In the last issue of The Master Negotiator, we began to look at one of the three critical elements in any negotiation - the element of time (the period over which the negotiation takes place). In this issue, we will get into more depth and examine the 80/20 Principle and how it applies to negotiations.

Please feel free to contact me with any negotiating questions or article ideas. We'll do our best to address them in upcoming issues. (peter@pbsconsulting.com)

Remember, almost everything in life is negotiable.

Peter B. Stark

Most people consider negotiation an event that has a definite beginning and end. Furthermore, most people think negotiation begins and ends with the actual interactive process between the two parties. Nothing could be further from the truth.

Read article . . .

Time plays a critical role in negotiations. Most often, negotiations will conclude in the final 20 percent of the time allowed. This aspect of negotiation follows an interesting rule that seems to apply to life in general. It's called the 80/20 rule, or Pareto's Law (after Vilfredo Pareto, the Italian economist and sociologist who defined it). Pareto's Law states, "Twenty percent of what you do produces 80 percent of the results; conversely, 80 percent of what you do produces only 20 percent of the results."

In negotiation, this means that 80 percent of your results are generally agreed upon in the last 20 percent of your time. We consistently see this phenomenon in the seminars we present. As the participants negotiate with each other, the seminar leader periodically tells them how much time they have left. Normally, the majority of the negotiations are concluded in the final two minutes.

Here is an example of the 80/20 principle at work. In 1998 the National Basketball Association (NBA) team owners locked out the players in a dispute that lasted seven months. The issue was determining how the owners and players would divide $2 billion in annual revenue. Everyone was convinced that the players would not want to miss a paycheck, and assumed that the lockout would be concluded by the beginning of the 1998 basketball season.

Some of the richest players were making decisions . . .

With the Southern California grocery strike entering it’s fifteenth week, it’s become increasingly clear that the strike has become a losing proposition for all involved. The grocery employees are losing their weekly paychecks, the stores are losing customers, and the customers are losing faith. We’re all beginning to wonder . . . how did this happen? And, couldn’t the differences have been solved over the negotiating table as opposed to on the street corners?

Tactic #39 - Take It or Leave It - This tactic is where the strike began when the stores put their final deal on the table and told the union to “take it or leave it”. This tactic is commonly used in labor negotiations and sends the message that if the counterpart doesn’t agree, there will be no further discussion. This was immediately countered by the union with Tactic #13 - That’s Not Good Enough when the union called its members together for a strike vote. At this point, the union members voted to invoke Tactic #16 - The Ultimatum -This tactic is likened to “drawing a line in the sand.” The union said that if their demands weren’t met they would strike. At this point, the stores fought back with Tactic #44 - No More Mr. Nice Guy and decided to “lock out” all employees, not only the ones who were striking at VONS. Since then, both sides have employed Tactic #14 - Facts and Statistics - Anytime you can incorporate facts and statistics into your negotiation, you have a tool that your counterpart will find difficult to handle. Reliable facts can add a tremendous amount of power and credibility to your case. But be careful - if you quote statistics incorrectly and your counterpart proves you wrong, you lose your credibility. Once this happens, you have to fight twice as hard to gain any deal point. This tactic has been so used and abused by both sides that at this point, you don’t know who is telling the truth.

So, where do we go now? It is a waiting game and in the end we may find both sides wish they had utilized Tactic #15 - The Trade Off Concession, and found some common ground that could have turned their lose-lose negotiation into a win-win negotiation.