positional negotiation’
If each party is free to walk away without making a deal, negotiations will conclude with everyone feeling that a reasonable transaction ensued. If, however, there is pressure on one or more of the parties to complete the transaction, the agreement will likely not be perceived as fair.
The advantaged party in this situation may not care, particularly if they are not concerned about maintaining a relationship with their counterparty. However, if there is concern about striking a deal that benefits all parties, and that is equitable and efficient (i.e. distributes all the benefits that could be derived from the agreement), positional bargaining or negotiating suffers from a number of drawbacks:
- There may not be any trustworthy reference to what is a fair concession in exchange for the goods, and so one party may lose and the other may unfairly benefit. If the loosing party discovers this, there will be damage to the relationship and if they ever have the opportunity, they may take their revenge or seek redress
- The opportunity to get their best outcome may be missed because the parties do not understand fully what their partner in the negotiation wants or values. For example in a sales transaction, the buyer may prefer the item on offer to be blue rather than green. They are able to drive down the price because of this when the seller could just get the last blue one from the stock room and settle at a higher price. All parties would be much more satisfied even though the buyer would end up paying more
- Psychological ‘target fixation’ will have more affect on the agreement reached than the proximity to a fair outcome. The first person to take a position tends to skew proceedings as all subsequent offers will be drawn towards that position. This potentially gives the advantage to a wily negotiator utilising psychology but it does not facilitate an agreement that benefits all parties and is fairly rated in the current market, with all possible benefits explored
Negotiating by principle
So, if we are interested in long term agreements, deriving all the possible benefits, and establishing a reputation for fair dealing, we need to choose a different negotiating style.
‘Principled negotiation’ provides an approach that makes good the deficiencies inherent in the positional style:
- Establishes that the objective is to negotiate a fair agreement that benefits all parties, improving trust and the quality of engagement in so doing
- Makes sure each party has an equal chance to respectfully present their view of what that agreement should be
- Equal allotted time/duration for presenting arguments
- Facts based, reasoned arguments and criticism
- Agreement on the format and reference information that will be used throughout the negotiation
- Ensures transparency and fairness during the negotiation
- All parties should declare their interests and any external pressures and constraints which are pertinent to negotiating an agreement
- No bilateral meetings of sub-sets of the parties. Alternatively, if these types of meetings can not be avoided, agree that all agenda and minutes of such will be made available to all the parties
- Agreed meeting format, agenda, location (media/office), and scheduling (calendar/diary). Asymmetrical pressures that disadvantage some parties should be removed in order to ensure the resulting agreement is not adversely affected
- Separates any ‘people problems’ from issues concerning the actual agreement. Impassioned arguments are fine for letting off steam but are rarely constructive in advancing the negotiation productively
- It is important for people to feel able to express themselves but a good negotiator will be able to address the emotional situation separately to the main negotiation
- At the beginning of the negotiation it would be helpful to agree how personal or emotional issues will be treated and resolved. For example
- Respectful language
- Agreement about 3rd party arbitration
- Insistence on constructive presentation of grievances; try to avoid direct conflict
- Address the issues relative to the agreement and do not drag in external issues/history (these should be addressed separately if necessary)
- People problems should be resolved before returning to the matter in hand
Although on cursory examination it might appear that principled negation presents a weak hand that could be disadvantaged by bad actors and cynical participants, in fact it provides the strongest possible bargaining stance in any negotiation, provided the intention is an equitable, respectful agreement.
This, of course, does not mean an equitable, respectful agreement will be reached, but for the weaker party it will still be better than alternatives:
- If one party has all the power they may not care about an equitable deal. However, their true intentions and disregard for the other parties will at least be revealed whilst the principled negotiator is engaged
- If one party has an advantage but wishes to be seen as reasonable and equitable, the principled negotiator will be able to illicit behaviour and concessions more conducive to an equitable outcome
- Holding back information can become detrimental to the party that does so. All articles of discussion become tradable in principled negotiation, opening up much more creative agreement/concession possibilities the more details that are revealed by the parties
- The ‘alternative to a negotiated agreement’ was always on the table. No matter how unpalatable that might be there is the possibility of improving on it through principled negotiation
At the most basic level the goal of principled negotiation is to improve on the agreement that will transpire if no negotiation takes place. As a result it is fundamentally important for each party to have understood what that might mean for them and then enter into the negotiation with the intention of improving on it.
For a more detailed examination of the relative merits of principled negotiation see the definitive publication: ‘Getting to Yes: Negotiating an agreement without giving in’ (Roger Fisher, William Ury, and Bruce Patton, published by Houghton and Mifflin).