What is principled negotiation?
Principled negotiating, as it applies to the negotiation of banking agreements, is a hybrid negotiating strategy. It doesn’t view negotiations as a collaborative process where interests meet. It doesn’t advocate soft bargaining or worry whether banking agreements “enlarge the pie.” Principled negotiating says bank negotiations are “win-lose” affairs. It recognizes that they are, at heart, exercises in claiming value. As a strategy, principled negotiating steps outside the “win as much as you can” box. It introduces the notion of fairness into the negotiating equation. In principled negotiations, banks are still free to set prices to generate satisfactory returns. However, this doesn’t give them licence to disadvantage their customers. Principled negotiating says bank pricing is only equitable if it meets an independent fairness standard. For the banks’ customers, this means pricing consistency. A company should expect the same pricing from a bank that the bank offers its strategic peer
