Improve Your Negotiations With The 5 Golden Rules.   LEARN THEM

“I don’t trust him,” he told me. “He’s lied in the past and will do it again. But I have to deal with him. What should I do?”

First, understand the role that trust plays in negotiations. According to Roger Fisher, co-author of “Getting to Yes,” trust is a matter of risk analysis. The more you blindly trust, the more you put yourself at risk. The less you trust, the less you risk.

If you have spent your life building a company and want to sell it and retire, you likely will not accept a handshake deal with a stranger.

You’ll want the commitments in a legally enforceable written document. Otherwise, the risk is too great and you will end up with less than what was agreed.

Likewise, you probably don’t get legally binding commitments in many everyday negotiations. It’s just not worth the effort – and the risk is minimal if either side reneges.

As a result, initially assess the risk – and your personal comfort with it – in determining when and how much to trust others in negotiations.

If you naturally start out by trusting others, understand the possible ramifications of misplaced trust as the stakes increase. If you’re more cynical, realize this also comes with costs.

So what should you do if you distrust your counterpart?

Most importantly, analyze why you distrust them and determine what incentives they have to lie. While some may be inveterate liars, most lie because they perceive it to be in their self-interest. They believe they will gain some advantage from such behavior.

Take that advantage away. Make it in their self-interest to “be trustworthy.” If your counterparts believe they will suffer negative consequences from lying, they will be less likely to do so.

Let’s say you are selling furniture at a garage sale and your new neighbor, a stranger, offers you $1,000 for your couch. However, he says he won’t have the cash for two weeks.

Should you put a sold sign on the couch and simply trust he will pay you later?

I would probably ask for a nonrefundable deposit of $250. That way, he will forfeit the $250 if he does not honor his commitment to buy the couch. He now has a $250 incentive to “be trustworthy.”

The bottom line? Take away the other party’s incentive to lie or breach an agreement.

This is especially critical in dealing with those you know or suspect – from past experience or from reputation – to be untrustworthy. There, in addition to ensuring significant consequences for any breach, take the following steps:

• Independently confirm all statements that may provide your counterpart with leverage or power, especially if they involve the existence of an alternative deal.

• Discount the relevance of statements that cannot be confirmed.

• Document and then confirm in writing the party’s commitments.

• Consider recording the negotiation.

• Aggressively explore your potential alternatives.

• Be especially wary of vague and ambiguous statements.

• Build mechanisms into the agreement that independently confirm each party fulfills its commitments.

• Understand that such negotiations take more time and effort than others and recognize this as a cost of dealing with this person.

• Pay attention to the details and don’t leave ambiguous issues unresolved.

• Consider bringing in an independent third party to help.

• Specifically define what constitutes a breach.

• Provide for a fair and efficient way to resolve disputes that may arise from a potential breach.

Finally, don’t lower yourself to their level. Your reputation is too important to risk.

I recently read that U.S. Sen. John McCain videotaped the campaign finance reform support commitments he received from other members of Congress before helping them raise money and campaign.

I don’t know if this is true. I do know, however, that if he did, those members likely voted for campaign finance reform. Their credibility, if not, would have been destroyed.

Trust is a critical element in all negotiations. Trust me on this, and protect yourself.

Published May 3, 2002 The Business Journal

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