Value Creation in Negotiation: Capitalize on Multiple Issues

Value creation in negotiation depends on having multiple issues on the table to discuss and trade. So why do so many negotiators want to negotiate issues one at a time?

By — on / Conflict Resolution

Value Creation in Negotiation handshake

Between 2017 and 2019, the United Kingdom (U.K.) and the European Union (E.U.) negotiated the terms of Brexit, the U.K.’s official departure from the E.U. The talks were contentious and stalled often, ultimately being extended by six months.

The trouble started even before the negotiations began, as the parties disagreed about how the process should unfold. The conflict ultimately highlights the importance of promoting value creation in negotiation by keeping multiple issues on the table.

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What’s the Right Sequence?

To achieve a smooth separation, the U.K. and E.U. needed to reach agreement on a daunting array of complex issues, including trade, Britain’s financial obligations to the E.U. for British citizens living in the Union, air travel, security, and the open border between Northern Ireland and the Republic of Ireland, which was set to become the only land border between Britain and the E.U.

Before the negotiations, the 27 E.U. member nations minus Britain favored carrying out the talks in two phases. The first would cover the terms of British withdrawal—particularly, how much the U.K. would pay the E.U. to cover debt obligations, such as funding for British pensioners living in the E.U. Only after such issues were decided, E.U. leaders agreed, should talks proceed to the second phase: negotiating a trade agreement with the U.K.

Why negotiate trade separately from withdrawal? E.U. officials reportedly believed member nations would veto any withdrawal agreement accompanied by potentially painful new trade terms on issues such as taxes and employment. The E.U. sought to gain leverage by focusing narrowly on price haggling.

By contrast, Theresa May, then the British prime minister, wanted to negotiate trade and withdrawal simultaneously to improve the odds that Parliament and the British public would support the agreement.

“We are very conscious of the time sequencing of this,” Boris Johnson, then the British foreign secretary, said in a May 2017 television interview. “We’re also very conscious of how [the E.U.] will use that time sequencing to pressure us. And we’ll avoid that at every turn.”

For Value Creation in Negotiation, Capitalize on Complexity

After talks kicked off in the summer of 2017, the two sides failed to make much headway as they argued about the sequencing issue and haggled over how much the U.K. would pay the E.U. By December, however, they managed to reach an “agreement in principle” on several issues, including a financial settlement, a framework for negotiating the Northern Ireland border, and protections for U.K. and E.U. citizens living abroad.

The E.U. also dropped its resistance to negotiating in phases, agreeing to the U.K. contingent’s oft-repeated negotiating principle, “Nothing is agreed until everything is agreed.”

The argument had self-serving motivations but is rooted in sound negotiation theory. When negotiators agree up front that all issues will remain unresolved until the end of a negotiation, they maximize their opportunities for value creation in negotiation.

Take the example of a customer and supplier negotiating a purchasing agreement. If they agreed to a price per unit near the start of a negotiation, they would lose the ability to later make small concessions on price in return for important gains on other issues, such as delivery, contract duration, and dispute-resolution terms. By moving beyond simple “split the difference” price haggling, this type of logrolling can give everyone involved a better deal and is the key to value creation in negotiation.

As political negotiation examples such as the Brexit talks highlight, complexity—in the form of added issues—is almost always a plus for all parties. Any leverage you might gain by pressuring a counterpart to agree to a concession early on is likely to be outweighed by the benefits you could jointly create by identifying tradeoffs across issues.

3 Moves Toward Value Creation in Negotiation

  1. Explain the logic of tradeoffs. If a counterpart balks at putting particular issues up for discussion or wants to discuss issues separately, describe various ways you might create more value by making tradeoffs across issues based on your different preferences. Your counterpart is likely to become receptive to “complicating” the conversation when you show them what they stand to gain.
    2. Beware of sequencing plans. Discussing issues with your counterpart in phases might seem like an orderly way of proceeding with a negotiation, but it risks walling off tradeoff-rich issues from each other. If you do decide to negotiate in phases, at the very least, agree that “Nothing is agreed until everything is agreed.”
    3. Present multiple offers simultaneously. Negotiation skills and strategies are available to promote value creation in negotiation. One is to make several offers at a time rather than just one, ensuring that you value each offer equally. Each offer should include a suite of proposals across issues. The other party’s reactions will help you determine what they value most while ensuring that no important issues are neglected.

What other tips do you have for promoting value creation in negotiation?

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