Tag Archives: Contract Negotiations

Move From the Whole to the Part or From the Part to the Whole

Another technique to avoid an impasse is to change how you negotiate the issues.  As we have said before, Americans prefer to bargain on an issue by issue basis.  They develop positions and goals for each matter and settle them one by one. The theory is that the sum of the settled parts will lead to settlement of the whole.  The French and Chinese prefer to hammer out agreement on a broad basis and then settle individual issues.  They believe that once settlement is reached on the whole, the parts will fall into place.

I recall a negotiation that took place several years ago in which both sides tried to hammer out an issue-by-issue agreement. We tried to settle problems related to scope of work and specification, but we could not reach an accord.  Then we attempted to agree on man-hours, but to no avail. Seeing that things were going nowhere, we tackled labor rates, a relatively easy matter we thought.  Still no agreement.  The talks were almost at a standstill.  Deadlock appeared inevitable.

Frustrated by the impending impasse, we changed our approach.  We moved discussion to settlement on a lump-sum basis.  Management offered $20 million to do the entire job.  Both parties found it easier to agree on the funds available for the overall package than to decide on individual expenditures.  Once the broader agreements on spending were reached, it became possible for our staffs to settle detailed issues, such as what could reasonably be spend on different phases of the project.

The rule is: if you encounter strong resistance on the issues, move the discussion to the whole.  Conversely, if you cannot reach an overall settlement, focus on each issue one by one.  Either road provides a face-saving way for the parties to say “yes”- no matter how many times they’ve said “no” before.

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