Ever wonder about how to enhance your deal after signing a negotiated agreement? After all, not all contracts are created equal. Some negotiated agreements come from integrative negotiations, where parties maximize joint gain through creative trades, and others are barely considered satisfactory.
Strategic wariness causes many people to leave untapped value on the negotiation table. Of course, negotiated agreements based on incomplete and distorted information aren’t likely to be very efficient.
The Art and Science of the Negotiated Agreement: Continuing to Negotiate After the Agreement
Twenty years ago, as a remedy to this dilemma, Howard Raiffa, author of The Art and Science of Negotiation: How to Resolve Conflicts and Get the Best Out of Bargaining (Belknap Press, 1985), floated a novel idea: people should still continue to negotiate after coming to an agreement.
Specifically, Raiffa proposed that negotiators consider post-settlement settlements in which their current deal is simply the foundation for further value creation. A signed deal would become the bird in hand; negotiators would entertain revision if – and only if – it were to everyone’s advantage. With this assurance, people should be more open to revealing their biggest priorities.
After agreeing on the purchase and sale of a home, for example, the parties might talk over the closing date.
If the buyer would like to move in as soon as possible (or the seller remain in the property longer), a price adjustment coupled with a date change might leave everyone better off in the long run. Other post-deal topics for discussion might include seller financing, home furnishings, and, in the case of a vacation property, maybe even some future timeshare. Even if few of these options have proved feasible, one or two might offer thousands of dollars of extra value to both sides.
Post-settlement settlements should work in any setting, yet they are rarely ever attempted. In hard-bargaining, distributive negotiation scenarios (those negotiated agreement scenarios in which each side seeks to maximize her value at the expense of her counterpart), it can be difficult to shift gears to a more collaborative, win-win negotiations approach; even people who have been cooperative throughout the process may simply run out of steam. But consider that it takes little effort to say, “Great! We’ve got a deal that we both can live with. But it might make sense to roll up our sleeves and see if we can do a better job.”
Do you find any of this information helpful to your existing negotiated agreement strategies? Let us know what you think in the comments section below.
Related Dealmaking Article: Negotiation Strategy and Negotiation Techniques – MESO (Multiple Equivalent Simultaneous Offer) Negotiation – How making multiple equivalent simultaneous offers (or MESO negotiation) in negotiations can help you secure the deal you want while also creating value for yourself and your bargaining counterpart. Presenting your counterpart with multiple equivalent simultaneous offers broadens the zone of possible agreement (ZOPA) with your opponent, as well as illuminating your (as well as her) BATNA (best alternative to a negotiated agreement).
Originally published in 2013.
Deals are regularly “… based on incomplete and distorted information …” – or how would any industry worth its salt protect its intellectual property? No one can be sure they are not entering into negotiations with a party that does not want to close a deal but just find out some business secrets. Your examples, like about buying house are rather simplistic events, whereas deals involving e.g. the setting up of a plant in a foreign country are ,far more complex. But … even your simplistic example seems unrealistic to me. Do you really believe I would first sign a deal on buying a house without fixing the EXACT date of evacuation by the selling party? You seem to think all these properties are independent variable like “first talk about an unspecific ‘house’, then add location, size and price or deadlines (I know, I am overdoing it a bit). As with game theory, which we can see how “fruitfully” it now plays out in Varoufakis’ Greek debt deals, most of these university-level negotiation projects fail in the real world, I am sorry to say.