When You Should (and Shouldn’t) Use an Ultimatum in Negotiation
The art of getting a room full of big egos to think they each got a fair deal
When I launched Paychex in 1971, I had no intention of providing payroll processing services outside of my hometown of Rochester. But when Phil Wehrheim, a former colleague of mine, asked to partner with me, we struck a 50–50 partnership deal (without lawyers), and he opened offices servicing Buffalo, Syracuse, and Albany. Then Chuck Wollmer, the employee of a client, came to me wanting to open a franchise. That was how Paychex started to grow from a small local business into a national organization: one territory at a time.
By 1979, there were 17 of us, both partners and franchisees, across the country. Finding a good deal for everyone has always been my guiding principle for negotiation, so I had ensured that every partner and franchisee was happy with the partnership or franchising deal we had made. But we had reached the point where it was time to take Paychex from being a bunch of partners and franchisees and turn it into a corporation.
The 16 partners and franchisees, plus me, all met in Nassau to discuss consolidating into a single company. It posed a significant challenge: If I wanted them all to agree on consolidation, each and every one of them had…
