By Yvonne Milosevic
Life is filled with endless negotiations, whether you’re dealing with a boss, potential business partner—or even a tantrum-prone toddler. If you’re trying to figure out whether a deal you’ve struck is a good one, consider this advice. As Marc Modica, who teaches negotiation and management communication at UVA’s Darden School of Business, explains, an effective agreement has four pillars.
“Negotiation is an opportunity and art, and it’s teachable.” —Marc Modica.
Anatomy of a Successful Agreement
It’s common to second-guess yourself at the end of a negotiation. “If we do end up making a deal, how do we judge its quality?” Modica asks. “Even if there isn’t a deal, did we do the right thing? How do we gauge whether we have made a good call, either way?”
Today, we’re sharing Modica’s four-piece framework for evaluating negotiations. Consider this your expert checklist that will leave you feeling more confident about every agreement you make.
Pillar One: Outcome
People often think of negotiations in terms of winning and losing. One party gives in while the other emerges victorious. That is not a recipe for a successful agreement. Instead, we want to create a win-win scenario with mutual gain.
“While we often second guess whether we might have done better or worry that we have left ‘money on the table,’ we simply need to confirm that we are better off for having made a deal,” says Modica. When both sides feel satisfied with their agreement, the chances of having an enduring and successful business partnership improve.
Pillar Two: Process
With this piece of the puzzle, you want to evaluate how the journey to reach the outcome went. Modica suggests asking yourself a series of questions to determine the success of the process. For example:
- Did you use a blend of cooperation and competition?
- Did you pursue a creative approach to problem-solving?
- Was the process exhaustive so that you feel confident you considered all the alternatives?
- Do you think the process had appropriate levels of trust, honesty, and respect?
“The more satisfied you are with the answers to these questions, the less likely you are to be concerned about leaving money on the table,” Modica explains. “That worry often comes from uncertainty arising from the process.”
Pillar Three: Relationships
“Some negotiations are convivial and creative; others are confrontational and hard-fought,” Modica acknowledges. Yet “either process can result in a strong relationship of trust and respect, depending on the integrity of the negotiators.”
Good relationships are essential because mutual trust is necessary for any proposed action that involves risk or uncertainty. “People will view a course of action as less risky, and therefore more acceptable, when it is suggested by someone that they trust,” this Harvard Law post on relationships in negotiation explains.
Modica also stresses the importance of considering the relationships beyond the two parties at the table. Ask yourself:
- How will the outcome and process of this negotiation affect you and your counterpart’s relationships with others?
- Will the outcome and process compromise or improve those relationships?
- Will they add value or destroy it?
- Can you count on participants included in the agreement but not at the negotiating table to deliver on the contract?
Work hard to foster a strong connection because every effective agreement depends on it.
Pillar Four: Sustainability
Finally, what use is an arrangement if it crumbles too soon? Modica considers sustainability the most critical pillar of a good agreement. The deal should be built to last, he says, “at least through the duration of the contract, if not beyond.”
Modica adds: “It is the outcomes, the processes and the relationships that make an agreement truly sustainable and successful.”