Prevention, Management & Resolution of Disputes: Management
Disputes in the business world are inevitable. However, they don’t always have to end up in a catastrophe for you. Together with getting some ‘legal stock’ on your shelves (as discussed in our last blog) business owners and their management team can empower themselves to manage and maximise their outcomes from negotiations and help avoid unexpected or negative outcomes from any given situation.
Given that life (and hence business) is in essence series of negotiations here are some basic tips to maximise your outcomes from any type of negotiation.
Know Your Options
Before starting any negotiation top negotiators spend significant time identifying their best alternative to a negotiated agreement (BATNA), and take steps to improve it BEFORE the negotiation starts.
BATNA is the best you can do if the other person refuses to negotiate with you. Another term for the same thing is your "walk away point." Your BATNA is the only standard which can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept. In the simplest terms, if the proposed agreement is better than your BATNA, then you should accept it. If the agreement is not better than your BATNA, then you should reopen negotiations. If you cannot improve the agreement, then you should at least consider withdrawing from the negotiations and pursuing your alternative.
Know The Process
Don’t assume both parties have or will agree as to the process to be used for the negotiation. You should ensure you know when to meet, who should be present, what the agenda will be, and any rules of engagement.
Make sure you raise (and if need be negotiate) how you will negotiate in advance. Discussing such procedural issues will clear the way for much more focused talks.
Know the Other Party
Although it’s not always feasible to engage in small talk at the start of a negotiation (particularly if you’re on a tight deadline), in our experience genuine efforts at doing so can bring real benefits,.
It can lead to you and your counterpart being more collaborative and likely to reach agreement if you spend even just a few minutes trying to get to know each other. If you’re negotiating over email, even a brief introductory phone call may make a difference.
Listen & actively engage
It sounds simple and obvious, but all too often in negotiations participants are over eager to get their point of view across. This often leads to each party no hearing or understanding the key elements of the other party’s position.
Resist the urge to think about what you’re going to say next while your counterpart is talking. Instead, listen carefully to what they are saying. Sometime it can even help to paraphrase what you believe they have said to double check your understanding of what they are putting to you. Where appropriate, acknowledging relevant emotions involved in the discussion such as frustration, stress or disappointment.
Not only are you likely to acquire valuable information using these techniques, but the other party may mimic your listening skills.
Ask good questions
You can often gain more in negotiations by asking lots of questions. Make sure you ask questions that are likely to get helpful answers. Avoid asking “yes or no” questions and leading questions, such as “Don’t you think that’s a great idea?”
Instead, craft neutral questions that encourage detailed responses, such as “Can you tell me about the challenges you’re facing this quarter?”
Find some common ground & smart trade offs
Parties are often stuck making concessions and demands on a single issue, such as price. In sophisticated negotiations, you can capitalize on the presence of multiple issues to get both sides more of what they want. Specifically, try to identify issues that your counterpart cares deeply about that you value less (which you can discover by asking good questions). Then propose making a concession on that issue in exchange for a concession from them on an issue you value highly.
Lead the discussions
Experience has taught us that the first number mentioned in a negotiation, however arbitrary, exerts a powerful influence on the negotiation that follows. Avoid being a victim of what is sometimes referred to as ‘anchoring bias’ by making the first offer (or offers) and trying to anchor talks in your preferred direction.
If the other side does ‘anchors’ first, keep your aspirations and BATNA at the forefront of your mind, pausing to revisit them as needed.
Present multiple offers simultaneously
Rather than making one offer at a time, consider presenting several offers at once. If your counterpart rejects all of them, ask them to tell you which one they liked best and why.
Then work on your own to improve the offer, or try to brainstorm with the other party an option that pleases you both. This strategy of presenting multiple offers simultaneously decreases the odds of impasse and can promote more creative solutions.
Deal with contingencies up front
Negotiations can often stall because parties disagree about how a certain scenario will play out over time. In such cases, try to work through how various contingencies may be dealt with. For example, if you doubt a contractor’s claims that they can finish a project in set time frame, propose a term that will penalize them for late completion and/or a reward for early completion. If the contract truly believes their claims of being able to finish the project on time they should have no problem accepting such terms.
Prepare for implementation
Doing the deal is one thing, making it stick is another. Too many deals fall over after in principle terms have been agreed because the parties had not planned for or thought through how it will be implement.
A great way improve the long-term durability of your deal is to make sure that there are clearly defined milestones and/or deadlines and if possible regular reviews.
Another way to ensure that the deal gets off the ground is to come to a negotiation with a template agreement that covers off on the major technical issues and only requires minor amendment to be able to be signed off. This is particularly important if there are very specific technical requirements or legal terms for the agreement.
If you reach an agreement on the key issues, try and work through or at least show the other party your proposed form of agreement. This can help avoid a document that is prepared (often days) after a negotiation straying too far from the original terms and causing
Without a binding document deals will often fall over no matter the intent of the parties.
We have years of experience in helping businesses managing (and avoiding) disputes and crystallising negotiated outcomes in to binding documents. We specialise in providing clarity and confidence to business operators. If you have a dispute or a negotiation you need assistance with contact us and benefit from our knowledge and experience.