Truth 23. Postsettlement settlements

“Who’s your favorite negotiator?” people often ask me. Many expect me to say Henry Kissinger or Donald Trump. But instead I say Professor Howard Raiffa of Harvard University. Wait, you might say, aren’t professors just armchair theoreticians? Howard Raiffa is a gifted theoretician, to be sure, but he is also an amazing negotiator. And his book The Art and Science of Negotiation is chock-full of brilliant approaches to real-life negotiations.

When I first read Raiffa’s description of postsettlement settlements, I was struck by its utter simplicity and elegance. Yet I haven’t met a single business person who knew about it. Once they learn about it, though, they become like me: addicted.

So, what is a postsettlement settlement?

Bob and Susan Sanderson are fitness fanatics, but they draw the line when it comes to hauling massive specimens of new exercise equipment to their home and down the stairs to their home gym. So, when they responded to a sale at their local Costco by buying an unbelievably heavy new contraption for their home, they negotiated with Costco to have it delivered to their home. Those were the terms.

The day of the arrival came, and the driver was visibly not happy to have to heft the great and clumsy box from his truck into their house. As a matter of fact, he stated that he would only deliver to the front steps. Not up the steps, just to the steps. Ideally, the Sandersons wanted him to come through the garage and down the stairs into the basement. No doing.

The Sandersons took this as an opportunity to create a postsettlement settlement. They correctly ascertained the delivery driver’s interest to be primarily financial and theirs to be primarily physical—meaning Bob did not want to have hernia operation #3. So, the Sandersons suggested that perhaps for an additional $50, the delivery driver might be willing to bring the contraption through the garage and down the stairs to the gym. They also determined that one of his concerns would be to avoid them accusing him of soiling their carpet or damaging their house. They said that they were not worried about the carpet and would take responsibility for any damage if the thing slipped. They also iced the cake by mentioning that they would pay in cash.

Thus, a postsettlement settlement represents a mutual improvement over a given deal that both parties currently find acceptable.

A postsettlement settlement represents a mutual improvement over a given deal that both parties currently find acceptable.

About 75 percent of negotiators, given an opportunity for a postsettlement settlement, are able to mutually improve upon the deal.

Think also about the motivation that negotiators have when they go back to negotiate after a deal has been reached. If they think they can bully, badger, or harangue the other party into giving up more of the pie, they would be sadly mistaken. Rather, negotiators must realize that the only way to improve their own outcomes is by improving the other party’s outcomes.