A mutually beneficial agreement is all about creating and claiming value

How To Create Mutually Beneficial Agreements During A Negotiation

A mutually beneficial agreement is all about creating and claiming value
A mutually beneficial agreement is all about creating and claiming value
Image Credit: OECD Organisation for Economic Co-operation and Development

It goes without saying that when we sit down at the negotiating table, both sides have a different view of the world. We both want something and in order to get what we want, the other side is going to have to be willing to give something up. The fact that we all have different preferences means that if we are not careful our negotiations can grind to a halt. What we need to get good at is using our negotiation styles and negotiating techniques to find ways to create mutually beneficial agreements during our negotiations that both sides will be able to live with.

Creating A Mutually Beneficial Agreement

When multiple issues are being discussed in a negotiation and both sides have different preferences across these issues, they may be able to reach a mutually beneficial deal by making tradeoffs based on what each side values most. To reach mutually beneficial agreements, both sides have to work hard to both create new sources of value through collaborative moves and claim as much value as they can.

The tension between creating and claiming value is pivotal to the process of business negotiation. If you share too little information about your interests then you will have difficulty identifying possible value thus creating trade offs. Share too much, and the other side may use this as an opportunity to take advantage of you. This brings us to the key question of how can you reach mutually beneficial deals while minimizing the risk of being exploited?

Take Time To Identify Issues and Interests

Too often, we approach a negotiation with a narrow mindset, assuming we will be fighting with the other side to grab as much as we can. Rather than looking for ways to expand the pie, we focus on carving it up. Rather than capitalizing on our different preferences, we accept impasses. By contrast, when parties can trade on their preferences across different issues, they reduce the need to haggle over prices and percentages.

As part of your preparation for your next negotiation, make a list of all the possible issues that may be at stake. Then consider your interests and the other side’s interests in each one. In addition to identifying tangible interests, such as price and deadlines, don’t forget intangible ones, such as building a long-term relationship or saving face in the aftermath of a negotiating error.

Always Assess and Improve Your BATNA

During a negotiation we always need to determine the point at which you would walk away from the current negotiation and accept your best alternative to a negotiated agreement, or BATNA. Because this allows you to reject a mediocre agreement, a strong BATNA is typically your best source of power in a negotiation. After identifying your BATNA, you will want to take steps to improve it, when this is possible.

Before The Negotiation Starts Set Reservation Values and Aspirations

Another key part of how you prepare for reaching a mutually beneficial deal is to assess your reservation value, or bottom line—the least you will accept in the current negotiation—and an ambitious yet realistic aspiration level, or goal that you have.

Reservation values can be difficult to calculate, as when you are weighing two job offers that vary on dimensions such as salary, responsibility, and benefits. One way to deal with a situation like this is to set up a scoring system—a grid that allows you to assign point values to different options and make comparisons across your various alternatives.

As for setting an aspiration level, always aspire to an outcome that is better than your BATNA. Prepare arguments that will make your aspirations seem reasonable. Though you are unlikely to get everything you asked for, you should be able to anchor any haggling that follows around an ambitious yet realistic aspiration level.

What All Of This Means For You

We don’t engage in negotiations if we think that we are not going to be able to reach a deal with the other side of the table. In order to make a deal happen, we often have to find ways to make a mutually beneficial agreement happen. These agreements require both sides to be willing to bend a bit to reach a deal.

In order to create a mutually beneficial agreement, both sides are going to have to be willing to make trade offs. You will be spending your time both creating value and claiming value throughout the principled negotiation. Take the time to study all of the issues that will be part of the negotiation. These will be the issues where you can make your trade offs. You’ll want to remain aware of your BATNA so that you can get a better deal than your BATNA affords you. Additionally, make sure that you know what your bottom line is and what you’d really like to get out of the negotiation.

We always want to be able to reach a deal with the other side. What we need to understand is that in order to make this happen there is going to have to be some give and take on the part of both sides. During a negotiation, our goal should be to find a way to reach a mutually beneficial agreement with the other side. Taking the time to prepare to reach this kind of agreement before the negotiation starts is the key to making sure that we can get there by the time that the negotiation ends.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Do you think that it would be a good ideal to determine what the other sides BATNA is before starting a negotiation?

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What We’ll Be Talking About Next Time

So I’ve got a quick question for you: what’s the goal of your next negotiation? I’m pretty sure that you’re going to tell me that you want to be able to reach a deal with the other side. I’d say that not only do you want to reach a deal with them, but you want to reach a deal with them that both sides believe that they can live with. This is the essence of win-win negotiation. I think that we can all agree that it’s something that we’d all like to be able to do; however, the big question is how can we use win-win negotiation styles and negotiating techniques to get what we want?

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