Recently, in a presentation and communication training, an exercise was about reaching a long-term agreement between two groups over several periods. The aim was to maximise the profits of both “companies”, which could only be achieved in the long term through cooperation.
While one group reasonably adhered to a verbal agreement in the sense of “handshake quality”, the other broke the deal to gain an advantage, at least in the short term. This approach permanently damaged the trust between the negotiating partners for the rest of the exercise, and the goal of maximising profit amounted to “damage limitation” for both sides.
One participant reflected after the exercise: “Written agreement is valuable and oral has no value.”
A written agreement is a possible criterion to make arrangements “watertight”, but it does not protect against abuse any more than an “only” oral contract can be broken.
So what does it take for agreements to stick?
If I want to reach a long-term deal with my counterpart, I should always ask myself three “simple” questions:
- May I,
- I can,
- I do,
make and keep this agreement?
Do I have the power to close the deal? Do my role and the framework conditions associated with it offer me the possibility to keep the agreement made in the future?
Do I have the competences to fulfil the agreement made? Do I have the necessary knowledge and skills for the deal made to enter into it “in good conscience”? What might it take? And, if necessary, how do I get there?
Here we come to the most delicate point, which concerns the counterpart’s attitude and attitude to agreements. At this point, we come across the concept of “commitment”.
Do I also feel obliged to comply with the agreement?
We explored how commitment can arise and what one can do oneself to generate commitment on the other side.
- Suppose I am interested in a long-term, successful business relationship with the other side. In that case, I will keep my word and fulfil the agreements made, as disappointed expectations are likely to harm me in future negotiations.
- If values such as honesty and trustworthiness are essential to me, I will honour agreements out of an intrinsic need because otherwise, I would be acting against my personal needs.
What can I do as a negotiator to generate commitment on the other side?
- A successful approach is to use trust-building measures to strengthen the relationship with the other side to generate a joint solution. However, be careful; this is not an invitation to trust the other side, “unconditionally”. Building a sustainable business relationship is a long process.
- I can make “non-compliance” with the agreement uninteresting for the other side if, for example, I agree on high penalty payments.
If all else fails, use the Tit for Tat strategy.
If I do not get any signals from the other side about whether they are interested in a cooperative and joint solution, behave constructively as long as the other side does. Immediately set a sanction if the other side leaves the collective path.
However, we recommend that in this situation, you remain cooperative and that as soon as the other side is collaborative again, you also respond cooperatively.
Use this strategy when You need to do business, but you can not establish a good relationship with your partner. It serves to avoid damage. In this context, you should never take the “misconduct” of the other side personally. Consider very carefully if You want to do business with this person again. The Tit-for-Tat strategy is not a “permanent solution”.