Understanding the Long-Term Effects of Negotiation Agreements

If you negotiate outside the lines, agreements will be unstable. I've done that before. 1. When I was young(er) and brash(er), I negotiated a comp package too large for my experience. My ambition was so obvious that my boss thought I needed (deserved?) a VP title. Then I thought I needed (deserved?) a corresponding comp package. Based on the higher pay we bought a larger house, and all was good until it wasn't. New funding round, new CEO, and my base pay was reduced by 30%. Now we couldn't afford our larger house. What to do? 2. Much, much later I was CCO at a SaaS company where a large contract was up for renewal. The customer had contractually committed to expand, but they hadn't, and they wanted out of the expansion clause. We didn't let them. We forced them to spend the money on something-- services? Guess what happened one year later? They canceled and moved to a competitor. These agreements--negotiated hard--are not stable. Yes, you can negotiate hard. And you can get what you want. But if you want long-term, sustainable relationships, it's a give and take. It's a win-win. It's a third alternative... and you can't tip the scales too far in your own favor without upsetting the equilibrium and shortening the life of the "contract." My advice is... 1️⃣ Fit first. Make sure there's fit from both sides. If it is no-fit, force-fit, or fake fit, that's a short-term arrangement. 2️⃣ Optimize for IMPACT. *You* want to deliver impact... that's your side of the bargain. That's what you can control, and as long as you are delivering, you increase the stability of your arrangement. 3️⃣ Be realistic. If circumstances change for you or the other party, let them. If it was a great arrangement for you both but now it's not so great for one or the other--have another look with fresh eyes. Don't hold on for dear life to an arrangement that isn't good--that doesn't help anyone. Don't over-negotiate. Add value. Achieve equilibrium with win-wins. Play the long game. 👊

Your negotiation metrics are outdated and costing you dearly. Forget spreadsheets; success goes beyond numbers. Here you’ll have seven powerful metrics, recommended by 𝗛𝗮𝗿𝘃𝗮𝗿𝗱’𝘀 𝗣𝗿𝗼𝗴𝗿𝗮𝗺 𝗼𝗻 𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝘁𝗶𝗼𝗻 (𝗣𝗢𝗡), to redefine success in your negotiations. This will boost your profits, partnerships, and strategic impact. After advising executives from global companies like ABB and transforming negotiation strategies for over 30 years, I’ve seen how outdated metrics silently erode value. Most companies measure negotiation outcomes with overly simplistic financial indicators: • Higher rates • Bigger contracts • Short-term gains But here’s the costly truth:  ↳ This narrow focus risks long-term profitability, reputational damage, and missed strategic opportunities. Harvard’s Program on Negotiation (PON) recommends evaluating negotiations with these seven powerful metrics: 1️⃣ Relationship (separate people from the problem): ↳ Does your negotiation build relationships by clearly separating interpersonal issues from substantive problems? 2️⃣ Communication (Listen actively and empathize): ↳ Are discussions focused on understanding the other side’s perspective, actively listening, and demonstrating empathy to solve issues constructively? 3️⃣ Interests (Identify shared and divergent interests): ↳ Does the negotiated outcome effectively address your core interests, your counterpart’s key interests, and relevant stakeholders’ interests? 4️⃣ Options (Create value through joint gains): ↳ Have you jointly brainstormed multiple creative solutions aimed at maximizing mutual gains and expanding the negotiation pie? 5️⃣ Legitimacy (Use objective criteria): ↳ Is the agreed solution backed by objective criteria, standards, or precedents, ensuring fairness and acceptability for all parties involved? 6️⃣ BATNA (Best Alternative to Negotiated Agreement): ↳ Is your negotiated agreement demonstrably superior to your best alternative if the negotiation fails? 7️⃣ Commitment (Clear and realistic implementation): ↳ Are the negotiated commitments detailed, clear, realistic, and actionable, ensuring both parties understand their roles and responsibilities? Companies embracing these comprehensive metrics don’t just close deals; they build enduring competitive advantages. Redefine your negotiation success metrics now. Use these seven dimensions to evaluate your next negotiation. Your future bottom line will thank you. What’s your favorite metric for measuring negotiation success? Share in the comments. ♻️ Found value here? Please repost. Let’s raise negotiation standards together. 

In one of the classes I am teaching I assigned my book "Getting Back to the Table" for the students to read. They have come up with some really wonderful and practical examples that I want to share (anonymously of course). Here is a very good example of the Pennywise and Pound Foolish Failure: "One time I learned the wrong lesson from a negotiation was early in my supply chain career. I believed that the key to success was to be aggressive in every negotiation, with the sole focus of cutting costs regardless of the context or long-term impact. Looking back, that mindset was not only flawed, but it led to a situation that I still regret. I was negotiating with a small, long-standing vendor, one that had maintained a strong relationship with the company I worked for over the previous 12 years. Driven by my goal to maximize savings, I took an overly aggressive approach and used our purchasing power which made up about 70% of their total revenue to push for deep cost reductions. While I achieved short-term savings, the consequences were far more damaging. I later learned that the vendor had reduced the number of clients they served to prioritize our business and meet our high demand. My negotiation left them financially vulnerable and, in the process, severely strained a valuable partnership that had taken over a decade to build. When I fully understood the impact of my actions, I felt terrible. That experience taught me an important lesson: effective negotiation isn’t just about cutting costs, it’s about creating value and maintaining healthy, sustainable relationships, especially with smaller vendors. Since then, I’ve been much more mindful in my approach, focusing on strategies that support mutual benefit and long-term success."