Negotiation Stage 5: Dealing with Concessions

Serious concessions must be taken seriously. If one party gives up an important desire, the other party must respond appropriately. They cannot ignore it, for if they do they are showing disrespect for the other party and more importantly, they are revealing that they are not serious about negotiating.

Often you will make a concession with the main object of getting the other party to make a concession you want badly, but concessions are made for a variety of other reasons too. As indicated above, they may be made to get information, to test flexibility, to show goodwill.

As concession–making is an important part of the whole negotiation process, it is worth examining some of the do’s and don’ts of concession–making.

Click here to view a video that explains tips on making concessions in a negotiation.

Deadlock

How can a deadlock be broken? There are several strategies that are employed.

• Go back to information gathering. It may be that one or both parties have misunderstood the other’s situation.
• Agree to disagree for the moment and try to explore other aspects of the situation instead. This gives the opportunity for understanding and goodwill to continue to improve and perhaps for agreement on the other important issues to take place. It will then be easier for parties to compromise later the deadlock issue.
• Try to think laterally. Brainstorm and make unexpected suggestions.
• Often, the parties become very rigid in their thinking and something is needed to break this rigidity. In our example, the solution may be for Qwikbite to hire an independent delivery service, so that Hercules does not have to deal with it, but Qwikbite get their three deliveries per day.
• Spell out to the other party what the consequences are if no further progress is made. Rather this, than giving an ultimatum, but it might work in some situations.
• Arrange for a neutral third party to act as a mediator or arbitrator. A mediator makes suggestions, may or may not be accepted, while an arbitrator makes a ruling which the parties must accept.

When everything has been successfully traded, we must close the deal:

‘I’ll leave it with you then’ or ‘I’ll give you a call’ are not closings.

Determining when to close a negotiation will usually be self-evident. However, look out for closing signals from others that they are ready to make and agreement. For example: if someone says I will buy it on your terms, don’t ask them to wait until you have completed all the earlier phases of a negotiation!

This phase is a process that cannot be rushed. There is clearly no advantage in acting as if the parties are moving towards agreement if there is a deadlock on some issue(s), or some important points have not even been discussed.

In other words, one can only begin to move towards agreement when there is a sense among parties that the negotiation has been largely successful. At this point, it is useful to promote a positive mood. This might be done by praising the other party for the professional way in which they have negotiated and apologize for your insistence on doing things your own way. Statements of trust, future benefits and promises to treat your negotiating partner preferentially in future all add to the positive mood.

A good strategy at this point is to summarise the situation. This achieves two goals: a reminder of how hard all have worked, and how far they have come, and, a restatement of what each party understands by the agreement (so that there are no later misunderstandings and accusations of “going back on your word”).

At this point, it is customary for a final offer to be formally tabled. This must be done with conviction, but it must also reflect what has developed during the negotiations. There may be small modifications on what has been said to date, but clearly a major new demand or proposal would set the whole process back, or even destroy what has been achieved.

The parties will consider the final offers from each other. It can be expected that minor alterations will be suggested, even at this stage, but both parties will be quick to remind the other that there is little in risking in what has been achieved to date.

The final stage in the negotiations will be the discussion about the implementation of the agreement.

Develop an Implementation Plan

Know who is responsible for carrying out the provisions of the agreement, how they will be monitored (if necessary) and what you will do if conditions change. It is difficult to anticipate the future and the impact of the agreement.

Sometimes, agreements specify a review period. You should clearly decide what will happen if problems arise; build in a dispute resolution mechanism, such as mediation or arbitration.

In practice, some of this will occur at a late stage, once lawyers have been seen contracts and the parties have made their own internal arrangements. Nevertheless, if the outlines are not clear, the danger exists that the agreement will quickly break down and the time spent negotiating will have been wasted.

Reaffirm the Relationship

After the long period of stress that typifies the negotiation period, it is important to affirm the renewed importance of your relationship. Good relations tend to enhance implementation in the spirit of the agreement and can head off the problems of each party begrudgingly implementing as little as possible.

Sometimes parties affirm the relationship through a symbolic celebration of the agreement, such as a ceremonial handshake that makes public acknowledgment of the mutual commitment to the agreement.