PRAM Model
Categories: Financial Theory
Our business partner Rhonda goes into every negotiation like it’s a fight to the death. She’s not interested in what the other party wants, and she doesn’t compromise. It’s her way or the highway, and as we sit and listen to her scream it out with yet another potential supplier (Stan) who will probably vow to never work with us again after this debacle, we think to ourselves, “There’s got to be a better way.”
And guess what...there is. It’s called the “PRAM model,” and instead of treating every negotiation like a cage match, it’s a four-step process designed to help everyone walk away from the negotiating table a winner.
Step One of the PRAM model is “Plans.” This is where we work with the other party to figure out how we can mutually benefit each other. For example, if Stan agrees to be the main tent and chair provider for our event planning business, then we benefit from having a reliable supplier, and he benefits from having a reliable source of income.
Step Two is “Relationships.” This is where we get to know Stan and he gets to know us. Do we need to be BFFs? No, we don’t, but we do need to develop a good relationship so that we feel comfortable talking to each other if issues come up.
Step Three is “Agreements.” Now that we’re all friends and understand how valuable we are to each other, it’s time to line out the deets of how we’re going to work together. This is where we agree on the ins and outs of our business relationship, such as: How much are we going to pay Stan for his tents and chairs? How much notice does he need from us before an event? What is our arbitration process if things go south? Stuff like that.
And finally, Step Four is “Maintenance.” It’s all well and good to make promises and sign dotted lines, but now we have to make sure we keep the good vibes going. We need to continue to foster our relationship with Stan, and we need to make sure everyone on our end delivers on our promises.
Is the PRAM model a foolproof path to Business Happily Ever After Land? No, but if we follow the steps (and our negotiating partner does as well), we’re a lot more likely to have mutually beneficial business relationships…and lessen the chance we’ll have to sit through another of Rhonda’s screambuilding exercises.
