Adapted from “Your Place or Mine? Deciding Where to Negotiate,” by Jeswald W. Salacuse (Professor, Tufts University), first published in the “Negotiation Newsletter”.
Everyone knows the three rules of real estate: “Location! Location! Location!” When it comes to making deals, choosing the right place to negotiate can be just as important. The location you select can dramatically affect the ensuing process and, ultimately, the end result. In deal making, the answer to the question “Your place or mine?” is never automatic. It requires careful study of the negotiation ahead of you.
Negotiating at your place. Like athletes seeking the home-field advantage, most people prefer to negotiate on their own territory. Meeting at your office offers many perceived benefits. First, you gain the advantage of familiarity with the negotiating environment. You know where everything is located, from reliable secretarial services to secure areas for private consultation. Your counterpart, on the other hand, runs the risk of unfamiliarity.
Negotiating at home also allows you to control the environment, including the selection and arrangement of the meeting room, the seating of participants at the bargaining table, and the nature and timing of hospitality and social events. Playing host gives you the opportunity to impress the other team with your company’s resources. Finally, negotiating at home is cheaper, eliminating travel costs and saving executive time.
Whereas host negotiators can usually continue to handle other job demands while participating in talks, a visiting negotiator cannot do the same. Negotiating at home also spares you the pressures of being away from your family, friends, and daily routines. Visiting executives may tend to make a deal or break off talks more quickly than if they were negotiating on their own turf-often to their disadvantage.
Negotiating at your counterpart’s place. At first blush, negotiating on your counterpart’s turf seems to offer only disadvantages: travel can be costly; the environment is unfamiliar and uncontrollable; lines of communication to your home office may be slow, uncertain, and insecure; and, when traveling a great distance, you face the psychological pressures of being away from home.
On the other hand, when you’re the seller, often the only way to bring your product or service to the other side’s attention is to show up at his office. The choice of a negotiating site also has symbolic value. By entering your counterpart’s territory, you show your serious intent and strong desire to make a deal-factors that can be invaluable in persuading him to sign a contract.
The most important reason to negotiate on the other side’s territory is that it gives you opportunities to learn. When making deals, executives are laying the foundation for a continuing relationship-which depends crucially on how well parties know each other. A vital purpose of any business negotiation is to allow both sides to learn about each other, their businesses, and the conditions in which they must operate. In this respect, the home field doesn’t hold an advantage.