4:17 PM, November 27, 2022

How to avoid a no deal

Banking & Finance
| The European | 7 November 2022

Expert advisor Simon Horton looks at the negotiating do’s and don’ts for leaders across the board, and how to fix things if they start to go wrong.

We all remember the “No deal is better than a bad deal” mantra from Brexit and it probably invokes different emotions amongst us. It certainly divided opinion at the time, was it the correct approach or not? And what’s the best way to avoid No Deal if we don’t want a bad deal either?

Well, from a negotiation perspective, it was absolutely correct. You should never accept a bad deal and therefore you should always be willing to walk away, i.e., No Deal. But the question then becomes at what point do you walk away? And, you should only walk away if where you are walking away to is better than what’s on offer in the primary negotiation. This is where the argument lay – the UK population, at least, was pretty much split on whether No Deal (WTO terms) was something we could live with.

Don’t worry, we won’t be debating the ins and outs of Brexit. However, we are going to look at how to avoid a No Deal, because in one respect it is a failure. Good negotiators should always be able to find a solution where both parties are better off, so, if the negotiation breaks down, this is a failure of the negotiators. Obviously, some situations are more difficult than others but No Deal is generally not considered successful.

So what can you do to boost the chances of getting an outcome that is good for everyone?

Plan to avoid a No Deal

Firstly, even before the negotiation starts, some of the logistical factors, like medium or location, can make a difference. In recent years, accelerated by the pandemic, the negotiating process has been moving increasingly online. Yet research has shown that online negotiations are more likely to break
down. Email is the worst – it has great advantages as a medium, of course, but over reliance on it causes miscommunication and mistrust and, ultimately, the deal to collapse. So, if email isn’t working, pick up the phone. If that isn’t enough, organise a video call. But face to face is best. This makes it much more substantive, and you’re much more likely to have the right kind of communication to strike the deal. If you think the negotiation is going to get tricky, it might be worthwhile agreeing a process upfront. Peace treaty negotiations often have “talks about the talks” before the negotiation begins and this helps develop a successful process and build trust before anything contentious is raised.

"View the negotiation as a problem to be solved collaboratively"

Another peripheral factor to consider is the nature of the relationship. You’re not there to make friends, but you’ll probably get a better deal if they are friends so it’s worth the effort. And that means you going first with the smile, with the compliment, with the questions about their holiday and so on. Deals usually break down because of lack of trust and a positive relationship will help build that trust.

And then your approach to the negotiation will make a big difference too. A tough, competitive strategy is likely to incur a tough, competitive strategy in response and this will most likely end in stalemate. Instead, view the negotiation as a problem to be solved collaboratively, where the problem is that each side has specific goals in mind, each side has real constraints but, equally, each side has resources that they can bring to the table. If you bring this attitude and genuinely work with them to find a solution that does benefit everyone, they are likely to respond in kind to this, and now you have a very high chance you will achieve that goal and the No Deal will be avoided.

So it’s important that the negotiation isn’t about making demands, it’s about listening to the other side, understanding their requests, their constraints, and exploring the reasons behind them. If you then clearly communicate your side, again with the reasons, you’re now in a good position to start exploring possible solutions. And all the time you’re showing you have their interests in mind by actively referring to their goals and putting your message in terms of their rationale and their values. It is this collaborative, exploring approach that will generate a solution that suits everyone and avoid a No Deal.

It is worth pointing out at this point that taking a collaborative approach like this does not mean being a roll-over. Win-win does not mean lose-win!

Paradoxically, sometimes projecting strength can be the thing you need to do to make the other person more obliging. So, do build your strength – not to use it, but precisely so you don’t have to use it.

What if there really is a stand-off?

What if you’ve done all this and you’ve reached a deadlock? Well, there are still things you can do to get it back on track. Taking a break always helps – whether for five minutes, or reconvening in a week. As can changing the dynamics by bringing in a new negotiation team or changing the medium, like moving it from email to Zoom, or changing the location. Reset with some kind of refocussing statement like, “Look, we’re both here to reach an agreement…”, then recap on what has been agreed and you can now go back to the sticking point with a more positive energy.

Negotiation is a highly creative process and never more so that when there’s a deadlock. So be imaginative and think of something new to bring to the table to break the impasse. Often the sticking point is about different opinions, or subjective considerations: you think the car is worth £1,000 and they think it’s worth £2,000. Fine, go objective and find an independent perspective that will help you come to a figure that everyone agrees is fair.

Often it’s about emotions. If it’s your emotions, put them aside. Don’t let your anger get in the way of getting a good outcome. And if it’s their anger, you have to address it otherwise you will never get past it. Usually, simply acknowledging their feelings is sufficient “Look, I know you’re upset about…”

Always have a Plan B

Then the last consideration is if you were to walk away from the deal, where would you be walking away to? In other words, you need to have a credible Plan B, otherwise the other side won’t believe the position you are taking. They will be more collaborative if they know you have good options elsewhere.

So yes, No Deal is better than a bad deal, without a doubt. On the other hand, it is a kind of failure too, especially in a situation where you really don’t have any other good options. But fortunately there are many things you can do to avoid that No Deal.

ABOUT THE AUTHOR

Simon Horton is the author of ‘Change Their Mind: 6 Steps to Persuade Anyone Anytime’, published by Pearson, priced at £14.99 and available from all good bookshops. He is a world-leading expert in the fields of negotiation and influence. He has taught hostage negotiators, solicitors at some of the most prestigious law firms and senior executives at some of the most successful companies in the world. He is also a visiting lecturer at Imperial College London.

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