THE VIEW
The View
by

Negotiations not a zero-sum game to squeeze the last cent out of the other guy

PUBLISHED : Wednesday, 22 July, 2015, 11:16am
UPDATED : Wednesday, 22 July, 2015, 5:02pm

Negotiations are very much in the news these days. The marathon talks to secure an agreement with Iran on its nuclear programme appear to have been successfully concluded and the European Union has been doing what it does best, endlessly talking and, in this instance, forging a tough deal with Greece.

Way down at the less glamorous end of the negotiating tree you will find businesses negotiating every day of the week. The differences between day-to-day business negotiations and those that take place between prominent people in fancy hotel rooms are remarkably small.

It may seem like a crude simplification but this negotiating stuff is basically about Party A wanting something from Party B and vice-versa. In almost all instances one of the parties is stronger than the other, which means that the other party is less likely to get all it wants and so will have to make compromises that are sufficiently palatable to achieve an agreement.

However there is a widespread illusion that negotiating skills can somehow produce an outcome that is radically different from that which is dictated by the relative strengths of the negotiating parties. This illusion is perpetuated by the genre of self help business books devoted to something called 'negotiating skills' or words to that affect.

In moments of weakness I have glanced at these works, which contain all manner of bizarre 'information'. Some of them stress the importance of dress, others ponder on patterns of speech, layout of the negotiating room and so on. So far, so bad but then we get to the elaboration of the blindingly obvious where we are told to prepare carefully for negotiations, to have a clear idea of your objectives and to have a pre-determined fall back position. Honestly, who knew!

Of course there are a number of commonsense rules and it is indeed possible that a slick operator will be able to secure some outcome from a negotiation that is superior to this party’s inherent strength. However this begs the extremely important question of what happens in the wake of these talks when the other party realises it has been short-changed.

If this is a one-off deal it matters less but generally speaking most agreements represent no more than the beginning of a process of cooperation between the parties.

While global leaders huddled to discuss Greece and Iran my company happened to be involved in a far more mundane negotiation with another company where, frankly, we could have walked away without regret. Yet we were tempted to continue an existing arrangement simply to avoid the bother of making changes.

That temptation however was weak and with this in mind we informed the other party that our proposal was non-negotiable, as we had presented what seemed to us to be a fair deal. The other party simply failed to respond and the day before the deadline loomed tried to embark on a flurry of negotiations.

We replied that if they were not happy we would simply part company without further ado. At this point a complication arose with the intervention of a third party, with whom we were keen to maintain a good relationship. They urged us to give the other party more time.

Reluctantly we agreed but got the other side to sign an agreement to come back to us before the new deadline was reached and not to attempt another round of negotiations. Yet again this was ignored and at the last moment they presented a long list of reasons why they could not sign the agreement.

This was met with a single sentence response to the effect that as no agreement had been reached we would be making other arrangements. Three hours before the deadline was due to expire we were informed that all our conditions would be met.

Other than taking up a great deal of time and causing considerable aggravation it is very hard to see what was achieved here. My view of things is that if you are offered a deal that works for you, it is pointless to spend time agonizing over whether it somehow works better for the other party.

If you are in the enviable position of having the upper hand in a negotiation it generally seems wise to follow the old American aphorism of leaving something on the table for the other guy. My experience is that the longest lasting and most successful business relationships are those where both parties are flexible and less concerned about squeezing the last cent out of each other.

This brings us back to the basic fact that negotiating is a long process that does not end with a single agreement. What ultimately matters is not the agreement itself but what follows when it comes to execution of the deal in terms of all the usual factors such as delivery, service, quality etc. etc.

The Smart Alec who managed to put one over on his negotiating partners needs to enjoy the moment because, generally speaking that's all it will be; the days and weeks that follow will produce a very different story.

 

Stephen Vines runs companies in the food sector and moonlights as a journalist and a broadcaster