Rethinking the Win-Win Philosophy

August 14, 2006
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As members of a 230-year old democracy, there is deeply ingrained in most Americans a fundamental belief in the rightness of fairness. This premise is manifested in everything from our judicial system, which emphasizes the importance of a fair trial, to the Fox News Channel, which labels its news coverage as fair and balanced. It's even written into our Declaration of Independence. The notion that "All men are created equal" means nothing if the principle of fairness is not applied.

Given the circumstances described, it's easy to see why the win-win philosophy of negotiating is so widely accepted - at least in North America, where democracy prevails. In fact, it borders on being politically incorrect to even suggest there is merit in any negotiating philosophy other than win-win.

Please don't get me wrong. I too, believe in the virtues of the win-win philosophy of negotiating. I also believe that peace is superior to war - another trait of a civilized nation. However, I am not so naive as to believe that every war-minded tyrant can be placated with an olive branch. By the same token, a fiercely competitive negotiator is seldom satisfied with anything less than a complete victory. This individual wins only if you lose.

What does all of this have to do with you as a contractor and the way you do business? If you are fortunate enough to be able to choose whom you do business with - in particular, the people you buy from and the people you sell to - then you are free to deal exclusively with individuals and organizations that play fair.

But, most contractors do not have this luxury, at least not 100 percent of the time. In fact, approximately one in four individuals ascribe to the win-lose approach to negotiating. Though they may not openly acknowledge it - it's anti-American after all - in their hearts and minds they believe that negotiating is a zero-sum game in which your win is their loss, and vice versa.

You will be at a distinct disadvantage if you insist on playing by win-win rules if the other party believes in and is skilled at the win-lose approach - and all the more so if he or she is adept at hiding this fact, which may well be the case.

A CASE TO CONSIDER

Consider this scenario. Bill Webber, owner and general manager of Webber Heating and Air, is interested in doing business with Tom Maddux, a general contractor who is in the market for a number of light commercial a/c units. Having no business history with Tom, Bill doesn't know what to expect when they meet to negotiate a deal for the purchase and installation of 25 units over the next three months.

If the first words out of Tom's mouth are, "I'd like to do business with you over the long haul, but I've got to have your absolute bare-bones offer on these first 25 units," what might Bill conclude regarding Tom's negotiating philosophy?

Here are a couple of possibilities:

  • Bill might conclude, rightly or wrongly, that Tom's expressed interest in doing business over the "long haul" signifies that Tom is interested in the long-term welfare of his business - something that would likely concern a win-win negotiator.

  • On the other hand, Bill might conclude that Tom is simply baiting him with an empty promise in order to squeeze him on the price for the 25 units - a ploy that would likely be used by a win-lose negotiator.

    Bill could profit in either case if he guesses right, or he could lose money if he guesses wrong.

    The best advice I can offer Bill, with the limited information we have at this point, is to resist the temptation to make a snap judgment either way. At the very least, he should ask questions to confirm or disconfirm his suspicions.

    If he is able to determine that Tom is a win-win negotiator, perhaps there is a basis for giving him the best deal possible on the first 25 units. On the other hand, if he deduces that Tom is a win-lose negotiator, he could force Tom's hand by insisting on a written agreement guaranteeing future business or he could extend a quote for the 25 units that would provide him with a reasonable, but competitive, profit margin if Tom can't or won't formally commit to any future business.

    TRUST BUT VERIFY

    It is possible to do business with a win-lose negotiator, but it is important to recognize how that person can manipulate you if you are a devoted win-win negotiator. For instance, the win-win school of thought is predicated on the notion of sharing information with the intention of expanding the negotiating options for both parties. A fiercely competitive negotiator will not reciprocate in kind, and will in fact use any information you provide to his or her advantage.

    Even if both parties enter into a negotiating situation with the intent of negotiating in good faith, the win-win approach is at best a house of cards. It can quickly cave in if that elusive factor called trust is ever breached, even over a seemingly minor point.

    If you have no choice but to deal with a win-lose negotiator, take a lesson from President Reagan's playbook that he used when he was dealing with the less-than-forthright leaders of the Soviet Union during disarmament negotiations: "Trust but verify."

    Publication date: 08/14/2006

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