The Intelligent Negotiator (25 page)

Cooperative bargaining is most natural when individuals become involved in bargaining interactions that include a number of different items. This is so because
both sides do not place equal value on the same items. Although we often assume that they do, this assumption is rarely correct. One party prefers to obtain certain items, while the other hopes to get other terms. It is thus entirely possible for negotiators to formulate proposals that simultaneously advance the interests of both sides. Let’s look at how to do this.

G
OING
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CCEPTABLE
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ERMS:
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EARCH FOR
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NDISCOVERED
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LTERNATIVES

During the Distributive and the Closing Stages, the participants often behave disingenuously to advance their own selfish interests. They may, for example, overstate or understate the value of items being exchanged for strategic purposes. Both you and your counterpart want to convince the other that what you are giving up is substantial, while what you are getting is not. Sellers of products or services embellish the value of those items, while purchasers of those goods or services devalue their significance. Because of these manipulative tactics, truly efficient agreements—where neither party may improve its position without worsening the other side’s circumstances—are often not attained. The parties merely achieve “acceptable” terms, without even considering the possibility that they could generate more beneficial agreements for
both sides.
If you conclude your interaction at this point, you may leave a substantial amount of potential, yet untapped joint satisfaction on the bargaining table.

To go beyond acceptable terms, you and your counterparts need to explore alternative trade-offs that may concurrently enhance the interests of both sides. This is
best done after a tentative agreement has been achieved through the Distributive and Closing Stages. Even if you are mentally exhausted due to the extended negotiations, take a few minutes to explore alternative formulations that may prove to be mutually beneficial. What you are looking for are items that ended on the wrong side of the bargaining table—the items the conceding party actually valued more highly than the side receiving those terms.

For example, two spouses may be discussing the terms for their marital dissolution. They have tentatively agreed to joint custody of their two children, given the primary residence to one and the vacation home to the other. One got the one-year-old convertible, while the other got the two-year-old sport utility vehicle. If they were to finalize these terms, they may not maximize their joint return. For example, the husband may be willing to give the wife sole custody, if he received generous visitation rights. The wife may be willing to give up her claim to the principal residence if she could sell the vacation home and use the proceeds to purchase a new house near the schools both parents want the children to attend. The wife, because she would be getting custody, may prefer the SUV rather than the convertible, due to the ease with which she could use that vehicle to transport the children. If the couple never contemplated these possible trade-offs, they would part company with far less than they could obtain through efficient cooperative bargaining.

Getting Your Basic Agreement in Place First

If the Cooperative Stage is to be used effectively, you must first reach a tentative agreement on which topics
are available for distribution and how those items should be divided. If your counterpart tries to convince you that the Distributive or Closing Stage is unnecessary and suggests that you eschew all but cooperative win-win tactics, he is probably trying to preempt the interaction and win the Distributive Stage by default. He will succeed in his plan if you go along with his suggestions. For if these matters are not set in the Distributive and Closing Stages, your counterpart will be able to dictate the basic division of the available topics. He will also be able to use the Cooperative Stage to obtain a further advantage. Do not let this happen. It is thus imperative that negotiators participate in effective Distributive and Closing Stages
before
they move into the Cooperative Stage.

Initiating Cooperative Bargaining

Once tentative terms have been agreed upon, you can suggest exploration of the Cooperative Stage. If you fear that your counterparts might be reluctant to move in this direction, take the following steps:

1. Draft a written document and have the parties initial each term agreed upon to signify their concurrence in the overall agreement.
   

2. Propose the joint exploration of alternative formulations that may prove to be mutually beneficial but were overlooked during the prior stages of the interaction.
   

Be sure that both sides recognize your transition from the Closing Stage to the Cooperative Stage. If one side tries to move into the Cooperative Stage too quickly without the understanding of the other party, the whole
deal may unravel. When the cooperative bargainer begins to suggest alternative proposals, they may be less advantageous to the other side than the previously agreed upon terms. If the recipient of these new proposals does not understand these to be incipient cooperative offers, he or she may suspect manipulative tactics and accuse the cooperative bargainer of bad faith negotiating. Once this happens, the entire interaction may break down. This is why the party making the first move into the Cooperative Stage should be sure the other side understands what is taking place.

Look for Mutually Beneficial Tradeoffs

Keep in mind your primary goal: to expand the overall economic and non-economic pie to be divided between you and your counterpart. To achieve this, you must do all you can to ascertain the presence of previously unnoticed alternatives that go beyond the merely acceptable, and improve both sides’ respective situations. Contemplate options that would more effectively satisfy the underlying interests of your counterpart with less cost to you, and vice-versa. To accomplish this goal, both sides must be willing to candidly disclose their underlying interests. You and your counterparts can no longer directly over- or understate the value of items for strategic reasons. You must indicate what you truly hope to obtain and explain why you prefer those terms.

Through an objective exploration of the underlying needs and interests of the parties, you and your counterpart can look for areas in which you may generate joint gains. Each of you must indicate what you in fact hope to accomplish and then both engage in brainstorming to develop
options that were not previously considered. When your counterpart asks you whether a different formulation would be as good or better for you than what was already agreed upon, you must be forthright. If the proposed trade would not be preferable, the participants should contemplate other options. How else might they better satisfy the underlying needs of each? What other formulations may prove to be mutually advantageous?

The managing partner of a business firm may have just offered someone a new position with a $60,000 salary, a compensation level that might initially be insufficient to lure the prospective employee away from her current situation. The offering company may not wish to increase the starting salary; it may, however, be willing to offer the person a five-year guaranteed employment contract, or promise her advancement opportunities not available with her current employer. The company may agree to cover the cost of specialized training or advanced education that would enhance the skills of the new hire and make her more valuable to the hiring firm. It may agree to reassess her salary after her first six months on the job. Through such win-win exchanges, the negotiators may improve the value of the deal to both sides.

You and your counterpart must try to preserve your basic credibility as you enter the Cooperative Stage. Both sides may have used puffing and embellishment early in the negotiation, during the Information Exchange and the Distributive and Closing Stages, to deceive each other. Regard the Cooperative Stage as a place to correct the inefficiencies that may have been generated by these deceptive tactics. If you are too candid about your previous misrepresentations, however, your counterparts may begin to question the validity of other claims you have made and attempt to renegotiate the entire deal. This could cause
the interaction to break down. Be careful not to overtly undermine your credibility while you are exploring alternative formulations during the Cooperative Stage.

It is important for any negotiator participating in cooperative bargaining to appreciate the competitive undercurrent that may affect even these discussions. When cooperating participants discover areas for joint gain, nothing requires them to share that gain on an equal basis. If your counterpart offers you a much better arrangement, move slowly. Do not directly acknowledge how much this arrangement benefits you. Your counterpart is unlikely to appreciate how much that offer would improve your circumstances. Simply indicate that you would prefer these terms to the prior arrangement. In doing this, you avoid having to give him as much as you would have to provide if he realized how much of a concession he was actually proposing. Remember how competitive this exchange is. If you offer the other side more beneficial terms, be sure that your concessions are reciprocated by your counterpart.

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GREEMENT
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CHIEVED,
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EVIEW
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ASIC
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ERMS AND
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RAFT
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CCORD

The Cooperative Stage ends when you and your counterparts have a mutual accord. Before you part company or hang up the telephone, briefly review the terms you think have been agreed upon to be certain there has really been a meeting of the minds. Mention all the different terms you have included. In most cases, this process will confirm what you think you have agreed upon. On a few occasions, however, you may encounter some misunderstandings. Now, when both sides are psychologically committed to
settlement, is the time to identify them so that you and your counterparts can resolve them amicably. If you did not discover them for several weeks, the discovering party may raise claims of bad faith and accuse the other side of dishonesty.

At the end of many bargaining encounters, the parties have to write up their agreement in a relatively formal document. Whenever possible, take the opportunity to prepare the written summary of your agreement. You have to believe that you will do a better job of representing your own interests than would those with whom you are negotiating. I would not for a moment suggest that you ever contemplate changing what has been agreed upon when you draft the actual accord. Not only would this be completely unethical, but you would be exposing yourself to claims of fraud, and your reputation as a negotiator could be destroyed.

On rare occasions you may encounter counterparts who, when drafting written agreements, deliberately change what the parties have agreed upon. To avoid these problems, always review carefully the specific terms of any draft your adversaries prepare to be sure it reflects what you think it should. You are examining that document to verify three things:

1. Do you like language they have included?
   If not, don’t hesitate to take out a pen or pencil and mark up the draft. If they try to thwart your review efforts by complaining about the total number of changes you are requesting, ask them to send you the computer disk containing their draft and offer to make the requisite modifications. They will refuse to provide you with their disk, but will cease their complaining.
   

2. Is there any provision in that document that you don’t recall discussing?
   Some drafters include “boilerplate” language they think will offend no one. While they should highlight such provisions to alert you to their inclusion, some drafters inadvertently fail to do so. Remember that nothing is “boilerplate” until both sides agree that it is. Be sure they are not including a clause that may disadvantage you in the future. For example, in a new employment contract, the hiring firm may have included a provision requiring all controversies to be resolved through binding arbitration procedures controlled by the hiring company. If you were to sign a contract containing such a clause, you may be unable to seek judicial relief if you later thought you were discriminated against in violation of state or federal civil rights laws or were terminated unjustly for refusing to engage in conduct that violated an important state or federal public policy.
   

3. Has anything that you think was agreed upon been omitted?
   This is the most difficult task of all, because most individuals reviewing a written document look for what has been included rather than what may have been excluded. If we like what is there, we fail to appreciate what may not be there. As you review the included provisions, check off your notes pertaining to those areas. When you are finished, look to see whether there is anything in your notes that has not been reflected in the draft contract.
   

What should you do when you suspect disingenuous drafting by counterparts? You might contact them and
challenge their integrity, but they would undoubtedly deny dishonesty and the whole deal may unravel. This is especially true if their mistakes were inadvertent and they resent your challenge to their honesty. It is more effective to contact your counterparts, point out the areas in question, and ask them to review their notes pertaining to those areas. In most instances, you will discover that either you or your counterparts have made honest mistakes that can be quickly corrected. Even if your counterparts have deliberately tried to cheat you, by raising the issue in this manner you provide them with a face-saving way out. They can apologize and correct the “erroneous” provisions.