Contracts as conversation starters

If you’ve ever hired a contractor, you know there’s something about a contract that makes it seem final. Maybe it’s the careful calculations, detailed specifications, or numerous terms and conditions. Regardless, there’s something about most contracts that make them seem like the end of the discussion. But I’m here to tell you that a contract is often only the beginning, and that assuming as much can make life much more negotiable.

A quick story to illustrate:

My sisters and I wanted to buy a snowplowing service for my parents for Christmas (don’t worry—they already know about the contract). Having contacted several companies for quotes, I received a contract that included a charge for each visit—and an increasingly large charge depending on the snowfall amount. That would be fine for a snowplowing service in Florida, but my parents live in a much snowier location, and my sisters and I only had a fixed amount of money to spend. So I requested protection against a huge bill in the form of another contract that charged a fixed amount. The snowplowing company obliged, but the fixed amount was high enough to make me worry about the possibility of a Florida-like year, in which case we would be vastly overpaying. So I requested one more revision to the contract—a rebate if the company did not have to visit much at all. The company again obliged, offering to waive a third of the cost if it didn’t happen to snow much. Overall, we got a great service that will take care of the lion’s share of the snow, but will also protect us against vastly over- or under-paying.

I relate this long and winding tale not because I think you’re particularly interested in snowplowing. I relate it because it illustrates how treating a contract as a conversation starter can often be the only way to get the kind of contract you need. And getting the contract you need is often the only way to make life negotiable. So the takeaway is simple: don’t take a contract’s calculations, specifications, or terms and conditions as an indication of finality. Take the contract as an opening gambit, in an ongoing discussion, about an agreement that makes everyone happy.

What, we agree? Compatible issues in a disagreeable world

It sometimes seems that seething disagreements surround us. Crazy passengers punching out flight attendants, angry politicians launching invective, nasty comments following a nice news story about puppies and kittens.

At times like these, it’s easy to forget that we actually agree with each other quite often. In negotiation-speak, we can easily lose sight of the compatible issues—issues on which we completely agree with our counterparts—all around us. To help make life negotiable, let me illustrate through five examples:

  1. We all want to have a good flight/stay/meal. So does the airline/hotel/restaurant. What with the bad service we so often receive, it sometimes seems our interests are completely opposed to the interests of airlines/hotels/restaurants. And it’s true: they all want to save money where they can. More importantly, though, they all want you to come back and/or say nice things to your friends and acquaintances. Our interests are more aligned than unaligned.
  2. We all want to be at a job where we can thrive for the long term. So do our employers. It seems that many employers want to squeeze every ounce of effort from their employees, then spit them out. And some do. More often than not, and in spite of outward appearances, though, many employers would prefer to keep you around for the long-term, if only because it costs so much to replace you (anyone, really).
  3. We all want to minimize the amount of time a contractor spends at our house. So do our contractors. When plumbers dawdle, when electricians take a smoke-break, it seems that they must be padding their paycheck. Right? And maybe some are. But most of the contractors I’ve dealt with are so busy that they’d rather get the job done and move on—if only to make more money, an additional call-out fee often exceeding an additional hour of time.
  4. We all want our kids to be happy. So do our kids. Kids do strange things, some of which seem almost certain to undermine their long-term happiness. In such instances, it’s worth remembering that our kids probably aren’t trying to ruin their own lives. They just don’t understand the consequences or have the benefit of long-term thinking. So arguments that start from the assumption our kids want the same thing we do (and did) will probably work better.
  5. (Most controversially…) We all want as few car repairs as possible. So do our dealers. Does it sometimes seem that your car dealer wants to reconstruct your engine every time you need an oil change? Some dealers undoubtedly propose unnecessary repairs. But many—at least of the manufacturer-owned variety—would probably prefer to do fewer repairs. And the reason resembles the airlines/hotels/restaurants. They can make a lot more money if your first car functions so well it convinces you to buy another from them (or advise your friends to).

These are just a couple of the many common real-world situations when we tend to agree with our counterparts more than we think, if not completely. This list is not intended to cover every airline, employer, contractor, kid, or car dealer—certainly not! Nor is it comprehensive—far from it! It’s merely intended to reiterate that we all actually agree with other once in a while, if not routinely. In a world of deepening polarization, rumbling faultlines, and spiraling incivility, I think it’s a point worth remembering.

Delayed response: Replying to emails sluggishly but strategically

I have to admit it: I am a compulsive email replier. I feel the acute need to reply almost immediately to every email I receive. Unfortunately, this tendency is not always helpful, particularly in the context of an email negotiation. Indeed, sending a delayed reply, uncomfortable as it may be, can help negotiators in many situations claim value, thereby making life more negotiable.

So let’s examine what those situations might be. Consider the following five moments in an email negotiation that might call for a delayed reply:

  1. When they act inappropriately. It’s a hard fact of life: Negotiators sometimes act inappropriately. They make demands that are not just aggressive but uncalled for. They try to intimidate you. They break social conventions if not overt rules or laws. In these cases, a delayed response (perhaps a permanent delay) may be best, as it signals your reaction without drawing you into the downward spiral likely to ensue if you take the bait.
  2. When you want them to concede. More commonly, negotiators make requests that are not necessarily inappropriate but are also nowhere near the terms you deserve or need to reach a deal. You ask a service provider to match a $1000 discount offered by another provider and they offer a $25 gift card to the jelly-of-the-month club. In these cases, your silence may make them just uncomfortable enough to prompt an unsolicited additional concession.
  3. When you want someone else to weigh in. The email negotiations we all face in the workplace often involve multiple people. You are just one of the 12 people CC’ed on a message and eventually expected to reply. But wouldn’t it be helpful if someone else weighed in first—an ally, perhaps, or even your boss? A delayed reply can often create the space for someone else to speak first, which can often bolster your case.
  4. When you want to signal your alternatives. Particularly when you’re buying something big (e.g., a new kitchen, car, or landscaping service), you need to get multiple bids. In part, these bids help you learn and compare. In part, they help you gain leverage and convince each seller to put their best price forward. But the latter only happens if a seller suspects you’ll compare their price. Hence the need to signal that you’re obtaining multiple bids. Many sellers who send quotes and then receive delayed replies are sophisticated enough to intuit the reason.
  5. When you want to signal you’re in no particular rush. Alternatively, you might want to signal you’re in no particular rush to purchase a particular good or service. This approach is particularly useful for goods and services that most people buy in a moment of desperation—roofs, basement waterproofing solutions, and air conditioners, for example. Unlike most customers, who probably reply to such sellers within seconds, your delayed reply can convince them to cut the common sales tactics and focus on offering something competitive.

In sum, silence is aversive for many of us, in email or in person But temporary silence in the form of a delayed reply can also be wise in the context of an email negotiation, particularly for the purpose of claiming value. With that, let me silence myself…

Negotiating with neighbors by planting the seeds of trust

If you’ve ever owned a house, you know that much of your happiness inside the house is attributable to people who live outside the house: namely, your neighbors. The fate of every homeowner is at least partially in the hands of their neighbors. Good neighbors—nice people who will work with you to resolve any neighborly issues—make you never want to leave a place. Bad neighbors? They make you want to call the moving company today.

Wouldn’t it be nice if you didn’t have to place all of your happiness in the fickle hands of fate? If you could exert at least some control over this particular corner of your life, thereby making it more negotiable? There is: by building a trusting relationship before you ever meet your neighbor at the negotiating table.

We all tend to think that negotiations start when you sit at a long mahogany table, casting a steely glare at your wily counterpart, sitting all the way at the other side. They don’t. First of all, and as I hope you’ve gathered from my posts, most negotiations don’t involve long mahogany tables; they happen every day whenever we depend on someone else. Second, and more relevant to the current post, negotiations start long before you start “negotiating,” or at least they should. Indeed, negotiations start when you become aware of someone who will eventually become your negotiation counterpart. Consequently, the best negotiators don’t wait for chairs or mahogany tables; they start building a trusting relationship as soon as they possibly can.

What does this have to do with your neighbors? Well, every homeowner eventually has to negotiate with their neighbors. Have you? From constructing new fences, to felling old trees, to mitigating noisy teenagers, to driving a piece of construction equipment across their yard, to borrowing a tool—opportunities or even necessities to negotiate abound. Your negotiation will go a lot better if you’ve planted the seeds of trust beforehand. And, by the way, getting along with your neighbors is the right thing to do.

For the purpose of this post, though, let’s focus on the initial, instrumental goal of planting the seeds of trust, in the interest of promoting a successful negotiation. Supposing that was your primary goal, how would you do it? Here are five tips for building trust before you even start negotiating, based on a paper Jeanne Brett, Amit Nandkeolyar, and I published in Harvard Business Review:

  1. Assume they’re trustworthy from the start. Even before you meet people, you can assume the best, the worst, or somewhere in between. If you immediately assume that best, that tends to start a reciprocal cycle of trust, as I’ve said before. I’d encourage everyone to at least give that assumption a try.
  2. Take their perspective. There is a lot you can glean about a person before you know anything about them. If they’ve been living next to a bunch of renters who didn’t take care of the house you now own, wouldn’t they be interested in hearing about your intentions to overhaul the place (not that this has happened to me)? Take a guess at what’s important to them, and frame the conversation with those interests in mind.
  3. Act consistently and reliably. People trust others whose behavior they can reliably anticipate. It’s amazing how much trust you can build by consistently taking in the trash can and never letting your lawn reach the length of the African savannah.
  4. Signal your trustworthiness. People also glean your trustworthiness from the signals you send—particularly any similarities you might choose to highlight or signs that you lead an upstanding life. So if you share a common (passionate to the point of obsessive) interest in the Baltimore Orioles, for example, make sure to mention that. If you have a respectable career, there’s no need to brag, but it wouldn’t hurt to signal your occupation as a sign of trustworthiness.
  5. Show a genuine interest. It’s amazing and sad at the same time, but the number of people who show a genuine interest in each other seems to plummet all the time. So even if you came in with the initial, instrumental goal of priming them for your major construction announcement, ditch that goal once you get to know them, and try to show a genuine interest in who they are what they’re all about.

As I suggested before making this list, it would be good to treat your neighbors well even if you never had to negotiate with them. But since you do, you might as well kill two birds with one stone.

How have you built trust with neighbors?

Getting the most out of your contractor

With the advent of the do-it-yourself revolution in home improvement, we are all tempted to look it up on the internet and then, well, do it ourselves. Tiling, painting, plumbing—internet as guide, house as palette. And when we can’t—when the task is too complicated or the time is too short—the temptation is to once again look it up, then pay somebody to do exactly what we would’ve done if we could’ve done it. Right?

Right, but wrong approach. Useful as the look-it-up-and-shoot approach may be for DIY, it’s usually not the best way to engage with a contractor. So if you need to hire such a person anytime soon, here’s a tip that can immediately make life more negotiable: tell them what you’re trying to accomplish, not what you want them to do.

The difference is subtle but significant. And it’s well-established in negotiation research, which consistently advises negotiators to focus on interests rather than positions. In negotiations, that means telling your counterpart your underlying needs and motivations as opposed to your overt demands and offers. In working with a contractor, it means telling them your overall objectives rather than the exact piece of equipment (down to SKU and aisle number at Lowes) that you’d like them to install (bin number available on request).

A quick real-life story that might clarify: we once wanted to redo some wood floors that looked as if they hadn’t been redone since the advent of wood itself. After obtaining multiple bids, as advised, we settled on a contractor who offered high quality for a reasonable price and also came highly recommended. Rather than telling him exactly what stain we wanted and exactly which rooms to stain, we told him what we wanted to accomplish: to lend the house a light, airy feel; to do everything in a cost-effective manner; and to avoid doing anything that would ultimately interfere or look bad with an eventual kitchen renovation. Telling him what we wanted highlighted several possibilities we hadn’t envisioned or found in aisle 27 (bin 6) at Lowes: not staining the floors at all but letting the natural wood shine through and not yet redoing the floors in the kitchen, seeing as they might get damaged by the renovation or at least might clash with the cabinets. Brilliant! The solution looked great, saved a bunch of money, and paved the way for a beautiful kitchen renovation, complete with future flooring update.

With the benefit of a story, it’s easy to see the benefits of telling a contractor what you want to accomplish rather than exactly what you want. In general, here they are:

  1. You might find a cheaper solution. For example: not staining the floors.
  2. You might find a solution that better fits your needs. For example: not redoing the floors in the kitchen.
  3. You might discover you have a different problem. If you tell a contractor to install something from aisle 27, they probably will. If you tell them what you’re trying to accomplish and ask them how to get there, you have a fighting chance of leveraging their expertise. Hearing you put your trust in their expertise, they’ll probably put said expertise to work and give you their opinion as to whether you’ve accurately diagnosed the problem. If not, then wouldn’t it be great to solve the real problem?
  4. You might find that you don’t really have a problem. Again, contractors usually do what you tell them when you pay them to. But if you tell them the perceived problem and what you’re hoping to do about, they just might point you down a much easier path—at least if they’re honest. And if they’re not, well then you can always go with someone else or go back to aisle 27. Which leads to the next point…
  5. You might discover how competent or honest your contractor is. Again, you’re advised to get multiple bids. If you do that and tell each person exactly what to do, each will probably give you a price for doing just that. If you tell multiple people what you’re trying to accomplish, however, their responses will—if nothing else—tell you something about their level of knowledge. Or, if someone suggests something way out of left field (not that this has happened to me several times recently), you might even learn about their honesty.

So, the next time you have a problem with your home, I’d advise you to resist the siren’s call of Lowes.com. Instead, figure out what you’re really trying to accomplish and tell your multiple potential contractors your overall objectives. Wonderful and reliable as Lowes.com always is, leaving room for your contractor’s judgment can leave you much better off.

Have you ever told a contractor your overall objectives and been surprised by their response?

Three traps to avoid in every home repair negotiation

We’ve all been there: We’ve seen something BIG—and I mean BIG—start to break in the house. A roof, a furnace, a major piece of plumbing: the feeling of dread is the same. So is the need to get several bids, lest you expose yourself to outrageous bids from unscrupulous repairmen.

But what to do with the multiple bids as they arrive? It’s not obvious, but it’s negotiable. This post will discuss three traps to avoid when soliciting multiple bids for a major repair. Since you should really entertain multiple offers in any negotiation, though, these traps are truly universal.

So imagine the dreaded day has arrived: your ailing roof now needs replacement. You’ve set a budget ($30,000 or less), solicited three bids, and just begun to receive them (gulp). Here are three traps to avoid as the bids roll in, each grounded in a particular psychological state and each likely to produce a particular type of poor agreement:

  1. Satisficing: Grounded in laziness, satisficing involves accepting the first offer that satisfies your minimum requirements. Supposing that the initial bid was $31,000 and the next was $28,000, satisficing would involve accepting the second bid before waiting for the third or continuing the discussion with the first two companies. Why would anyone do that? Because it’s easy (and easy to justify). Instead, wait for all three bids, then continue the discussion with the best two (at least), in order to see which can fulfill your fundamental interests best. Note that those interests might have nothing to do with price (e.g., the timeline for the work).
  2. Hubris: Grounded in anger, hubris involves walking away from a negotiation even though it serves your interests better than the alternatives. Suppose that the third bid came in at $27,000, which made you so angry at the initial $31,000 bid that you tore up their offer and shot off an email chastising their greediness. But oops! Reading the fine print on the remaining two offers, you now see that both are offering to complete the work in six weeks. You seem to recall that the first bid promised immediate repairs, which sounds a lot better in light of the impending rainstorm. So hubris involves rejecting a better offer. Why would anyone do that? Because it feels good to voice our irritation. Instead, try to retain and compare all offers against your fundamental interests (e.g., preventing the drowning of your daughter’s stuffed animals), staying at the table with the parties that meet them best—even if certain aspects of their offer, well, make you displeased.
  3. Agreement Bias: Grounded in fear, agreement bias is pretty much the opposite of hubris. It involves staying in a negotiation and actually reaching an agreement that serves your interests less well than the alternatives. Having ripped up the first bid, imagine you’re now negotiating with the second company ($28,000 bid). You’ve since learned that their offer is essentially identical to the third, except for the additional $1,000, which they refuse to remove. But there is the salesman from the second company—sitting across the table, smiling sweetly, and pushing the contract in your direction. Agreement bias involves signing it even though you know the third offer is better. Why would anyone do that? Because it feels uncomfortable to say no to somebody’s face—many of us are actually afraid of it. Instead, and again, try to stay focused on your interests, one of which must be saving $1,000. If that’s too hard, now would be a good time to try ratification.

Bottom line: When comparing multiple bids, it’s all about staying focused on what you really want and need. That sounds unbelievably obvious, but decades of research show people falling into these traps, then struggling to climb out solvent and satisfied.

Have you or someone you know ever fallen for one of the traps?