An Understanding is an expression of mutual viewpoint and attitude on an issue. An Agreement is a conclusive commitment to mutually acceptable terms. And a Procedure is a way of doing something.
You’re probably wondering what this has to do with negotiating. What difference does it make? After all, isn’t a deal a deal?
When you’re negotiating it’s not enough to simply reach agreement. Even when two parties have the best intentions, Agreements break down for a variety of reasons. Breakdowns occur because those responsible for implementing the Agreement often do not understand the common viewpoints, attitudes, and backgrounds that brought about the Agreement. Sometimes the breakdown occurs because neither party knows how to make the Agreement work or how to prove what is, or is not working.
A good Agreement should not only spell out the work and money involved, but should also discuss the understanding behind the Agreement and a Procedure for measuring cost in the event that additions or deletions of work occur. A poor Agreement simply leaves the parties bickering about whether verbal understandings are being met and whether costs are being accumulated fairly.
The next time you are in a negotiation, better say to yourself, “It is not enough just to reach agreement on terms. Are there any understandings and procedures that ought to be documented in detail right now, while they are fresh in our minds?”