Business Negotiation October 17, 2012

Agreements-Understandings-Procedures

A procedure is a way of doing something.   An understanding is an expression of mutual viewpoint and attitude on an issue...

A procedure is a way of doing something.  An understanding is an expression of mutual viewpoint and attitude on an issue.  An agreement is a conclusive commitment to mutually acceptable terms.

You’re probably wondering what difference all this makes.  After all, isn’t a deal a deal?

When you’re negotiating, my contention is that it is not enough merely to reach an 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 that it is or is not working.

A good agreement should not only spell out the work and dollars involved, but also the understand behind the written words and a procedure for measuring cost in the event that additions or deletions of work occur.  A poor contract would leave us bickering about whether the quality level achieved met our verbal understanding and whether costs were 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 laid out in detail right now, while they are fresh in our minds?”
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