Article originally published in the Philadelphia Business Journal on April 17, 2018
In August 2017, I wrote an article headlined, 7 principles for effective negotiations. Since that article, I have been asked to elaborate on how to avoid damage to a business relationship during heated negotiations.
I’ve spent years negotiating many types of deals and living with the results, as well as observing the negotiating styles and skills of other senior leaders. Sometimes a deal can’t be reached, but a good relationship remains intact, which bodes well for future negotiations.
A negotiation style that damages a business and personal relationship should be avoided. The key is to attack issues, not people. In sports, you want to defuse, not enrage your opponent in what you say before a game. In a business negotiation, it’s the same: You don’t want to enrage your counterpart on the other side of the table.
In a one-off negotiation, you need to decide how hard you want to take advantage of your “perceived” strengths and drive toward a “win-lose.” You could run into the other party again in a different situation where you may not have as strong a position.
If you have an ongoing relationship, it’s important for a win-win result. If after a deal is struck and one party finds that the terms are significantly adverse and lopsided, they might ask the other party for changes in the terms of the agreement.
The best way to destroy any possibility of continuing an ongoing relationship is for the party with the advantage to insist they have an iron-clad agreement in place and try to force the disadvantaged party to continue to meet those terms. They do so at their peril. Maintaining a good relationship in the long-run is more important than a win-lose result.
This must be a civil discussion between both parties. Neither should personally threaten nor intimidate the other in any way. It will hurt their reputation. Threats have the opposite effect of getting the other side to capitulate – that party becomes more entrenched in their position. This only poisons the relationship moving forward.
I once was the lead negotiator for my company in a negotiation to sell our ownership interest in a joint venture to our partner. After the second time the attorney for our partner misrepresented what we had negotiated in the agreement he was drafting, my team and I stood up and announced we were leaving the table and would not return until my counterpart replaced that attorney.
Two days later my counterpart apologized and informed me he was appointing a new attorney to record our decisions, and negotiations resumed.
Don’t misrepresent what was previously negotiated. It damages your credibility. In a calm manner, I attacked my counterpart’s attorney, not my counterpart, but he got the message. Had I not challenged the dishonesty of his former attorney, my counterpart would have taken that as an indication that I was a weak negotiator.
Before entering a negotiation, be well prepared. Know your objectives and the terms under which you are willing to walk away. Understand the situation of the other party, including strengths, weaknesses and alternatives.
Remember, it’s business, not personal. When in a long-term business relationship, drive for a win-win. Even if you don’t care about maintaining a long-term relationship, exercise caution driving for a win-lose. People have long memories.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School.