Time or distance prevents you from doing your best. What if you’re due to begin talks with someone in a distant city or country, or under a tight deadline to hammer out a deal? When you don’t have the time to meet with potential partners in a distant location or participate in every step in the process, you’re unlikely to represent yourself well. Also, you might be tempted to close too quickly. In such cases, you’ll probably want to find an agent who specializes in the type of negotiation at stake. A California writer who has never dealt with commercial publishers, for example, should probably enlist a New York–based literary agent to sell her manuscript and explore contract terms.
You have a poor relationship with your negotiating partner. Imagine you’re facing—and dreading—negotiations with someone you’ve clashed with in the past. By bringing in an agent, you can calm tempers and better ensure that talks are businesslike and amicable. This strategy plays out most dramatically in contentious diplomatic contexts, such as the negotiation of a cease-fire between armies, when factions might bring in representatives they both trust to hash out a peace agreement. In the business world, when rancor between a company and its employees over a work contract is deep-seated and ongoing, both sides may need to employ experienced agents to explore very different terms from those that applied in the past.
In short, whenever you’re worried that you won’t be able to pursue your interests effectively—especially in the face of aggressive behavior on the other side—you’d be well advised to find an agent to represent you.
Using Agents Effectively
ONCE YOU’VE DECIDED to use an agent, it’s important not to rush headlong into the process—picking the first one you speak to, for example, and sending him off to talks the next day. You need to choose your agent carefully, and then establish a clear, detailed understanding of responsibilities and expectations. The following are critical steps in picking an agent and negotiating his contract.
Examine your potential agent’s reputation closely. When choosing an agent, put your needs first. Agents specialize in different fields and have known reputations—differences that can improve or diminish your chances of getting the outcome you desire. You might choose a particular agent because of her previous success negotiating with principals in situations like yours. Or the choice could be based on the strong working relationship she has with people you know. Analyze agents’ reputations from many angles while factoring in the particulars of your upcoming negotiation.
Clearly communicate your agent’s responsibilities. After you’ve made your choice, it’s time to write out the responsibilities you do and don’t want her to handle. Start by ranking your interests and sharing this list with your agent. A professional athlete might put performance incentives at the top of his list as his agent prepares to negotiate the player’s new contract. If the player’s performance has declined recently, he might feel uncomfortable asking team owners for such upside benefits on his own. The player should also specify the degree of authority the agent will and won’t have at various stages in the negotiation process. The agent might have a great deal of latitude early on but need verbal authorization from the player as the deal solidifies.
Negotiators often wonder whether they should give their agents broad or narrow parameters in which to settle. In my view, allowing your agent to explore a broad range of alternatives makes sense, especially during value creation, as long as she does not have the authority to make final commitments—which should always be yours to make. In other words, let your agent probe the edges of the deal space and report back to you. Together, think through possible trades that might create value on your behalf. Make sure any final deal has your approval before it is formalized.
Link agent compensation to performance. As the principal, you may want to include a provision in your agent’s contract that ties her compensation to the achievement of certain negotiation milestones or results. In any circumstance, it is crucial for you to ensure that your agent’s interests are tightly aligned with your own. This might mean holding your agent responsible not only for the dollar value of the deal but also for the quality of the working relationship between you and the other side in the wake of the negotiation.
In some negotiations, you may want to involve an agent just to bring fresh eyes to the situation. This may mean that an agent’s involvement is most valuable during your own preparations and the initial value-creating brainstorming session with the other side. Keep in mind that when it comes time to accept or reject an offer, negotiators often defer too readily to their agents. If you want your agent to disengage at some point in the process, express that caveat clearly at the outset. Include it in the contract.
Working with Your Agent—and Someone Else’s
NEGOTIATIONS BECOME ESPECIALLY COMPLEX when agents are involved on two or more sides. Many negotiators often mistakenly assume that an agent representing the other side always has a clear mandate from his principal, and always aligns his interests with those of the principal. Janice needs to be very careful about this in the Prometheus case because often, neither is true. For example, the agent on the other side may have been told by his principal that he will get a bonus only if he gets Janice to accept an unfavorable contract. He may have been given no other instructions. This means that her good ideas about ways to create additional value for both sides could well be ignored by the agent. Prometheus could actually lose money because the other side’s agent had too narrow a mandate. For this reason, Janice should be aware of potential pitfalls and follow these general guidelines.
Explore the role of the other side’s agent. Janice may suspect that the interests of the other party’s agent are not aligned with those of his principal, but how can she find out for sure? She should consider speaking to the principal on the other side and probing to determine, to the extent possible, what he expects from his agent. If he won’t cooperate, she should try writing down her understanding of his agent’s interests and sending it directly to him (not to the agent) for confirmation. By doing so, she may be able to discover the nature of his relationship with his agent and the type of bargaining she can expect. An agent paid a percentage of whatever deal he generates may be in a rush to close because he needs the cash. Meanwhile, his principal might actually prefer to seek other tradeoffs that could enhance the deal and create value for both sides.
Make the other party’s agent your ally. Whenever possible, frame proposals that will provoke the other side’s agent to advocate your interests with his client (as discussed in chapter 1 and further in chapter 4). After all, if you aren’t able to speak directly with the agent’s client, the agent is the only person who can argue on your behalf. It’s in your interest to arm the agent with the strongest case you can muster in support of your desired outcome. In addition, you should seek ways to meet the interests of both the agent and his principal. Make it easy for the agent to explain why your proposals should be accepted. A basic understanding of the agent’s contract could be useful, though this information may be difficult to verify.
Put forward a variety of agreements. If the other side’s agent is not interested in expanding the deal space, Janice will need to work at pulling them into the trading zone and generating proposals that are good for them (and great for her). She shouldn’t hesitate to put multiple written proposals or packages on the table (making sure she can live with all of them). In doing so, she’ll force the agent to discuss the choices she’s offered with his principal.
Once you and the other party have reached agreement through your agents, remind your own agent that the final decision is yours to make. This power will not minimize your agent’s ability to create value or generate a winning package for you, although your agent might argue otherwise in the hope of gaining more authority.
Finally, when it comes time to seal a deal, don’t hesitate to insist upon a face-to-face meeting with the other side, with your agent present, even if she has been handling most of the contact up until that time.
Although professional agents can complicate negotiations, their presence is likely to enhance the ability of negotiators in unfamiliar territory to reach the trading zone and to generate winning packages. The key is to remember that agents on both sides always have interests that vary to some degree from those of their principals.
CHOOSE AN AGENT WHEN:
•You’re unfamiliar with the issues and rules
•Time or distance creates a barrier
•Poor relationships might get in the way
USE AGENTS EFFECTIVELY BY:
•Examining your potential agent’s reputation
•Communicating responsibilities
•Linking compensation to performance
•Exploring the role of the other side’s agent
•Making the other side’s agent your ally and reviewing his or her responsibilities and powers
•Putting forth a variety of possible agreements
By carefully crafting a written agreement with her own agent and staying attuned to the agenda of the other party’s agent, Janice should be able to generate the kind of agreement that allows her to claim her fair share of the joint venture.
WHEN A MAJORITY ISN’T ENOUGH
CONSIDER HOW A TYPICAL WORK GROUP inside a company or organization reaches decisions. A leader sets the group’s objectives, mandates a schedule, and indicates who will be at the table (often with the concurrence of others). When the discussions are complete, the work group takes a straw poll or a vote of some kind. In most instances, the majority rules, although someone higher up may eventually supersede the group’s authority. This is not an ideal context in which to push value creation as far as it can go.
While most work groups don’t follow all the requirements of Robert’s Rules of Order, they do tend to adopt, most of the time, at least two key features of parliamentary procedure: they employ a system by which (1) motions are made and informally seconded, and (2) final decisions are made by a majority. Such procedures don’t always maximize the chances of value creation. If top management knew what it wanted the outcome to be, it probably wouldn’t bother creating the work group. So the work group should do everything it can to explore value-creating opportunities. This often requires alternative decision-making procedures.
Why do work groups and teams rely on voting or majority rule as their primary means of making decisions, especially when voting shuts down the search for creative outcomes? First, because they think it prevents the few from dictating to the many, thereby establishing a sense of fairness. Second, it leads to a firm decision. When deadlines loom, a vote effectively ends discussion. Finally, majority rule presumably enhances the legitimacy of whatever decision or recommendation emerges by communicating to others that more people liked the proposal than didn’t.
There’s one big problem with majority rule, however: it puts a premium on generating just enough support to put a majority together rather than on producing the best possible outcome, that is, producing as much value as possible for everyone. As a consequence, majority-rule decisions almost always guarantee an unhappy minority—and, therefore, some degree of instability. I know one multinational company, call them “Simplex,” that spent a year debating which division’s accounting software would become the system of choice for the whole company. The members of the eight-person work group spent almost a year advocating for their division’s software, convinced that the winner would be able to devote a lot less time to making adjustments. The oldest division was persuasive, and, by majority vote, imposed its will. An unhappy minority set out to show that this was a bad decision, awaiting an opportunity to sabotage or reverse the group’s choice. In a group decision-making situation, I would argue, it is important to find a way to reach decisions that help as many parties as possible to meet their most important concerns. Often, this means working harder to create even more value to bring the holdouts on board.
A Better Way
MOST PEOPLE HAVE A VAGUE SENSE that some kind of consensus-building process would be better than a simple majority. It would certainly avoid the tyranny of the majority and increase the legitimacy of work group decisions.
Consensus building involves moving almost all the members of a group simultaneously into the trading zone. It requires a commitment to seek overwhelming agreement among all relevant stakeholders. The result is a negotiated decision that is as close to unanimous as possible. From an organizational standpoint, it means helping the group as a whole win. More than just human relations jargon for getting everyone to cooperate, consensus building allows a group to reach the broadest agreement possible, not just one that is barely acceptable to a majority. I will walk through a consensus-building process and show how it can improve group decision making in your organization. If you want to help your organization win at win-win negotiation, it helps to advocate for a consensus-building rather than a majority rule approach to group decision making. Even in situations where you think you can be part of a winning majority, remember that an unhappy minority may devote substantial time and energy to upending a decision that didn’t meet its needs, as in the above-mentioned Simplex case.
Consensus Building: A Five-Step Process
CONSIDER THE FOLLOWING SITUATION. In an effort to adjust to new federal legislation, a small health services company called “Best Care” realizes that it must make a number of changes to the way it operates, especially in terms of the way it hires and compensates part-time consultants. The CEO, the general counsel, the CFO, and the HR director are well aware of what must be accomplished in a matter of months. They have appointed a task force with a half-dozen members to figure out exactly how to bring Best Care into compliance with the new laws and emerging regulations. The task force includes key individuals with the most knowledge and experience from finance, legal, human resources, sales, and marketing. Each task force member has clear instructions from their immediate supervisor to make sure that any proposed changes are acceptable from their supervisor’s standpoint. The first few meetings have made clear that there are very different ideas about what needs to be accomplished, by when, at what costs, using which strategies. Reaching consensus may prove difficult also because most of the task force members are unhappy with the CEO’s decision to appoint Brad, assistant general counsel, as head of the task force.
Let’s look at the five steps in the consensus-building process as they were applied in this group.
1. Convene the group. The CEO is the convener. It is his job to define what needs to be done, indicate who needs to be at the table, and provide the resources necessary for the group to engage in a problem-solving dialogue.
In consensus building, the convener often taps a neutral facilitator—someone from inside the organization—to canvas possible stakeholders and lead the discussion. In this case, the CEO has appointed Brad to head the team. Brad is certainly not neutral. He has been appointed to ensure that the job gets done. On the other hand, figuring out what Best Care needs to do means taking account of the multiple ways the new law and forthcoming regulations will affect each aspect of the company’s operations. It will require substantial insight into the technical workings of each component of the organization. And it will require buy-in from everyone if a seamless transition is to occur.
Brad reports to the general counsel that the group has already made it clear that they have no intention of deferring to the legal department in figuring out what needs to be done. The general counsel suggests to Brad that they hire a trained facilitator to interview, privately and confidentially, not just the members of the task force but an additional dozen or so individuals who might be able to spell out how the company’s reliance on part-time consultants is likely to run afoul of the new law and regulations. If they have to hire full-time employees to do the same work, there will be all kinds of financial and logistical implications. Based on the interviews, which the facilitator completes in a few weeks, she produces a written analysis summarizing possible ways to comply with the new law, alon
g with arguments for and against each suggestion. Everyone interviewed receives a copy of the facilitator’s report. After producing a revised draft, taking account of confidential feedback she received, the facilitator helps Brad spell out a specific agenda, timetable, ground rules, and two possible additions to the original team. The CEO quickly embraces the facilitator’s suggestions.
2. Clarify responsibilities. At this point it’s important to clarify who will assume which responsibilities within the task force. While Brad is clearly in charge, he might prefer to have the facilitator manage group meetings.
Here’s where consensus building differs markedly from the typical majority rule approach. The only way to get a near-unanimous outcome is to make sure that everyone involved understands that they are responsible for formulating proposals that meet not only their own needs but the needs of everyone else at the table as well. Why? If all you need is a majority, you’re likely to spend time outside the meeting piecing together a winning coalition. Once you have it, you won’t care much about what those outside the coalition have to say. But if you don’t take account of the concerns of a losing minority, your victory may be short-lived. Thus, the goal is to organize a problem-solving process that aims to produce a result that each team member will say is good for everyone else, good for Best Care, and great for them.
In a consensus-building process, everyone understands that they won’t be able to achieve their own goals unless they help others achieve theirs. Now the group’s face-to-face work requires creating as much value as possible, making sure the results meet Best Care’s overall interests (as defined by the CEO and others in senior management), and ensuring that a win for any one part of the company represents more than a minimally acceptable result for the others.
Good for You, Great for Me Page 7
