Business Negotiation January 20, 2016

Creative Way to Split the Difference

There are many ways to split the difference when the gap between negotiators is not too large. The most simple splits consist of dividing the difference in some way that cries out, “If not here, where?” A split in half where there are two parties involved, or in quarters when there are four, makes for an uncontested arrangement most times. Splitting the bonus pool by revenue produced can help lead a bonus committee to consensus and closure. I have been in negotiations where flipping a coin determined final distribution and outcome. Simple solutions facilitate agreement.

Splitting the difference even in a simple way does have a danger built in. The next time someone on the other side says, “Let’s split the difference,” watch out. Before you are tempted to say “Yes,” calculate how much of the difference you will give away by signifying agreement. It may be, as Shakespeare once said, “by much too much.”

Sometimes, on the other hand, complexity is called for. As we said earlier, satisfaction is what we negotiate about, not dollars, goods or services. What is interesting about satisfaction is that is has a time dimension. Some prefer their satisfaction early or in advance while others prefer it to occur far in the future. Changing the time shape of satisfaction has the power to bridge bargaining gaps. When indecision or impasse looms, one way to avert it is to customize the shape of satisfaction and dissatisfaction to fit the specific time needs of each side. The calculus of satisfaction differs from person to person and from one time period to another.

Negotiated benefits, rewards and work contributions can be provided all at once immediately, later or at the end of performance depending on a person’s preference, age and lifestyle. Some now, more later and the balance at the end may suit some negotiators more than others. Benefits may also be offered over a period of time, then triggered to increase or decrease by some event, index or performance milestone later.

If these creative approaches fail and a gap remains, it can prove to be useful to establish a joint committee to study the matter and make a recommendation. Committee decisions often serve as the catalyst that bring the disputed sharing formula to rest.

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PROCUREMENT at AMERICAN EXPRESS

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