The Road to a Fair Deal is Paved With Good Intentions. And Something Else.

I’ve written before about the difference between interests and positions in a negotiation. Where positions clash, interests may share common ground and produce win-win solutions.

Common Ground pic

Deal or no deal?

Like in the story of the 6 eggs and the 2 bakers. Their positions clashed, in that they both wanted 4 or more eggs. But, as it happened, their interests were complementary in that one needed whites and one needed yolks. By coming to a deal based on interests, the 2 bakers were able to maximise the utility of the 6 eggs and literally ‘expand the pie’.

In this story, the bakers had complementary interests, so a win-win solution was possible without even a gram of compromise. If only all deals were as sweet.

The reality is that in most negotiations, interests will clash. You will find your common ground. But once you get there, and start gazing about the place, you will notice that there is a road between you, and that road is paved with the weeds of competing interest. Your ability to navigate through the weeds, and agree on what is fair and reasonable, will determine whether you make it through to ‘mutually beneficial’ territory and seal the deal.

Say for example, you want to rent a house. Someone out there, lets call him Jim, wants to rent out his place. You like the house, Jim likes you. That’s common ground, is it not? Well yes, of course it is. But there are a few more details to settle before you have yourselves a rental agreement. Like how much rent you will pay. And it is in those details that your competing interests will come forth and shake up the party.

So what to do next? How do you find your way to a fair and reasonable deal?

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What to do…

Well, what you think is fair and reasonable, and what Jim thinks is fair and reasonable is going to be different. Your interest is to pay as little rent as possible. You have bills to pay, clothes to buy, brunch to fund. I get it. Jim, on the other hand, is a capital ‘I’ Investor. His interest is cold hard negatively-geared cash. Your interests clash and therefore what is fair to you is not the same as what is fair to Jim.

What you need is some kind of independent measure of ‘fairness’. Something to cut through the self interest and point to a solution that is objectively fair and reasonable. Fisher and Ury (my ‘Getting to Yes’ gurus) call this ‘objective criteria’ and champion its use as one of the four pillars of ‘principled negotiation’.

Objective criteria is any objective measure of fairness, efficiency or merit. In the rental market, this would include property value, average rental prices and renter demand. Everywhere else, this could be the law, science, independent valuations or other things.

Clever negotiators will skip past the positional tug-of-war and start by looking to objective criteria to agree on a fair and reasonable deal.

Fisher and Ury provide a good example of this in ‘Getting to Yes’ and I will paraphrase it here: During the United Nations Convention of the Law of the Sea negotiations, India (representing the Third World bloc) proposed an initial fee for companies mining in the deep sea bed of $60 million per site. The US rejected the proposal and suggested that there be no fee. Both sides clung to their opposing positions. Then someone discovered that a prestigious university had developed a model for the economics of deep sea bed mining. The model showed that the $60 million fee, payable before the mine would generate any revenue, would make it virtually impossible for any company to mine. The model also indicated that some initial fee would be feasible. India, who had been influenced by anti-capitalist sentiment, and the US, who had been influenced by mining companies, were able to recalibrate their positions based on what was objectively the smart thing to do (economically that is). India changed its position, the US did too.

The good thing was that neither side looked weak. They just looked reasonable. It was compromise in the absence of pressure.

So, to summarise, smart negotiators will start by looking for objective criteria and negotiate from there. That way, they will give themselves the best chance of making wise deals efficiently, and walking away with egos and relationships intact. And what is more fair than that?

Thought leader(s): Roger Fisher, William Ury, Bruce Patton (Harvard).

Source(s): Source(s): Roger Fisher, William Ury and Bruce Patton (2012) ‘Getting to Yes’, 2nd Edition, Penguin. 

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