Leave something on the table

Can one measure the skill of a negotiator based on what they leave – or don’t leave – on the table?  I think so.  The person who negotiates a deal extracting maximum value without leaving anything on the table is indeed a skilled negotiator, right?  I’d say “wrong”. 

To many, negotiation is a process of optimising one’s own self-interest – it’s about winning, and the satisfaction of knowing that you have left nothing that could have been taken.  I have seen this often – for example a business I know of has recently negotiated a lease for new premises – and taken maximum advantage of the current squeeze on commercial property owners by negotiating a great deal. 

So far, so good. 

But they continued squeezing – ratchetting more and more incremental concessions with regards terms such as minor but costly details of fitout until the owner was left in absolutely no doubt that he had been thoroughly beaten in the “game”.  Neither the landlord nor the tenant are clients of ours, but I have watched this unfolding from a distance, hearing the self-satisfied dialogue from one party – and the near desparation from the other. 

Good skills? 

Well this may look like good skills giving a great result for the leasee business in their new ivory tower.  But perhaps a better approach may have been to remain mindful of  the owner’s needs, appreciating that a good deal is one where both parties have given a little more than they initially intended.  The deal may have looked a little less attractive at the outset – but you can be sure the landlord will remember this bitter taste in his mouth when the leasee needs some slack at some stage of the next nine years! 

It is  not easy to save a relationship soured by aggressive negotiation.

In most deals that are the subject of serious negotiation, the contract is just the start of a relationship rather than a transaction to  be milked for every last drop before signing.  For example:

• When buying a business, the new owner is dependant on the vendor to ensure that as much personal goodwill as possible is willingly passed over following the sale.  You can be sure this won’t happen if the vendor has a bad taste in his or her mouth from overly aggressive negotiation techniques!
• When leasing premises, the leasee will surely suffer at some point if they are unable to obtain the landlord’s consent for some minor matter as a result of a bloodyminded attitude after being screwed too hard at the outset;
• A contract for supply is likely to be followed down to the last letter – and not one inch more – if the other party has negotiated so hard that there is nothing left on the table for the supplier.   

So should one ensure that every last scrap is taken from the table in a deal – or should one remain mindful of the needs of the other party and consider the ongoing relationship?   Of course, one will never know which course of action will ultimately pan out for the best economically until the relationship has played out in full. 

But I have to say that I really respect and prefer to work with those who adopt the latter approach.

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.