What’s Your Contract Negotiating Style?

Companies often overlook the fact that negotiations extend from inception of a potential relationship through to its eventual conclusion; during this time, there may be hundreds of individual negotiated events, internal and external, that contribute to the eventual outcome – successful or unsuccessful.

 

Employing the right negotiating style is important to your success. There are generally two core approaches to negotiation commonly called Positional and Principled. The positional style is competitive in its nature and therefore tends to lead to a “winner” and a “loser” in the negotiations. While the principled style is focused on collaboration, with the ultimate goal being a win-win for both parties. Let’s take a look at each one.

 

Positional Negotiation
Positional negotiation is used when you are trying stifle and limit discussion. It is designed to intimidate the other party so that they lose confidence in their own case and accept the other side’s demands.

 

A positional approach involves a person adopting a position and aiming to negotiate an agreement as close to that position as possible, without even exploring alternative outcomes or paying real attention to the other side. It is a style that allows for only limited and fairly predictable negotiating. In many instances it can degenerate into a ‘battle of wills’, each party wondering who is going to give in first. People adopting a positional style will assume that only one party can emerge from the negotiation a clear winner.

 

Principled Negotiation
Alternatively, principled negotiation is employed when you are serious about finding a mutually acceptable solution. It is based on the assumption that the parties share some common interests and that the outcome (and longer-term relationship) will be improved if there is full discussion of each participant’s perspectives and interests.

Principled negotiation is generally prevalent in many of the deals that you negotiate. While certain elements of the negotiation may still be positional (i.e. delivery dates, data security and other non-negotiables), the overarching goal is to understand the shared opportunities and risks that prevail and come to terms that both parties can feel good about.

 

Overall success in a principled negotiation is going to be defined in the relationship that results, not the specific contract terms that are signed. Contract signature is just a milestone – not an end point.

 

Do you fit into one of these styles? Or do you find yourself using a little bit of both?

 

Most negotiators have a natural preference for one method or the other, but experienced negotiators need to be able to employ both. That means that you should understand and practice both styles.

 

But always remember. The other party in the negotiation has goals and objectives they need to meet too. If you can negotiate to create a win-win for both parties, you are much more likely to have them committed to the long-term success of the relationship.
Tom Rogers
Author:

Job Title: CEO
Organization: Vendor Centric

Tom is the founder and CEO of Vendor Centric, he has been a trusted advisor to nonprofit organizations for 30 years, with a focus on helping them align the right people, processes and systems to mitigate third-party risk and drive more value from third-party contracts and relationships.

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