Reaching an Agreement without Compromise: Negotiating Contracts
So how can two parties with different views reach an agreement without making concessions? By creating one coherent, viable, and mutually acceptable agreement, rather than cutting and pasting two conflicting ideas together into one.
If only one solution is possible, it’s up to you to effectively influence the nature and terms of the agreement by honing your business negotiation skills and using the following Black Swan contract negotiation rules:
1. Avoid Using the Language of the Ego
When you present a solution as your idea versus their idea, right versus wrong, you create an antagonistic environment. In such an environment, no party can make a concession without sacrificing their autonomy or their integrity. Rather than presenting a solution at the beginning of a negotiation, focus on nurturing trust, fostering a collaborative environment, and gaining a more complete understanding of your counterpart’s point of view. By asking calibrated questions, you’ll encourage your counterpart to talk, awarding them a sense of control and helping you learn what you need to gain their trust and build influence.
2. Be Willing to Hear Your Counterpart out and Open to Learning from Their Ideas
If someone doesn’t feel like they’ve had the chance to express themselves or doesn’t feel like their opinion has been understood, they won’t be able to process what you’re saying or willing to say “yes.” Rather than focusing on what your next counterargument is going to be, listen on multiple levels with the goal of comprehension. If you listen effectively and use labels and calibrated questions to uncover your counterpart’s core drives and perceptions, you’ll learn what’s fueling their decisions. Once you have this baseline understanding, you can determine how to adequately address those needs and anticipate accusations that they may have about your desired solution.
That said, listening to your counterpart and being open-minded doesn’t mean you should blindly accept their advice. As a general rule, never take the advice or criticism of someone that you wouldn’t switch places with. In other words, consider the qualifications of the critic before you rethink your solution. Even if you don’t agree with your counterpart, you can strengthen a relationship by demonstrating an understanding of their perspective.
3. Uncover Value Perceptions
Before you agree to talk terms, you need to understand how your counterpart perceives the overall value of a contract and what individual components they value unequally. What’s dictating their standards and driving their decisions? If your prospect is hyper-focused on cost, find out what other terms they value to determine where you have room to negotiate and influence the nature of the deal in question. If they value a lower cost more than receiving the full package of services you offer, why not trim the contract to include limited services at a reduced cost? If time is their chief concern, might they be willing to pay more or provide additional resources in exchange for an expedited timeline? By locating these value perceptions and bringing these items of unequal value to the negotiating table, you’ll expand the pie and create more avenues to influence the outcome.
4. Demonstrate Understanding and Present Options
There’s a stark distinction between feeling that you’ve understood what someone is saying and demonstrating that you’ve understood. If you don’t make a point of doing the latter, then you won’t gain the trust you need to influence the contract at hand. Understanding can be demonstrated using tactical empathy, labels, mirrors, and summaries. By preparing a cheat sheet of positive and negative labels and calibrated questions prior to the negotiation, you’ll help improve your flexibility under pressure and avoid using counterproductive communication cliches.
By presenting options rather than framing a solution early on in the negotiation process, you’re asking your counterpart to work with you to create a solution. Doing so helps them feel ownership over the agreement and improves buy-in. In addition, presenting options gives you the power to shape the deal as you go, rather than being limited by the terms of an existing solution.
5. Anticipate Negatives
Most people avoid addressing the elephant in the room because they’re afraid that drawing attention to a negative will make it seem more significant. In fact, it’s much riskier to leave a negative unspoken rather than addressing it outright. You can’t avoid the negative element in a negotiation—you can only prepare for it.
To prepare, conduct an accusation audit and come up with some negative labels to address those accusations and dissolve a potential attack. If you’re tasked with repairing a bad business relationship with a client who feels slighted by a previous interaction with your company, prepare labels to acknowledge their point of view without accepting responsibility.
6. Embrace “No” as a Beginning Rather Than an End
Sometimes, we need to say “no” before we can even consider saying “yes.” Giving your counterpart permission to say “no” to your ideas helps them retain their sense of autonomy. Oftentimes, the word “no” is a knee-jerk emotional response that we give when we feel uncertain or afraid. It’s a desire to maintain the status quo and a hard-wired protective mechanism. In short, it’s more often an emotional response than a well-considered, rational choice. In that respect, allowing your counterpart to say “no” can help further a negotiation and make them more willing to say “yes” down the line. When you feel protected and in control, your emotional register falls back to baseline and your decision-making abilities improve.
If you’re met with a rejection, work on creating space in the conversation before responding. If you aren’t receiving the confirmation you were shooting for, it may be an indication that you need to rewind and focus on building rapport and trust before attempting to influence your counterpart. Once your counterpart relaxes, you can work on adapting your strategy to make “no” work for you.
7. Address Implementation
In many business contracts, people spend more time on penalty terms than they do on the terms of implementation. The irony is, if you focus on implementation, then you won’t need to worry about broken contracts.
To effectively persuade your counterpart, you must be able to trace a roadmap to their desired outcome. That means laying out a plan for implementation and earning buy-in from everyone who will be involved. What are the potential pitfalls of the solution in question? What might the consequences be if one part of the deal isn’t upheld?
To avoid disappointment down the road, address how those potential downfalls will be accounted for in the implementation process. Focus on asking calibrated questions using a “when/what?” or “if/what?” structure—what we like to call “time travel” questions. This format is designed to make your counterpart think about something other than the present moment. The first “if” and “when” creates a condition or moves them to a point in time, and the “what” asks them to follow up and participate in the implementation plan. For example, you could ask, “When this breaks down in implementation, what are we going to do to fix it?” Asking these questions is a great way to address the concerns of behind-the-scenes deal-breakers who aren’t at the negotiating table and prevent the likelihood that a deal will be killed internally.
In addition, communicate with the members of your own team who will be responsible for implementation to ensure that you set realistic and attainable expectations in the sales process. If you plan to negotiate as a team, practice communicating with one another in low-stakes situations and assign clear roles to make sure that you operate as a unit, rather than a collection of individuals.