Concerned that you may not be able to trust your negotiation counterpart to follow through on their promises? Here are four ways to minimize your risk:
1. Evaluate the risk of trusting your counterpart
The bigger the deal and the greater the risk, the more you will want to do more than just blindly trust your counterpart.
2. Research your counterpart’s reputation
Find out if they or their organization are subject to some independent oversight, like having to be licensed (like doctors and lawyers), registered with an oversight agency (like many contractors), and/or a member of the Better Business Bureau. Search out their online presence, too, like on LinkedIn, etc. And take the time to follow up on recommendations and references. Find out what others’ experiences with them have been.
3. Give your counterpart reasons to follow through
Positively incentivize them to perform and fulfill their commitments and take away their possible incentives to breach, which could involve requiring up-front payments, using escrow agents and using signed, enforceable contracts with liquidated damages clauses.
4. Don’t put all of your eggs in one basket
Finally, even with all the ways you can try to protect yourself in any one deal, sometimes it might just go south. So, protect yourself by ensuring you have a decent alternative if your deal goes in that direction. Otherwise your leverage in that negotiation will be weak. Bottom line – diversification is almost always good.