Sometimes business deals are complicated. Especially when friends and family members (F&F ties) are involved. How you can still negotiate well and protect your relationships.
When negotiating business transactions with F&F, or negotiating the end of a business relationship with them, two questions arise:
What are the peculiarities of negotiations with friends and family members? and
What are the pros and cons of this?
Business Transactions
When was the last time you negotiated with friends or family members? For example, about buying/selling a used car, or about support services in maintaining your website? What was the result of these negotiations? How is this situation different from negotiations with complete strangers? Could you have gotten a better price for yourself? It can be assumed that in this case you would have placed much more emphasis on your own advantages.
Doing business with F&F is not easy. Close bonds imply the expectation that one will look out for one another's well-being and that the time or effort invested is part of the friendship's contribution. In classic business relationships, exactly the opposite is the case. We expect something in return for the effort, time and money we have invested in the business partner. When these two paradigms collide when dealing with F&F, many negotiators feel a dissonance and do not quite know how to behave in this situation.
The positive aspects of close ties between negotiating parties are a reduced number of harmful competitive situations and an easier exchange of information.
On the other hand, researchers have found that in the majority of negotiations with F&F, less creative and less satisfactory results are achieved as both sides are more willing to compromise.
Instead of dividing the added value that only arises through cooperation fairly for all parties involved, many in negotiations with F&F tend to divide the bargaining chip into equal pieces so that everyone involved receives an equal share. This is only a logical solution at first glance. The desire not to go down a dead end and to avoid conflicts of any kind because of the relationship often leads to suboptimal agreements.
A 2006 Canadian research project by scientist David. R. Mandel, had a simple design: participants were asked to sell an audio CD to friends and set the price themselves. The researcher found that sellers were charging much less than the buyer was willing to pay. Looking at the buy-side, these participants tried not to overpay. Offering things to friends, even if we get money for it, triggers a kind of generosity norm that isn't present when we buy things from friends.
What do these findings mean for your negotiation? My answer is: improve the objective quality of the deal. For example, agree in advance on the application of market standards for the respective subject of negotiation. Deals with F&F are more than just an exchange of favors. The next time you negotiate with a friend, improve the objective quality of the deal, agreeing beforehand that market standards for the item or service apply and apply, rather than viewing the deal as an exchange of favors. Talk to them about possible obstacles that their friendship could present in the upcoming negotiation. At the same time, imagine what the deal might be like if you made it with a stranger.
Termination of Business Relationships
The most important question that arises in connection with the termination of business relationships with friends, siblings or spouses is: How can the termination of the business relationship be negotiated confidently and calmly without endangering or damaging the personal level?< /p>
In 2008, after 25 years in business with two of his brothers, Henry Elghanayan decided to liquidate his real estate business and exit. However, this did not pose a challenge for the brothers. In 1989, another brother had already left the joint family business. The procedure that was specially developed at the time was used again at the beginning of 2009. In a mini-auction, one of the brothers and partners, Fred, won the right to split the joint assets into three "pillars". Freds was aiming to split the pillars fairly, since he would be the last to act in the order of distribution. First Henry, then Tom, and finally Fred chose a "pillar of wealth." The three brothers exchanged the individual values from their assets with each other until all three were satisfied.
What was the recipe that allowed the business relationship between the three brothers to end so successfully? The ingredients are foresight and careful planning.
When beginning a business relationship with someone close to you, take the time to talk about norms, standards and processes. Determine how you will resolve disputes and disputes and how you will deal with potentially significant business changes. It may feel unfamiliar at first to think through and address all of these issues. However, this approach increases the chance of not jeopardizing personal relationships through possible future problems in business.
ISMAN & Partner is a management consultancy that supports national and international corporations, medium-sized companies and start-ups, organizations and institutions in complex negotiation and conflict resolution processes. Founded in 2015 by Calin-Mihai Isman, the experts for negotiation & mediation support managers and employees from the areas of sales, purchasing, M&A, contracting, HR or IT.
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