Adapted from “The Deal Is Done—Now What?” by Jeswald W. Salacuse (professor, Tufts University). First published in the Negotiation newsletter.
At last, the deal is done. After 18 months of negotiation, eight trips across the country, and countless meetings, you’ve finally signed a contract. It’s clear and precise. It covers all the contingencies and has strong enforcement mechanisms. You’ve given your company a solid foundation for a profitable new business. As you file the contract, a question dawns on you: Now what?
To achieve your goals, your two companies will need to develop an effective working relationship. Here are some essentials:
Two-way communication. At the time executives negotiate a deal, address the modes of communication you’ll use after the contract is signed. Parties to a long-term transaction can communicate in person or on the phone, or through faxes, video teleconferences, e-mail, and so on. While each mode may be an effective means of passing on desired information, some are more conducive to building and managing business relationships. Face-to-face meetings are usually the most powerful tool, allowing parties to convey information and learn more about each other. Visits may lead to brainstorming about new projects and business ideas. They also demonstrate the visitor’s dedication to the relationship.
Strong commitment. A good working relationship is one in which the two sides are committed to each other and to their partnership. Commitment requires more than just signatures and handshakes, however. Your partner will judge whether your commitment is genuine based on your behavior over the course of the relationship. To test the other side’s degree of commitment, try structuring your transactions to require increasing levels of effort, capital, and cooperation.
Reliability. An important basis for trust, reliability has two dimensions. First, a business partner’s conduct should be predictable. Second, the partner should honor promises and commitments made to the other side. A business partner who submits reports two months late, fails to show up for meetings on time, and responds slowly to e-mails will soon be viewed as unreliable. That judgment will inevitably become an obstacle to developing a good working relationship and eventually may lead to abandonment of the deal. On the other hand, if your partner judges you to be reliable, it will quite naturally turn to you to develop other business concepts.
Mutual respect. Creating respect in a relationship begins with the principle of equality between parties—the sense that each side recognizes that the other brings something valuable to their common enterprise and that both sides deserve to be heard. Like communication, respect is a two-way street. Show genuine interest in your contractual partner’s viewpoint. You may think you know more about the deal, but your partner could surprise you by improving it with valuable information and insights.