Forging Negotiation Relationships

Every business can often be judged by the extent in how it values its relationships. The truth is that every business does have a relationship with numerous groups and individuals. We have suppliers, customers, employees, labour and union representatives, to name a few. Whether we realize it or not, we interact with these groups and individuals through our relationship with them. Relationships matter and we must understand the reason why they are so important to our business.

In the past couple of decades, we have seen businesses evolve and change in how they conduct business. Internal changes have seen the dispersal of power, filtered down to the lower levels of management and employees, by giving them more responsibility and authority. Similarly, we have also seen an evolutionary change in the interaction between businesses and how they have developed relationships, to achieve more cohesive and durable partnerships.

We are moving away from fighting over the available bits of scrap, and more often we are looking to expand our meal, by creating both cooperative ventures and developing more creative business solutions. In other words, our negotiations have moved from competitive negotiations, to creating greater value, by forming relationships that  focus more on creative negotiations.

There are 3 reasons for this change in behaviour;

1) Taking future considerations into account

Many companies realize that if we concentrate too heavily on the amount of value we can get today, we may lose opportunities from transactions of greater value, later on down the road.

2) Give some - get some in return

Todays businesses recognize that by giving something to our negotiating counterpart in a transaction, we can expect getting back something of greater potential value in return.

3) Creating trust moves us further ahead

By developing relationships that are founded on a basis of trust, we do not need to spend resources on time and money in perpetually monitoring our partner, to ensure the terms of the contract are fulfilled.

How we conduct our negotiations also relates to how we will treat our partnership. If a potential partner places little value on an ongoing relationship, while we perceive our interaction as a long-term partnership, then the negotiators involved in discussing terms, will also view their negotiations from completely different perspectives.

The negotiator who does not place any emphasis on a relationship, will be negotiating from a distributive perspective, or grabbing as much as they can. They will try to gain as much as possible from the distribution of available resources. The negotiator who desires to form a long-term relationship, will be seeking to add value that is beneficial to both sides.

It is important to understand how we will frame our approach to negotiations. There are two prime questions that we need to ask ourselves, before we begin our negotiation.

1) Will we interact again in the future?

Obviously, if we are conducting a one time negotiation, and do not expect to interact with our counterpart in the future, we might want to consider taking the distributive negotiation or bargaining approach, to gain as much value as we can.

2) What will we gain through a long-term partnership?

If we believe we will interact over the long term, then we need to adjust our focus and think along the lines, of what value we might receive from the prospective partner, through an ongoing relationship. 

What do we do when they don't value a relationship, but we do?

This is a common problem that many businesses face, especially when it involves our clients. It is clear we need our clients to maintain our business. However, it is common that some clients demand more concessions than others. As we progress down the road, we find ourselves dismayed that the concessions we have made to appease the client, no longer provides us with any value. We literally end up working for nothing, or at a loss.

Regardless of the manner of our relationship with our clients, we need to distinguish between the agreement and the relationship. By separating the two when we approach our negotiations, we can avoid falling into the trap of trading a good relationship, for a bad agreement.

The Harvard Business Essentials has outlined how we might differentiate between the deal and the relationship, by categorizing the issues separately as follows:

Agreement Issues

1. Price at different volume break points
2. Service Agreements
3. Replacement of obsolete equipment
4. Disputed resolutions
5. Termination items
6. Assignment of the vendor's responsibilities under the contract

Relationship Issues

1. Recognition of long-term goals
2. Recognition of individual goals and interests
3. Future opportunities for collaboration
4. Continued trust and respect

When we make an agreement where a relationship is viewed as being of little consequence to one or both parties, our level of trust diminishes. We invest less time and exertion in forging a working relationship. We communicate less with each other and as a result, our relationship, tenuous at best, will be tested to the limit, or else it will collapse altogether.

Value of Forging Strong Relationships

When two parties intend forging a relationship, they will likely interact more positively and engage in beneficial communication. They will share and exchange information about their respective goals that leads to an improvement, in their mutual understanding of each other's business perspectives. The collaborating parties are more likely to expand the scope of their discussions even further. This open venue of communication, will enable them to create more valuable agreement options, and as a result, this will enhance and improve their mutual trust and cooperation.

When two parties approach the negotiations from the perspective of forming relationships, they do so by building the level of trust through an open line of communication. Generally, the agreement reached will likely offer both parties a partnership that presents more possibilities, in creating mutual value that enhances the partnership agreement.

Summary

It is clear that the mutual creation of a relationship between two negotiating parties, offers a broader range of partnership possibilities and at a more productive level. The opposite would occur, when one or both of the parties is less interested in forging a relationship and seeks to simply gain as much value as possible. It is vital that we fully understand each other's perspective, to know which role each is adopting in the negotiation.