LAW

9

STRIVE FOR WIN-WIN NEGOTIATIONS

NATURALLY, IN NEGOTIATING WITH third parties, we must assess whether they can be trusted. We trust our lawyers to be fiduciaries for our interests in third-party negotiations, but there are lots of internal negotiations that are more like conversations—discussions where we’re not represented by lawyers but where trust underpins the exchange.

It’s helpful to think of negotiations as conversations around trade-offs. Every conversation has a purpose. When your mindset is that you want the other party to “win”—to get something it wants, too—you’re on the road to successful negotiations. Whether being asked to pick up the kids or to come in under budget, people are constantly making trades with each other—in business, government, families, churches, and schools.

The stylized negotiations surrounding commercial transactions typically involve lawyers and accountants helping business leaders fuss over price, terms, time frames, remedies, and representations and warranties. Such negotiations can either build or destroy trust, as do the conversations that happen every day around the breakfast table or at the watercooler. Aware of the economy of trust—of the idea that today’s conversation is one in a series, not a one-off—we tend to gracefully make trade-offs in the negotiations of daily life, adapting to the constant give-get that is a part of every high-trust relationship.

Contrast these everyday interactions with Hollywood’s entertaining version of business negotiation, in which executives fight a verbal battle from either side of a long conference table, flanked by teams of lawyers, bankers, and consultants. Traps are set, voices are raised, and threats are made until one combatant maneuvers the others into a corner. Triumphantly, Gordon Gekko coldly declares himself the victor: “It’s not a question of ‘enough,’ pal,” he says. “It’s a zero-sum game—somebody wins, somebody loses.”

Thanks to such fictions, many people think the point of negotiation is to maximize immediate economic gain, without regard for the impact on the other side and without any sense that there are long-term consequences. A cottage industry has sprung up with self-styled negotiation experts offering ways to keep prospective employers, suppliers, and other “adversaries” on the ropes. But in the long run, treating negotiation as a boxing match will result in punches that should never have been thrown and a lot of unnecessary bloodshed.

A better way—one that builds rather than destroys trust—is described in the classic Getting to Yes, an early 1980s bestseller by Roger Fisher and William L. Ury, still taught in business schools. The book aims to show that when negotiators “separate the people from the problem,” “focus on issues, not positions,” and “invent options for mutual gain,” they’re more likely to find acceptable outcomes for all participants.

In a sense, all negotiations are serial, not episodic, so imagine that you’re slowly building a brand—a reputation that will follow you for your entire career. Extracting one killer deal from your counterpart can turn out to be costly in the long run. For one thing, you might forfeit the chance to do more business with him or people he’s close to. For another, you may have done nothing more than create an unstable agreement.

Practicing and internalizing these six attitudes can help shape the way you build trust while sitting at the negotiating (or the dinner) table:

1. Assume this is but one conversation in an ongoing narrative. Over the course of your career, you’ll engage in thousands of negotiations. Getting your way at any cost is not the reputation you want. Though people may not remember the suboptimal result of a single exchange, they’ll never forget how they felt when you dismissed their concerns or treated them disrespectfully. You’re not obligated to make sure those on the other side get a great deal, but you do want them to walk away feeling respected. If they do, the opportunities that will come to you in the future will more than compensate for whatever it is you think you gave up to ensure a fair deal.

2. Consider the other side’s interests. Understanding that your negotiating partners’ interests are legitimate conveys respect. (Assume that they may have anxieties about your trustworthiness, too.) When they see your efforts to understand their perspective, they’re likely to be more willing to engage in honest dialogue, which makes it easier to find a solution that everyone sees as a win.

Think of your goal as putting a fair price on what the other parties want. It’s up to them to decide if their demands are worth the price you’ve set. You’ll know you’re getting close when you can describe their needs in a way that satisfies them and they can acknowledge the price of what they’re asking for.

3. Aim to create value for all parties. Nobody’s counseling capitulation. The point isn’t to pummel the other person into submission, as if you win only when he loses. If your counterpart benefits from doing business with you, and you walk away satisfied, too, you’ve created two wins. Strengthening your relationship with the other party can mean more business, more referrals, a stronger brand, and more lasting agreements.

4. Eschew psych-out tactics. Many people start negotiations by assessing who has more legal or economic firepower, and who’s more willing to walk away. This power- only mindset can negatively charge a discussion and get it off on the wrong foot, turning a contest of issues into a battle of wills. You can avoid that by focusing first on the principles both sides agree on. Consider Lee Iacocca, the former CEO of Chrysler. His approach to negotiation was consistent with building trust in negotiations: “Being honest is the best technique I can use. Right up front, tell people what you’re trying to accomplish and what you’re willing to sacrifice to accomplish it.”

5. Find power in inquiry. Most people will tell you what they want out of negotiations if you simply ask the right questions. In negotiation, as in life, doing more listening than talking is a good rule of thumb. Asking probing questions about the other party’s perspective may yield insights into how to structure a deal. If the other side tells you its chief concern is price, and if you’re willing to meet the price, you may be able to set the other terms. Understanding the interdependence of the five elements noted at the beginning of this chapter (price, terms, time frames, remedies, and representations and warranties) can help make for win-win agreements.

6. Choose carefully the people you negotiate with. It’s tough to hold productive discussions with people who get no joy out of the process, and prefer gecko-fighting to finding creative solutions. As Trammell Crow used to tell me, “You can’t do good business with bad people.”

You can’t come to fair agreements with people whose only concern is their own short-term gain, serving only their benighted self-interests. So if you’re intent on building a high-trust organization, choose those who are already on the bus and thereby ensure that at least your internal negotiations are with people you trust. And follow George Bernard Shaw’s advice, “Never wrestle with pigs. You both get dirty and the pig likes it.” Try to negotiate (and to hire and promote) only trustworthy people.

EACH CONVERSATION AND NEGOTIATION either advances or destroys trust. Building a brand for fairness deepens the trust among all members of the team, resulting in flexible arrangements along with enjoyable relationships among teammates.