How A LOI / MOU Can Be Used In A Negotiation To Create Better Thinking

by drjim on May 20, 2016

To reach the deal that you want in a negotiation it's going to take some brain power

To reach the deal that you want in a negotiation it’s going to take some brain power
Image Credit: Allan Ajifo

Negotiations are complicated things. There are often a number of different people involved, there are multiple discussions that are held over time perhaps in different locations, and all sorts of negotiation styles and negotiating techniques are used. As a negotiator, it’s your job to make sure that everything is kept in line – that everyone knows what they’ve already agreed to and what still needs to be hammered out. This is where a LOI and a MOU can step in and help you out.

LOI / MOU Helps You Keep Things Straight

I can’t go to the food store without bringing along a list of the items that I need to get. The few times that I’ve tried to do this without using a list, you know exactly what happened – I came home with the wrong things and none of the things that I actually needed. In a negotiation, the very same thing can happen to us – we can get half-way through a negotiation and lose track of where things are at.

This is when a letter of intent (LOI) or memorandum of understanding (MOU) can come in handy. When you sit down and take the time to create one of these status report documents, the process forces you to really focus on what has already been agreed to in the negotiations. Additionally, you are forced to confront the issues that nobody has been able to reach an agreement on yet.

At this stage of the negotiations, no not everyone is going to be seeing things the same way. However, it can be very important to see if you can get some agreement from everyone in regards to what has already been agreed to. With this type of agreement, you can then get everyone to turn their attention to focusing on only the issues that are still unresolved. This can boost everyone’s productivity.

LOI / MOU Fills In The Gaps Caused By Time

There is an ugly little secret that nobody likes to talk about when it comes to negotiating. It turns out that it can be very, very difficult to reach an agreement with the other side. What this ends up meaning is that we’re never able to resolve everything in a single meeting. Instead, we end up having to have multiple meetings. This means that our negotiations take place over time.

This “spreading out” of our negotiations means that both you and I will have a nasty habit of tending to forget details. Sure, we’ll remember the big things, but it’s the 100’s of tiny agreements that have been made that really go into allowing both sides to reach a final deal. What we really need is a way to bridge our negotiating sessions.

It turns out that LOIs and MOUs are the perfect tool for doing this. A well-crafted LOI/MOU will capture all of the side agreements along with the results that have been hammered out at the main table. The creation of this document will allow both sides to manage the time gaps that occur between negotiating sessions and will allow everyone to stay focused on solving the issues that have not been resolved yet.

What All Of This Means For You

If you want to have any hope of being able to reach the deal that you are trying to get during a principled negotiation, then you are going to have to make sure that both sides of the table have a good understanding of where things stand. A good way to make this happen is to create a LOI or a MOU.

When you are creating the LOI / MOU this will force you think about where the negotiations are currently at. You’ll have to make sure that you know both what has already been agreed to and what is still considered to be an open issue. The list of things that have not been agreed to is especially important. Since negotiations take place over time, a LOI / MOU can help to provide continuity.

The challenges involved in a negotiation are many and varied. As a negotiator you need to make use of LOIs and MOUs in order to help both sides of the table understand where the negotiation is currently at. Create these documents carefully and you’ll be able to get to your desired goal that much quicker.

– Dr. Jim Anderson

Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How long do you think that it should take to create a good MOU?

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What We’ll Be Talking About Next Time

The longer that a negotiation goes on, the more complicated it can become. With all of the different negotiation styles and negotiating techniques being used, as a negotiator it can become very difficult to stay on top of just exactly what has already been agreed to in a complicated negotiation and what issues still remain to be resolved. This is when creating either an LOI to start a new negotiation or an MOU to keep the current negotiation moving forward can be a big help. However, who should actually write these documents?

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