Pre-Negotiations: Succeeding in Negotiations

Pre-negotiation is a stage in the negotiation process that is often overlooked, but it is an important step in ensuring that when the parties are actually negotiating, they have the proper understanding of what is needed and how to move forward.  Pre-negotiation is beneficial for parties that are facing a large and multifaceted conflict that needs to be defined and explained to ensure that the parties are considering the right path forward.  It is also beneficial for anyone that needs to define the terms of the negotiation and put another party on notice of the intent to negotiate.  Pre-negotiation is most often a step in formal negotiations that are scheduled and time is set aside for, but it can also be present in informal discussions between parties to hammer out a result.  Whatever the case may bring, having a clear path forward can best be achieved by the parties participating in pre-negotiation.  

This article will look at the idea of pre-negotiation and how it aids the negotiation process.  It will begin by defining the term and providing context to its place next to the other stages of negotiation and how it fits in the overall process.  Next, it will consider the role of an agreement during pre-negotiation.   Then, it will discuss some of the ways that pre-negotiation can benefit the overall negotiation process.  Additionally, it will discuss the different industries and areas of conflict that benefit from an understanding of pre-negotiation, especially looking at the role it can play in collective bargaining experiences.  Finally, it will provide some tips for a negotiator looking to achieve their desired outcome, starting in pre-negotiation.  The goal of this article will be to help readers understand what pre-negotiation is and how it can be a vital piece of the negotiation process moving forward.  

Defining Pre-Negotiation 

Pre-negotiation is often defined by what is sought to be accomplished during the parties before they enter full negotiations—which can shift and change with each negotiation that happens.  However, it can be defined in general terms as the stage in the negotiation process where the parties define the issues that need to be solved and begin to gather information and prepare for the negotiation process.  This often includes research and discovery, as well as negotiating to define the terms that will be negotiated.  A skilled negotiator may set the stage for successful negotiation by doing well at the pre-negotiation stage.  Pre-negotiation gives the parties a chance to influence the process and each other, a skill that is often overlooked.  

Pre-negotiation is also the stage where the parties agree to participate in negotiations and arrange how they will negotiate.  This can often start without the parties being fully aware that the negotiation process has begun.  It allows the parties to act cooperatively, allowing them to realize that agreements can be made between them and encouraging the process forward.    It allows the parties to find common ground in what they feel needs to be addressed and to place boundaries around how and when the ideas will be explored.  Pre-negotiation sets the stage so that negotiation can proceed smoothly and confidently. 

The Stages of Negotiation: 

To best understand how pre-negotiation can benefit the negotiation process, understanding its place in the overall process is important.  While every negotiation will look different depending on the needs of the parties and issues being discussed, it also typically proceeds on a similar, simple pattern that will be helpful in understanding how to achieve the best outcome from a pre-negotiation talk.  This process or blueprint involves three stages—preparing, bargaining, and closing.  Each of these stages is vital to the overall process and includes levels or stages within itself. 

Preparing:

Preparation is a vital step in any negotiation.  For a party to be fully prepared to negotiate, they need to have a lot of information about the issue and the other party.  They will need to know what their own parameters are and how they compare to the other parties.  They will need to know what interests will affect the ways the parties react to certain offers or issues and how to avoid causing the other party to feel angry or belittled.  They will need to know if any outside actors may have a role in the negotiations indirectly.  They will also need to know how to negotiate with the other party and what issues will be discussed.  

Pre-negotiation falls under preparation.  Because it is the process of defining the issue or issues and agreeing that negotiation is something that parties would be open to pursuing, it helps the parties understand what the issue is, gives a glimpse into what interests may affect the other party, and sets the time and place for negotiation.  It also gives the parties a chance to set the tone for the negotiations, whether that be cordial and conciliatory or adversarial.  It is an important step in information gathering and how the parties will view each other and the issue as negotiation begins.  

Bargaining: 

Bargaining is the actual negotiation process.  Once the parties have established and time and place and gathered the information necessary to barter, they will begin to negotiate with each other.  In informal negotiations, this may happen immediately after the parties have agreed to negotiate as they begin to swap ideas and exchange offers.  This can happen for several hours or days or even longer to give the parties a chance to reach an agreement.  The parties will usually offer back and forth until they reach an agreement or decide that an agreement cannot be reached and they will need to use other conflict resolution methods to reach the desired outcome.  

However, informal negotiations, this process will also have a pattern that it will follow. Formal negotiations are often set on a specific day and are time set aside specifically to help the parties focus on the issues at hand without distraction.  These negotiations often follow a process that involves: 

  • Opening: First, the parties will open the discussion with a brief summary of what they view as the issue and why they believe they are entitled to what they will be asking for.  This is often similar to a presentation of a case, including any law or facts that are important to how the suit will do should it be litigated.  By presenting a condensed version of their case, the parties hope to assert that they have the stronger case and therefore establish the power in the negotiation.  
  • Offer: After the opening, or possibly during their presentation, one of the parties will offer a solution to the issue that they would like to achieve.  This offer is typically the best-case scenario for the party that offers it and is very rarely if ever, accepted by the other party.  However, this first offer will set the tone for the rest of the negotiations and establishes one of the parameters that will be put on the parties.  
  • Counteroffer: Usually, after an offer is presented, the other party will counter that offer with one of their own.  The first counteroffer is usually the best-case scenario for the party that offers it and will set the other side of the parameters that the parties will be negotiating between. This offer will usually be vastly different from the first offer, but the parties will move closer as they continue to send offers back and forth with each other.  

This process will continue until the parties reach the next stage of the process and an agreement.  

Closure:

The closure is the step in the process where the parties reach an agreement.  This can either be an agreement to settle the dispute and move forward, or it can be an agreement that they will not be able to settle with negotiation and that they will need to resolve the dispute some other way. This may involve the use of other dispute resolution mechanisms, or it may mean that the parties take the case to trial.  However, cases will often end in a negotiated settlement, especially if the parties were prepared and participated adequately in the pre-negotiation process.  

These stages are the blueprint for how a negotiation will usually go and how the different aspects of the process work together.  Understanding what happens after the parties participate in pre-negotiation helps to exemplify the importance of preparing adequately for negotiation and how pre-negotiation can affect the process.  The stages can be intertwined, especially in informal negotiations, because the parties may receive an offer before they have prepared and will need to do research and ask questions as they prepare to counteroffer.  The parties may also move through the stages in a linear order.  No matter the process, the parties will still need to be adequately prepared for a negotiation, which a pre-negotiation agreement can help the parties do.   

Pre-Negotiation Agreements

When the parties are participating in a more formal pre-negotiation process, they may reach what is called a pre-negotiation agreement to control the case moving forward.  These agreements help the parties put their discussions in writing and keep the negotiations focused and civil.  They are common in disputes where the parties already have an agreement, but that agreement needs to be altered in some way by the negotiations.  The agreement helps define what the negotiations may cover and how the negotiations will be run.  It also can help to define the relationship or business between the parties while they are negotiating.  It prevents either party from taking an action that could harm their position or case moving forward.  

Pre-negotiation agreements commonly have three important aspects that will need to be discussed in the pre-negotiation stage.  These aspects are: 

  • Issue: The agreement will often lay out the issue or issues that will be discussed in negotiations.  This helps the parties understand exactly what the issue that needs to be resolved is and prepare for it, as well as keeping the parties from receiving a surprise aspect to negotiation once it starts.  Defining the terms will often help the parties discover exactly what the issue is, especially in complex or difficult cases.  Understanding the issues may also help the parties see a solution that did not seem likely earlier. 
  • Logistics: The agreement will often include the logistics of the negotiation—the date, time, and place of the negotiation if formal.  It can also define the process of negotiations, such as offers need to be made in writing or on the phone.  This helps the parties prepare or be aware of how the negotiations will proceed.  
  • Status Quo: This portion of the agreement will govern the relationship between the parties during the negotiation.  This can be that the parties will continue with business as usual without it affecting any terms of the agreement between them or it may be that business will be suspended or operate at a lower capacity while the parties consider the terms of the agreement.  This portion is important for litigation in the future if the parties cannot settle, so the parties need to have a plan.  

When it comes to pre-negotiation agreements, several issues can arise with the agreements.  The most common of these being either not having one or pushing too hard in the pre-negotiation process.  

No Agreement: 

If the parties do not have an agreement, they run the risk of some action or decision during the negotiations impacting the outcome of the negotiation or litigation that may arise.  For example, if a landlord and a tenant realize that they need to change the rent due to changing circumstances, they may agree to negotiate on the new rent term. However, if no agreement maintains the status quo, if the tenant gives the landlord a portion of the rent and the landlord accepted it, the tenant may argue that the landlord has agreed to new rental terms as a decreased amount.  Many situations like this could arise in the course of a negotiation, so it would always be best to define these terms from the beginning.  

Hard Bargain: 

The other mistake that a party may make in pre-negotiation agreements is that they push too hard in these negotiations.  This will often happen if one of the parties is asking for more than the status quo while negotiation happens.  Asking for too much can make the other party refuse to sign an agreement that dictates the terms of the negotiations, and the parties will fall back into a situation like above, where there is no agreement.  Alternatively, the parties may end up spending much of their time on the pre-negotiation agreement and be unable to negotiate fully when the time comes.  

Either one of these mistakes can be incredibly detrimental to the process of negotiation, especially in disputes where the parties have an ongoing relationship that needs to continue during the negotiations.  It can also affect the parties’ understanding of the dispute or their willingness to participate in the negotiation process.  An important consideration is the necessity to keep the pre-negotiation stage friendly and cooperative to encourage the same spirit moving forward.  

The Benefits of Pre-Negotiation 

This article has defined and explained pre-negotiation and its role in the overall negotiation process, but that information will have little to no effect without a proper study of the benefits that participating in negotiation can bring to the table.  There have been brief discussions about the importance of defining the issues and setting the boundaries for the negotiation, but thorough consideration of the benefits provides a fuller picture of why the parties should expend the time and energy in pre-negotiation before moving into negotiation.  Some of these benefits include: 

  • Information: The pre-negotiation stage requires that the parties share information about the dispute with each other.  This can be a benefit to everyone because more information will mean that the parties will be making informed decisions moving forward.  
  • Defining Terms: The parties will need to identify the issues that are occurring and define the terms at play in the dispute.  Defining the terms helps the parties to notice any areas of miscommunication or mistakes in the dispute and will likely lead to a faster resolution later on. 
  • Anchoring: Anchoring is the idea of setting the terms where a party would like them to be.  This usually occurs with the first offer, but it may occur when the parties are defining the issue.  When one party offers a number or sets a marker, the other party will usually perceive this marker as one side of the negotiating zone.  Setting this in pre-negotiation will help the party that set it to define the negotiation moving forward.  
  • Clear Path: Once the parties have decided that they would like to try negotiation and how they would like to do so, they will likely have the first possible path to a settlement that they have seen.  It can help the parties feel like their dispute is not unsolvable without litigation and begin to see it coming to an end.  
  • Influence: By creating and establishing the boundaries for the negotiation, one or both of the parties can influence the negotiation from the pre-negotiation stage.  This can be as simple as having the negotiation in a place that is more comfortable for one of the parties to as influential as anchoring at the pre-negotiation.   Participating in pre-negotiation allows the parties to influence the negotiations before it even begins.  
  • Rapport: Participating in pre-negotiations will allow the parties to establish a rapport in how they will interact with each other during the process.  This can help the parties establish a cooperative and negotiating tone, while also acknowledging that the parties are in dispute.  This can also be a bad influence on negotiations because a party may establish a poor rapport and then will have issues negotiating. 

Drawbacks of Pre-Negotiation 

While there are many benefits to using pre-negotiation to define the terms of the conflict and set the agenda and interim roles of the parties, there are also drawbacks that will need to be considered before using pre-negotiation to its fullest effect: 

  • Legal Effect: Pre-negotiations and any agreements reached in them have little to no legal effect except as to act as a contract between the parties.  There is little legal recourse if a party completely abandons the agreement, but it may have an impact on the party that is left and their legal status.  Ensuring that the parties will abide by the agreement is not possible, so it requires a certain level of trust. 
  • Time: Participating in pre-negotiation can take up much of a party’s time.  This can be difficult when the conflict arises quickly and the parties are set on negotiations from the beginning.  Many times, the time spent bargaining in pre-negotiation could be used to begin the bargaining process.  While this is not always the case, the amount of time taken will need to be considered.  
  • Adversarial Behavior: As mentioned above, pre-negotiations are a place where the parties can create a rapport with one another.  However, this can go poorly if one or both of the parties act in an adversarial manner rather than cooperative, it may end the negotiations before they begin.  
  • Limits: The pre-negotiation process sets limits on the negotiation process, which may result in the parties being too limited in the subject matter and possible solutions.  Often, negotiation has to be creative and rely on other interests outside of a dollar amount to be successful.  However, if a pre-negotiation agreement limits the possible solutions the parties may be barred from reaching an agreement that would settle the case.  

While there are disadvantages to using pre-negotiation to define a dispute before negotiation, any attempt to determine whether pre-negotiation is the best option should consider all of the benefits compared to the drawbacks.  Additionally, a prepared and skilled negotiator may be able to find their way around the drawbacks to help the parties outline their dispute and move forward confidently.  

Pre-Negotiation and Collective Bargaining 

As mentioned earlier in this article, pre-negotiation is helpful for disputes that involve many parties or have a wide variety of disputes because it helps the parties understand the dispute and define the boundaries of the negotiation.  One example of such a dispute is collective bargaining, often seen in labor union negotiations.  Collective bargaining is the process in which union bargaining units negotiate with management to determine the terms of the contract between the management and the union.  This often involves considerations including wages, hours, breaks, time-off, benefits, and other employment concerns.  There are a variety of considerations that affect the ways that the parties will bargain with each other, but pre-negotiation can play a vital role in understanding and successfully creating a contract.  

Both parties to a collective bargaining process will need to prepare adequately for the negotiations.  This will include information gathering and sharing and defining which terms of the contract are up for negotiation between the parties.  The management will need to know what they have for bargaining power, how much labor is needed, and what their limits are.  Labor unions will need to know if there are any comparable agreements with this company or other comparable companies in the area, what the management may try to use to bargain, what the labor requirements are now, and employee expectations.  All of these can be defined during research and the pre-negotiation stage.  

By setting boundaries on the negotiations, the parties will be able to focus on the issues that matter the most to both parties.  They will be able to establish a cooperative spirit if necessary and encourage each other to participate fully.  Pre-negotiation will help the parties see that an agreement may be reached and what the terms of such an agreement may be.  Understanding the dispute will likely bring a better, more collaborative result than would have been achieved had the parties jumped right in.  It can also help establish terms for the relationship between the management and the employees in the union during the negotiations,  a consideration that could help both the employees and the management company, especially when it comes to keeping supply up.  Collective bargaining can benefit greatly from the pre-negotiation process and can help the parties reach an agreement with less aggression along the way.  

Pre-Negotiation in Other Industries 

While collective bargaining is one example of a dispute that may benefit from collective bargaining, several other types of disputes and industries can benefit greatly from the implementation of pre-negotiation in their disputes.  While no two disputes will be exactly alike, the patterns in these disputes make them ripe candidates for pre-negotiation and negotiation procedures.  Some examples are: 

  • Lenders: One of the most common situations that benefits from a pre-negotiation agreement is a dispute between a lender and a borrower.  Often, when a borrower cannot pay the amount needed, they will ask if the lender would be willing to negotiations to determine new terms that the borrower can comply with. In these situations, many lenders will agree to negotiate because they are less likely to get the amount back in a sale if they retook possession.  When these negotiations happen, the parties need to have an agreement to define what the terms being negotiated are, how the terms will be negotiated, and how the parties will proceed in the interim.  This helps protect both parties from accepting terms through actions in the interim and helps keep both parties safe from unnecessary terms.  
  • Leases: When a lease ends, most states have laws that require it to transition to a month-to-month lease until either a new lease is signed or the tenant moves out.  Often during this process or shortly before, the parties may want to restructure or renegotiate the lease.  These parties will benefit greatly from pre-negotiation because it will help to establish what terms of the lease are up for negotiation and how the parties will act while the negotiations are being carried out.  This gives both parties peace of mind while they are negotiating how a lease will function moving forward.  
  • Contracting Businesses: When two businesses are about to enter into or modify a contract between them, it would beneficial for the parties to consider pre-negotiation.  This can help establish the lines of where the businesses would like to go with their negotiations and help determine what will happen to their contract during negotiations if there is one.  Having an agreement can help the parties feel more secure in the negotiations and work even better with one another.  It also establishes trust between the parties and can eliminate some of the issues that they may face in their relationship without such an agreement. 

Many other instances and industries would benefit from using pre-negotiation to set up their negotiation, but many of them would benefit for similar reasons—the parties would be able to set terms and protect their interests in the interim.   Understanding the general benefits of pre-negotiation makes it evident that many types of negotiations would benefit from the process. 

Tips to Succeed in Pre-Negotiation 

When participating in a pre-negotiation, it can be difficult to know what the best practice would be and how to negotiate effectively before the formal negotiations begin.  Becoming a skilled negotiator does not always mean that a party will be able to handle pre-negotiations the same way or with the same temperament, as the processes will have different goals in mind.  Negotiation will focus on the outcome of the dispute as a whole, distributing the money or other interests.  Pre-negotiation will be focused on setting up the negotiation in a way that helps the parties achieve their desired outcome.  With these goals in mind, some tips that can help a party effectively pre-negotiate are: 

  • Choose Cooperation: Adversarial negotiating in pre-negotiation will likely result in the parties choosing a path other than negotiation.  When one of the parties feels like they are not being heard or valued at pre-negotiation, they will be cautious to enter into negotiations if they feel they cannot fully participate.  Treating pre-negotiation as a cooperative exercise will help all the parties enter the negotiations with the confidence that they are capable of achieving their desired outcome and that they will be heard and valued.  
  • Find Influence: A negotiator can help their position in negotiation by finding influence in pre-negotiation.  This can be as simple as offering an anchor point for the other party to respond to or defining the terms in a way that benefits that party’s position.  Finding ways to shift the outcome slightly toward one’s side helps set that party up for success in negotiation. 
  • Come Prepared: A pre-negotiation will run smoothly if the parties are adequately prepared.  When the parties approach pre-negotiation with an accurate idea of the case and a willingness to ask for and gain information from the other side, they will leave with an accurate picture of what the negotiations will be like and how to achieve their desire outcome.  Knowing their position and the other party’s will help them to identify and achieve influence as well. 
  • Leave Substance: One of the best skills that can be brought to the table is the ability to know when to leave a term or a decision to the negotiation and when it is worth taking time to discuss at pre-negotiation.  It is likely best to leave discussions of substance, apart from defining terms, out of the pre-negotiation, as those will be decided in the final negotiations.  

While there are many other tips for preparing for pre-negotiation, many of them would repeat the same theme of coming to the table prepared and identifying influence that can be asserted while knowing what is worth taking time away from negotiations on the substance.  

Conclusion

Pre-negotiation is a valuable resource for negotiators.  It sets the stage for the negotiation by defining what the issues to be discussed at negotiation will be, sets the process for negotiations, and establishes what will happen in the interim.  It is part of the preparation stage of negotiation and helps the parties understand where to go moving forward.  In certain cases, pre-negotiation will be recorded in an agreement between the parties.  Pre-negotiation benefits negotiations in many ways, but it does have drawbacks that need to be considered to determine if it is the right process.  However, when parties participate in pre-negotiation, they understand that they are defining the process of the negotiation so that they can focus on substance in the negotiations.  Pre-negotiations are a helpful tool to discovering the best outcome, and should often be considered when the parties are considering negotiations to resolve their disputes.  

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