Consider Contingency Agreements in Negotiating
When you’re negotiating, If you can’t get together on end goals, consider using contingency agreements to break the impasse.
If you find yourself unable to make the deal because of differing projections of possibility, consider using a contingent agreement. This gives you some leeway and flexibility in shaping a deal. For example - you can add incentives for faster performance and a penalty for slower performance. This way, both parties are protected against risk.
Let's say you're looking at a remodel of your kitchen. The contractor says they can get it done in three months' time, but you have doubts about that. One way to handle this is to ask the contractor to pay a penalty if they don't meet the three-month deadline. To counter that, they might ask for a bonus if they bring the kitchen in early.
We see this used in business all the time, where executive salaries are tied to the stock performance, and in the athletic world, where salaries reflect performance - both positive and negative.
There are a couple of reasons a contingency agreement might be a good way to go:
It may keep you out of court! If a deadline isn't met, for example, you have a solution to the situation in writing. This beats the heck out of a long protracted court battle.
It lowers the risk of someone not keeping their end of the deal. If you have verifiable agreements in writing upfront, your chances of the other party not delivering is much less.
A few caveats before we leave this topic - be sure that your agreed-upon projection is feasible. In our kitchen remodel for example, if the deadline is so tight that it will cause your contractor to cut corners and you end up with a subpar job, you have not won. Be sure the goals are attainable and feasible.
Lastly, be sure the goals are clear and measurable. They need to be tied to hard data instead of just someone's opinion.