Tensions arise whenever negotiations take place. This is not surprising. Sitting down to negotiate or participate in mediation is like preparing to throw a punch or defend.
To become a better negotiator, it's important not to try to avoid tension. Tension teaches us. But first you need to know that you have to feel the tension and respond calmly and strategically.
As a result of my work as a negotiator over the past 40 years, I have come to study negotiation tension and break it down into seven distinct components. By recognizing the seven tensions, knowing when to expect them, and knowing what tactics and moves are most likely to counter them, you can reverse course and gain an advantage in negotiations. You can.
The seven tensions in negotiation include:
1. Relationship tension. Who am I negotiating with? Will you have an ongoing relationship with this person, or is this a one-time deal? The type of negotiation depends on the person across the table.
2. The tension of the outcome. This tension comes from wanting something, perhaps not being completely clear, and even not knowing what you're going to get. There will be resulting tensions related to one's own perceptions and opinions about who should receive what.
3. Process tension. Where will negotiations take place? At your location, theirs, or a neutral location? In what order will issues be resolved? How will information be shared? All tactical elements such as strategy, planning, logistics, and agenda create tension in the process. It revolves around how parties decide to engage.
4. Timing tension. Timing tensions arise because timing is required to resolve negotiations. For example, if you start buying assets or a company, do you need to complete the acquisition this year or in the first two quarters of next year? The feeling will be higher. Similarly, sellers may have timing needs as well. They may want to avoid stub accounting periods. There may be a problem with the timing of tax payments. Timing between you and the other party is important in negotiations.
5. Power tension. Power tensions revolve around the fear that the other party will become more powerful because they have more resources or options. They may know something you don't or have the ability to influence or control you. It is important to understand power tensions in terms of how much influence one party has over the other.
6. Agent tension. Many transactions involve intermediaries such as lawyers, investment bankers, accountants, and consultants, creating tensions. What kind of agent should you have? How confident are you in your agent? How aggressive is your agent in negotiating on your behalf? How do you change it? And does the agent have enough expertise in the subject matter? All are sources of tension for agents.
7. Team tension. Most negotiation work is done in teams. You have a responsibility to your fellow voters. Team tensions revolve around the composition of the team, the consistency of the team, how the team's duties are divided, and to whom it is responsible.
To illustrate how the seven tensions affect negotiations, consider a typical acquisition.
relationship: Who will survive as the manager of the combined company? If you are the buyer, do you need buyer management? If you are the seller, will the seller need you or your manager? Whose culture will the new culture be? Is this a takeover where everyone will be laid off after the store closes? The future of the relationship will have an impact on negotiations. And you should.
result: What are the terms you want for the deal? What is the maximum you are willing to pay? What are the other terms? What kind of compensation do you want? Who takes what risks? What happens if I don't close? What are my options if I don't complete the transaction?
timing: When do you want to complete the transaction?When? they are Need to close? Are there any conditions or legal changes that will affect when it should take place? For example, certain tax breaks in favor of the agreement may expire.
force: Who has more influence? Are both parties hopeless due to their financial situation? Will one party have more staying power if negotiations drag on? Who will benefit if this deal goes through? If not? Who has a stronger balance sheet and income statement?
process: How will you negotiate? Will there be a lot of meetings, phone calls, or in-person meetings at your home, their home, or a neutral location? Will you leave it to an intermediary? What are you going to have them do with the principals?
Agency: What kind of agent do you need? Do you need an investment banker? Outside counsel? consultant? Accountant? what do you want from them? How much power do you give them? How do you evaluate its effectiveness? How much does it cost?
team: Who is your team? You are responsible to your board team, shareholders, and possibly other constituents. What team will you assemble for contract negotiations? Will you lead it? Should you be a part of it, or should you be an independent final decision maker?
Once you have identified these tensions, you will be able to recognize when they are being used against you. What kind of tension do you feel when someone puts pressure on you? “You have to do this within 90 days”…timing tension. You can say, “Sorry, it's going to take 180 days.”
You can also use different types of tension depending on the tension. The other person will force you to give results. “You can't sell unless you have $100 million for the company.” You might counter with the importance of the “due diligence” process and the relationship with the money you'll make together in the future.
Each of these tensions can be felt, compartmentalized, and dealt with in a disciplined manner. Having the ability to understand, deal with, and manage the seven tensions rather than managing them yourself is the key to successful negotiation. Retrain your instincts to feel the tension, breathe, try not to panic, identify the cause of the tension and try to resolve it, exchange one tension for another, or replace one tension with another. I will give it to the person concerned.
