My Place or Yours?Deciding where to make the deal
The first three rules of real estate, “location, location, location,” hold equally true for the art of negotiation. You have four basic options: your place, your counterpart’s place, some other place, or—thanks to electronic communications—no place at all. You should consider each with care, for the choice can dramatically affect both the process and the result.
Your place. Many dealmakers seek the “home-field advantage,” and indeed the benefits are many. First, you’re familiar with the environment, which usually increases your confidence. Your opponents may be on completely unknown turf, working to get their bearings. If they come from abroad, they may even have to deal with culture shock.
You gain control, too. You can select and arrange the meeting room, decide who sits where at the bargaining table, and plan social events according to your own preferences. You have easy access to experts for advice and to superiors for consultation.
Finally, you save time and money, because you don’t have to travel. And you’re spared the pressures of being away from your family, friends, and daily routines. Such pressures can cause visiting negotiators to make a deal or break off talks quickly—often to their disadvantage.
Their place. At first blush, negotiating on the other person’s territory seems to offer only disadvantages. It has strong symbolic value, however, showing the extent of your desire to make a deal. And many sellers have found that showing up at the customer’s office is often the only way to get their product or service noticed.
But most important, visiting your counterparts gives you opportunities to learn. For example, in making a deal to put an addition on your house, you should hold some of the negotiations at the contractor’s office to see if he actually has the resources to get the job done. The same applies if you’re hiring an out-of-town lawyer or consultant to represent you on a particularly important transaction. In general, negotiations tend to be more successful if both sides can deepen their understanding of the other. In fact, when talks are ongoing and parties are working to build a relationship, it may make sense to alternate rounds of negotiation between the two headquarters.
Another place. When negotiators come from far away, the choice of a third place for talks may be appropriate—but usually only if additional learning is not necessary, and if other advantages, such as reduced cost or time, can be achieved.
In other cases, negotiating in a third place may be useful because both teams are removed from their daily preoccupations so they can better focus on the task at hand. And of course if parties are attempting to settle a serious dispute, a neutral location, away from each side’s supporters, may indeed be best.
No place. Email, satellite telephone, fax, and videoconferencing offer low-cost, convenient means of making deals. Electronic negotiation can work well for relatively simple transactions, such as the sale of a standard commodity, or for transactions between parties who already know each other well and have agreed on rules for using communications technologies. Some negotiators have also created secure websites where documents and other information can be stored for easy consultation by both sides.
But while communications technologies provide valuable support for negotiations, they are not always a satisfactory substitute for face-to-face meetings. Their principal defect: a near absence of the all-important opportunities for parties to learn about each other. The technologies convey nonverbal cues poorly, if at all. Nor do they relay information about the other side’s associates, resources, and organization. And they completely eliminate productive socializing.
Communications technologies can also create new obstacles. For example, some scholars have found that, when used alone, they may encourage not only insensitive messages but outright lying: a counterpart may feel protected from face-to-face contact that often reveals when someone is not telling the truth.
Perhaps technology will someday eliminate these drawbacks. But for now, the negotiation of important deals requires a physical meeting place for at least part of the process. Just as Archimedes needed a place to stand to lift the world, negotiators still need a table to do serious business.
JESWALD W. SALACUSE is the Henry J. Braker Professor of Law and a former dean of the Fletcher School at Tufts. He is the author of Leading Leaders: How to Manage Smart, Talented, Rich, and Powerful People, and his latest book, Seven Secrets for Negotiating with Government, was just released by AMACOM.