In Negotiation, Money Is Not The Only Issue

A lot of negotiations fail because the parties focus too much (or only) on money.

The problem with this is that the negotiation quickly and unavoidably spirals down into bargaining.  The parties lock in their positions, make small concessions grudgingly, turn it into a personal issue, and bluff and cheat to have it their way.  It becomes a verbal tug of war where the stronger party "wins," usually at the expense of trust and relationship with the other side.

"Bargaining is a verbal tug of war."

I've seen this dynamic unfold in bargaining over monthly rent, house sale, professional service fees, you name it.

However, money doesn't necessarily have to be the only -- or even the primary -- item on the agenda.  Indeed, you can create new value when you think outside of the money box.

Here are a few good examples from my experience, simplified for clarity:

1. The seller of a building concedes on price when the buyer agreed to name the building after the seller;
2. A contractor concedes on service fees in return for the right to delegate a part of the work to a more cost-effective subsidiary (for more, see How We Saved Our Clients $250,000);
3. A client concedes on the contract price in return for a shorter notice period for terminating the contract;
4. An employee concedes on salary in return for extra vacation days in a year;
5. The management of a venue concedes on price in return for added publicity for the venue by the event organizers;
6. The landlord of office space concedes on monthly rent in return for access to the tenant's professional network;
7. A law firm concedes on service fees in return for an opportunity to present its work to the top vendors of the client (for more, see Never Make Unilateral Concessions When Negotiating);
8. A vendor concedes on purchase price in return for the importer covering shipping and handling, since it's cheaper for it to do so;

These results may seem intuitive, yet by human nature we often miss them as we find ourselves seated at the table.  By reflex, we become fixated on money as if it's the only negotiable item (and probably naturally so, since it's easily quantifiable).

The next time you find yourself pushing and pulling over dollars (or hundred thousands thereof)... stop.  Take a step back to see the bigger picture ("go to the mental balcony," as William Ury puts it) and add new items to the agenda.  Once you do this, you'll be able to engage in value-creating trade-offs...

And turn the tug-of-war into teamwork.

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For more on value-creating trade-offs, see Great Negotiators Do This Every Day.

Stepan Khzrtian (Cantab '11) is co-founder and Managing Partner of LegalLab Law Boutique (www.legallab.co) and co-founder of the Center for Excellence in Negotiation: Yerevan (www.cen.am).  Trained in advanced dealmaking at Harvard Law School, he has been engaged in coaching and consulting on negotiation for nearly 10 years, working with clients to successfully close deals with Fortune 500 companies and empowering officials and officers to best serve constituencies. 

He writes on law, dealmaking, and strategy.