First, you may not believe that relationships will facilitate smoother negotiations. Even if you do believe in the role of relationships in negotiation, you may say that all of the studies and research has been focused on corporate giants. Well, you may be at least partly correct. However, I recently reviewed some research on negotiations that may offer some guidance, even if your organization is considered a small business or consultancy. The research was conducted by professor, Jeswald W. Salacuse of Tuffs University. Here is a summary of his findings:
1. Start Forming a Relationship Before You Sign the Contract
While negotiators must necessarily be concerned about a deal’s contractual provisions, they should also lay a solid foundation for a negotiation relationship from the very start of talks. Unfortunately, many deal makers do not. Professor Salacuse asked American executives whether their primary deal making goal was to reach a contract or to start a relationship. Fifty-four percent were focused on hammering out a contract. Their chances for a successful deal would be far better if they thought of themselves as relationship negotiators, not just contract makers. Before sitting down at the bargaining table, you might also consider hiring a consultant to develop and guide a program of relationship-building activities, which could include joint workshops, get-acquainted sessions, and retreats for executives from both sides.
2. Select the Right People to Manage the Relationship
Launching a business relationship requires diplomacy as well as technical expertise. To lay a solid foundation for the relationship, each side should select negotiators with the appropriate interpersonal skills, knowledge, and sensitivity. Indeed, these qualities may be more important in the long run than the technical knowledge of engineering, marketing, or finance experts. Just as diplomats must be vetted by the receiving state, parties to alliances might agree that executives appointed to manage the relationship in negotiation should receive the approval of the other side.
3. Closely Involve Negotiators in Deal Implementation
Often companies sign a long-term contract assume that a solid working relationship will develop automatically. For example, General Motors negotiated a series of joint ventures that ran into trouble once GM and its international partners began working together. Why did this happen? It happened because the teams that negotiated the deal were not involved in implementing it. After GM negotiators formed a joint venture, they’d move on to the next deal, leaving other executives with the task of figuring out how to make it work. During deal making, both sides gain an enormous amount of information about each other and the deal. In the process, they may very well form a positive relationship. To mobilize these valuable assets, the negotiators themselves should play a role in implementing the transaction, at least from the beginning.
4. Maintain Involvement and Interested
Many deals are formed with the active involvement of the companies’ leaders, whose personal relationship becomes a foundation for the relationship between the two organizations. After the contract is signed, it’s important to find ways to maintain management’s visible interest. For example, a deal to produce imaging devices might call for semiannual meetings between the heads of your two firms, alternating between the cities where they are based.
5. Educate Responsible Parties
Don’t assume that others in your firm will become as enthusiastic and knowledgeable about the deal as negotiators are. Indeed, others may view involvement with another company – whose culture and business practices they may not understand – as a burden, or even a threat. Inevitably, any deal may encounter difficulties, such as delivery delays, failed technologies, and miscommunication. Both sides will be better able to overcome these problems if their employees know and trust one another than if they view the other side with suspicion and hostility. To overcome resistance within their organization, deal advocates should plan educational efforts that bring employees from the two firms together, such as meetings, retreats, seminars, site visits, and jointly produced memorandums, electronic collaboration and newsletters.
6. Schedule Progress Review Meetings
Although a business relationship is organic and evolves over time, this doesn’t mean that the two sides should not consciously shape it. To guide the evolution of a sound relationship, both companies should adhere rigorously to a regular schedule of meetings, rather than just meeting from “time to time” or “when the need arises.”
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