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Keeping Cool: The Art of Family Negotiations (Part 2 of 2)

Posting by Ed Kopf, Ph.D., Principal at BMC Associates

Negotiating is critical to any relationship. As reviewed in Part 1, there are numerous factors that complicate family business negotiations. In this conclusion, strategies to combat the complications are reviewed.

The first step to avoiding potential negotiation conflicts is to be aware of the special challenges that may arise in important discussions about a family business. Once the need for care is recognized, most of the remedies are simply the thorough application of sound negotiation techniques. Among these principles are:

•  Prepare thoroughly for the negotiation. In particular:

Know what really is important to you – what you want to achieve through the negotiation. This implies an equally important point: know what seems important to you at first, but isn’t critical on second thought. This highlights what you can “trade” in order to get what really counts.

Try to understand what is important to the other(s) involved – what they will need to feel satisfied with the outcome of the negotiation. Then think creatively about a range of alternative outcomes that may meet both your needs and those of the other(s). A negotiating partner who is getting what she wants is far more willing to try to figure out how to close the deal by giving you what you want.

Be clear on what your best alternative is if the negotiation is unsuccessful. It’s much easier to conduct a constructive negotiation if you don’t feel all your chips are on the table.

•  At the start of the negotiation, agree on some ground rules. Specifically:

Agree on the subject of the negotiation. Otherwise, you may wind up talking in circles trying to solve all the world’s problems at one sitting.

Agree to observe basic rules of conversational courtesy – no interruptions, no sarcasm, no intimidation, etc.

Agree that each negotiator can call a break if s/he feels the need to think things through – or cool off.

Agree on a time frame for the discussion, and next steps if an agreement isn’t reached within that parameter.

•  During the negotiation:

Lay out your objectives clearly, ask relevant questions to test your assumptions about the other(s)’ objectives and perspectives, listen carefully, and answer questions you are asked honestly.

Stay focused on achieving the goals you’ve identified. This means not worrying about “winning” or “losing.” In fact, so long as you achieve your objectives, it’s usually to your advantage in a family business setting to have your negotiating partner walk away feeling like a winner as well.

Contribute to an atmosphere of common effort toward a mutually beneficial outcome.

Be conscious of your own emotions and behaviors and be sure they are working in your interests.

Using these and other negotiation skills can go a long way. But mastering them (and other negotiation principles) requires training, coaching, and experience. Even then, they can be difficult to stick to under the pressures of important family business issues. Given the many special challenges that arise in such family exchanges, more may be needed at times. To quote from the newsletter of the Harvard Law School Program on Negotiation, “It may be best to hire a third party mediator…to help resolve disputes from a neutral position.”

A negotiation professional can help family members incorporate the best techniques into their important discussions, preparing effectively and staying on course during the negotiations. In addition, an outsider can often help identify the emotional blind spots that so often sabotage even well-meaning efforts at resolving issues.

Given the stakes, emotions, and complexity of family business negotiations, an ounce of prevention – developing negotiation skills and finding professional help – can be worth much more than a pound of cure.

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