Practical Solutions to Business Puzzles

Negotiations require people to address conflict.  Conflict has unpleasant connections for some, to the point that many people prefer to avoid negotiation.  Others see negotiation as manipulation.  Negotiation can help people navigate the conflict in an ethical and responsible manner. 

The book on negotiations that I am writing outlines the framework that helped me achieve this.  Clients and suppliers loved working with me in the corporate world.  Both groups called me ”The Enforcer,” and we had our differences of opinion.  At the end of the day though, more times than not, we had a heart to heart about business.  They had discussions about which party I liked better.  And now you know why they called me The Enforcer.  Needs of the business required me to help clients and their suppliers work together.  Over the long term, both parties had to be successful or the relationship would fail.  My job was to make that happen.  That is what I did, and it was all I did. 

The approach in the book will talk about explains why a sales person that I had not talked with in about 5 years called me last week.  He knew that I did negotiations through my own business.  His wanted to know if I would help his company with relationship management services for one of its customers, if the need arose.  You can guess the answer to that question!  What small business owner is going to say ”no” to that sort of inquiry?  And, by the way, requests like that have been coming to me since I was eight years old working in my family’s small fishing lodge in Oregon. 

The key to this sort of success is found in the typical views of negotiations.  Why do people negotiate?  Four possible reasons for negotiating are to: 

Reach an agreement

Build a relationship

Achieve bottom line business objectives

Meet the needs of the business in the specific context

As an aside, my personal choice is that negotiations should build relationships.  My profeessional choice is that negotiations should meet the needs of the business in the specific context.  That said, let’s talk a little bit about these four views of negotiations and thing about a few of the costs and benefits associated with these views. 

Imagine a person who is just concerned about reaching an agreement.  If the agreement is an end in itself, the person may leave too much on the table or set the goals too low.  A bad agreement may be reached, and the person may be satisfied with the results.  Potentially, the parties end up agreeing to deals that don’t meet their needs.  Where would that leave the parties?  On the positive side though, the parties who adopt this view are likely to reach an agreement.  If the negotiation is a one-off transaction or tactical in nature, this view may be sufficient, by the way. 

Suppose that the person is trying to build a relationship.  On its face, this seems like it would be better than a person who is just trying to reach an agreement.  When the people negotiating have similar interests and perspectives, it can lead to better results.  If the interests are different, the results can be worse than where the focus is on just reaching an agreement.  Further, the relationship needs to be appropriate for the situation and, sometimes, the relationships created are unsustainable or consume far more resources than can be cost justified.  Often people rely on the relationships to provide safeguards.  Unfortunately, self-interest often gets in the way of the normal safeguards.  Where relationships are created and relied on, they need to be combined with due diligence and good business judgment. 

Imagine that the person is negotiating to achieve bottom-line business results.  Sometimes, that individual may be reluctant to make an investment in time, capital, or other resources because the person may be uncertain about a return on the investment.  The time to recoup the investment may be unrealistic and, when that occurs, it puts tremendous pressure on the parties involved.  The pressure may be so extreme that it leads to bad business decisions.  Still, this view often results in the parties achieving the bottom line business results they are seeking.  It is important that they remember to leave something on the table.  Sucking all the profit out of the deal for the other side can make a lot of waves in what could have been a great relationship.

What happens if people negotiate to achieve a result that meets the needs of the participants?  This could be situation specific.  What a person needs in one situation is likely to be different from what the person needs in a different situation.  In addition to being situation specific, it takes into consideration all of the participants’ needs.  Success comes from finding solutions that work for everyone and, in order for efforts to be sustainable, this is essential.  This option appears to be the best outcome because it is flexible and takes the context and needs of other participants into consideration.  Sometimes, people are uncertain exactly what they need.  As a result, it is important for negotiators to ask questions.  Over time, the negotiators can provide more value because the questions give them additional insight into the goals and motivation of the parties.  It also allows the negotiators to help the parties build longer term relationships and often leads to referrals and identification of other opportunities for the people to work together.

What are your thoughts?  Does this ring true for you?  How do you build relationships that meet the needs of your business?