As the NFL demonstrates, a negotiation isn’t a failure if you don’t reach an agreement. A negotiation can be a failure only after you reach an agreement. Plus: What you need to know about the other party to reach a truly successful agreement.
When you’re negotiating, it’s tempting to think that if you don’t reach an agreement with the other party then you’ve failed. Nothing could be further from the truth. The site richest.com recently reviewed the 20 worst American National Football League contracts from 2014 (that’s 20 bad deals in just one year). All of these contracts reflect the result of a successful negotiation…provided you define “successful” as “reaching an agreement”. But, considering the amounts of money and disappointment involved, almost anyone would classify these arrangements as “unsuccessful” because one party in the arrangement (management, in this case) isn’t getting anything like what they wanted.
In fact, I’d claim that if you don’t reach an agreement then your negotiation can’t possibly fail. I’ll come back to that later but I want to talk, first, about how to avoid these kinds of disasters in your own negotiations.
Let’s face it: We’ve all been trapped in some partnership, deal, or arrangement that we’ve ended up regretting. When we’ve been in those situations, we’ve tried everything we could do to fix the problem – which has boiled down to following one of four courses of action. We’ve tried to:
These are polite ways of saying that we’ve tried to sabotage the arrangement.
There have probably been times when the other parties in the arrangement have also been unhappy with the arrangement. Alternatively, the other parties in the arrangement have thought the arrangement was terrific…at least until we tried to get those other people to do more, tried to do less ourselves, tried to get out of the arrangement, or negotiated for more than was fair in our next negotiation. At that point the relationship turned sour even for the other parties. In these situations it would have been better if we hadn’t reached an agreement.
To put it another way: Folks, “successful” negotiations like this – negotiations where the definition of success is “we reached an agreement” – is why we have so many divorce courts filled with unhappy people.
In Learning Tree’s negotiating skills course, we talk about a “win-win” result. A “win-win” result doesn’t mean that both parties get everything they want; It does mean that both parties feel they’re getting a good deal: each party is getting more than they give up. A win-win result ensures that both parties will actively contribute to and participate in the arrangement without trying to sabotage it.
But there are situations when you don’t need to have a win-win result. Those situations have to meet three criteria. First, you have to be involved in a distributive arrangement (which means that if you get more then the other person has to get less – see James Haner’s series on the fundamentals of negotiation). Second, you have to be negotiating with someone that you will never negotiate with again (otherwise, the other party will just try to get back at you the next time). Third, the results of the negotiation have to involve exactly one transaction rather than an ongoing relationship (otherwise, the other party will try to do less or get you to do more in later transactions). When all of those criteria apply, it makes sense to try to create a win-lose relationship that favors you at the expense of the other person.
But, in reality, that situation doesn’t happen very often. In many cases, by working together, we create an integrative result which delivers more for both parties than if we worked separately (i.e. we don’t have to prosper at the other party’s expense); In most cases, the person we negotiate with today is the person we will negotiate with tomorrow; In almost every case, the result of the negotiation is a relationship that involves a series of transactions that stretch over time. In those more typical negotiations creating a “win-lose” arrangement will simply result in one party trying to sabotage the arrangement. It’s an arrangement that’s not going to end well for either party.
And that’s the real definition of a failed negotiation: It’s not when the parties fail to reach an agreement; It’s when the parties reach an agreement that they can’t live with, that they want to sabotage.
On the other hand, if two parties negotiate and realize that there’s no arrangement that both parties will benefit from then that’s not a failed negotiation. The two parties may not have reached an agreement but both parties have learned something important: That there’s no deal available for them.
The problem is that negotiations have a kind of momentum, an inertia similar to a rock rolling downhill. Once you start negotiating there’s a tendency to feel that you have to reach an agreement, that you’ve failed if you don’t reach an agreement. This can turn into a desire to reach an agreement at any cost to yourself.
This is why it’s so important to know your BATNA (Best Alternative To a Negotiated Agreement). Your BATNA tells you what it’s worth to you to not reach an agreement. If, through negotiation, you discover that there is no arrangement that’s better than your BATNA then that negotiation has been successful: it’s just that the right result is to walk away without an agreement.
If you take a deal that’s worse than your BATNA then you will, eventually, realize your mistake and try to sabotage the arrangement. But there’s another important point, here: The same is true of the party you’re negotiating with. If the party you’re negotiating with accepts a deal that’s worse than their BATNA then they will also, eventually, realize their mistake. When that realization hits then they will start trying to sabotage the arrangement.
Putting that altogether means that if you want to create a long lasting arrangement it’s not enough to know your BATNA: You must also make an educated guess at the other party’s BATNA. If you end up with an agreement where the other party is worse off than their BATNA then the other party will, eventually, attempt to sabotage the arrangement.
You can only fail in a negotiation when you or the other party end up on the “lose” side of an arrangement. But each party can only end up on the “lose” side if they first agree to that arrangement: As I said, a negotiation can’t fail until you agree. When you walk away from an agreement that’s worse than your BATNA, you’ve succeeded. Congratulate yourself!