negotiating life

Building Relationships

The deal is done at last. After 18 months of negotiation, six trips across the country, and countless meetings, you’ve signed a contract creating a joint venture with a Silicon Valley firm. You and they have agreed to manufacture products using your technology and their engineering. The contract is clear and covers all contingencies. It also has strong enforcement mechanisms. But as you file it away, a question dawns on you: How are we actually going to make this business work?

You’re right to wonder. It will take more than a well-written contract to produce those items on time, under budget, and up to specifications. Somehow you must turn that contract into a productive working relationship. Here are seven steps that can get you there.

Start a relationship before signing. In one survey, I asked American executives whether their primary negotiation goal was to reach a contract or create a relationship. Fifty-four percent said it was to reach a contract. They should reconsider. Their chances for a successful business would be far better if they went into contract negotiations with the future partnership in mind. They would get to know the other side well and establish positive chemistry. They would begin to understand the culture, expectations, and goals of their counterparts across the table. They would discuss potential obstacles to implementing their deal. For especially large and long-term transactions, it might even be worthwhile to hire a consultant to plan relationship-building activities, such as get-acquainted sessions and joint executive retreats.

Put the right people in charge. Launching a business relationship requires diplomacy as well as technical expertise. Each side should give leadership roles to people with appropriate interpersonal skills, knowledge, and sensitivity.

Involve negotiators in implementation. Those who negotiate a contract gain a wealth of information about each other’s organization and the deal. In the process, they may also form positive personal relationships. To take advantage of these valuable assets, the negotiators themselves should help implement the deal, at least at the start.

Keep leaders involved. Many deals are made with the active involvement of the companies’ leaders. After the contract is signed, it’s important to find ways to maintain visible leadership interest. Try scheduling periodic meetings in which leaders from both sides discuss how the relationship is evolving.

Educate staff about the deal. Don’t assume that everyone in your firm will be as enthusiastic and knowledgeable about the deal as you are. They may view involvement with the other company—whose culture and business practices they may not understand—as a burden, even a threat. Plan and participate in educational efforts, including meetings, retreats, seminars, and site visits for both firms’ employees. That way the inevitable delivery delays, failed technologies, and miscommunications that dog implementation of any deal will be easier to overcome.

Meticulously plan the first joint steps. Just as opening moves in a negotiation can either facilitate or obstruct what follows, so can initial joint activities between contractual partners. Consequently, the two sides should carefully define and supervise the first steps they take together. Don’t assume that everything will flow smoothly from the contract terms. Sometimes it’s better to start small, with tasks that are sure to succeed, before moving on to more ambitious projects.

Schedule reviews of progress. Although a business relationship is organic and evolves over time, it is more likely to be sound if the two sides consciously shape it. Companies should adhere to a regular schedule of meetings, rather than just getting together “from time to time” or “when the need arises.”

Whatever business you’re in, remember that it’s the relationships you negotiate, not the contracts you make, that build the bottom line. Contracts are invaluable in laying the foundation for a business. But relationships are at the core of the business itself.

JESWALD W. SALACUSE is the Henry J. Braker Professor of Law and a former dean of the Fletcher School of Law and Diplomacy. He is the author of Leading Leaders: How to Manage Smart, Talented, Rich, and Powerful People (AMACOM), as well as numerous works on negotiation. His latest book, Seven Secrets for Negotiating with Government: How to Deal with Local, State, National, or Foreign Governments—and Still Come Out Ahead, will be published by AMACOM Books in early 2008.