How to Close a Deal in a Negotiation

The feeling of a negotiation reaching a closed deal.

Early in my career as a business valuer and engineer I mentored many new employees with the advice that the first day to start report writing is when you receive the assignment.  Your focus needs to be on the final report from the day the engagement letter is initiated.  The same concept holds true for negotiations.   Plan on the close of the negotiation from the very beginning.  Many become to oriented on closing the deal rather than focusing on the process.  Yet others may focus on the process and don’t know when to close the deal or how to obtain help on closing the deal.  See a great article on this topic from the Harvard Law School Program on Negotiation written by Katie Shonk.  I have taken her words of wisdom and elaborated on these given my over 2,500 mediations and negotiations over my career to offer you some further ideas to help you with your negotiations.  I elaborate on her seven ideas in the commentary that follows.

1. Process: The process needs to be well thought and planned with multiple routes depending on how the negotiation proceeds.  Negotiation after all is a process.  Who will participate?  What are their roles?  What would we want included in ground rules?   Where will we have the meeting?   How will we structure the meeting?  Will there be an agenda and if there is who is preparing the agenda?   What is our starting position?  What are our interests economically, socially and environmentally?   What do we think their interest are economically, socially, environmentally and emotionally?   What do we see as the problem?  What alternatives do we want to propose?  What are the impacts of those alternatives?  How do we evaluate the alternatives?  How do we demonstrate that we are listening to the other side?  How do they know we care?  Do we care if they care or not?  Have we thought about and prepared our Best Alternative to Negotiated Agreement (BATNA) if an agreement cannot be reached?  Have we considered an absolute worst case scenario known as the Worst Alternative to a Negotiated Agreement (WATNA) if an agreement cannot be reached?  For example might this mean we literally go to war with a competitor or need to file for bankruptcy?

2. Deadlines: What will be the schedule and time line be for this meeting and for any additional meetings in the future.    What if team members on our team or the other team do not meet these deadlines?  Who is the leader and how will the leader help the team stay focused to address those that do not comply timely?  Did we set the stage and incorporate deadlines in our ground rules up front?   I have found that whatever the deadline to a less complex negotiation or mediation, if the expected time frame is few hours to an all-day meeting, typically significant movement takes place in the last 15% to 25% of the time set aside for the negotiation.  For more complex negotiations or mediations, milestones are set with specific expectations.  For example in a particularly complex example with 12 issues amounting to over $30 million in differences, eight issues needed to be closed out in two days in order to address the other four issues over another two days.  Both parties agreed that if an agreement was made on the first eight issues they would honor the agreement on those eight issues even if there was no agreement on the other four issues.  Deadlines matter.  In one instance the parties negotiated an hour to extend the process for two hours.

3. Shut-down move: I have not seen this done or applied in my experience, so I cannot provide additional insight on this approach.  Asking one side for an exclusive negotiating period when the other side will not negotiate with someone else is a unique approach.

4. Take a break: Katie Shonk points out that even though this may seem counterproductive, many times providing for an extended time can help quell emotions.   I concur.  I am involved in many negotiations and some mediations that have gone on for months.   Meeting a month later often helps the parties to rethink their positions, and develop alternatives taking into account the emotions and the interests presented by the other party.  Upon reflection having listened carefully to the words spoken, the tone of voice, the body language and the facial expressions of the other side, team members may come up with more creative alternatives.   This can go a long way towards proposing alternatives thinking outside the box. 

5. Bring in a trusted third party:  This is what I am generally called in for as a mediator.  In my volunteer work I am simply thrown into the mix.  In my business I always meet with the parties beforehand.  It is extremely important to build trust.   It is extremely important to truly remain neutral.  Finding the right party is critical.  The mediator may be a facilitative mediator, a transformative mediator or an evaluative mediator.  For example I perform facilitative and transformative mediation, but not evaluative mediation.  Many times attorneys and retired judges perform evaluative mediation and may find it harder to shift roles and to move into facilitative or transformative mediation. Explore who might be the trusted third party and ensure you want to use some with the appropriate style.

6. Change the lineup:  I was involved with a mediation at IRS Appeals on the West Coast helping my private sector client as part of a negotiation team.   I introduced myself as a disclosure witness related to the issue in question and as a trained mediator.  The IRS Appeals Officer fired back at the taxpayer team that she was in charge, this was not a mediation, and that I better be clear on this.   It was not my intention to aggravate the IRS Appeals Officer, but she was clearly agitated and she had a preconceived perspective.  As such, I kept my mouth shut for the most part at this first meeting.  When I did ask a question at the first meeting either of the IRS exam team or my client, it was to advance understanding and broaden the horizons of the parties.   At the second meeting exam was not present, the Appeals Officer did not feel threatened and she saw me as constructively working to help resolve the issues.  With the change in participants (examination not in attendance at the second meeting) and having built trust from the first meeting it was possible to positively impact the process going forward.

7. Set up a contingent contract:  Katie Shonk’s idea of including a penalty for a late completion in a home remodeling contract can work.  Having worked for the U.S. Army Corps of Engineers early in my career as a project manager with about a dozen contracts in place at any one given time, I think an incentive works even better.  Having a penalty only addresses a negative perspective.  Offering a bonus for work done ahead of time often meant that given two contracts with the same completion date by the contractor, ours might very well be the priority based on this incentive.  In addition, the possibility of future work and the ability to develop a good working relationship may also work very positively to induce positive timely results not only in terms of the deadline, but quality.

This article by Katie Shonk offers seven very good ideas.  I have expanded on these slightly to offer you some additional insights based on my experiences.  I hope you find these useful for your negotiations.

Mike is a manager with over 25 years’ experience at all levels of management.  Mike provides services related to negotiation, mediation, and value added services (business valuation reviews, research credit advice, transfer pricing assistance, strategic planning and leadership development) to help clients and boards of directors on a wide variety of issues.  When not serving clients as a consultant or blogging, Mike is an avid writer, speaker and educator.  When not working Mike enjoys family, church, volunteering, and daily yoga, meditation and exercise.