Why it pays to build relationships

By — on / Business Negotiations, Daily

Adapted from “When Lose-Lose Wins,” first published in the Negotiation newsletter, August 2004.

Does negotiation research promote the creation of joint gain at the expense of relationship building? Researchers Jared R. Curhan, Margaret A. Neale, and Lee D. Ross suggest that the field is guilty as charged.

To illustrate, the team apply author O. Henry’s classic tale “The Gift of the Magi” to negotiation. The short story describes a poor but loving husband and wife who want to give each other the perfect Christmas gift. Della sells her beautiful long hair to buy Jim a platinum chain for his prize possession, a gold watch. Meanwhile, Jim sells his watch to buy a set of tortoiseshell hair combs for his wife’s hair.

Curhan, Neale, and Ross point out that many negotiation experts would claim that the couple’s gift exchange had a “lose-lose” outcome. In fact, as O. Henry describes, Jim and Della’s material losses are overshadowed by their deeper appreciation of their love.

Negotiators might be better off forgoing economic value in favor of improving their relationships, the research team asserts. Indeed, it appears variables that improve economic performance may actually harm relationships.

In one intriguing study, pairs of negotiators engaged in a simulation. Half of the pairs were told that they worked for a firm known for its “extremely hierarchical corporate culture.” The other pairs were told that they worked for a firm known for its “egalitarian corporate culture.” Those pairs who worked in an egalitarian culture achieved less joint gain than did those pairs working in a hierarchical culture. However, those in the hierarchical culture came to less equal agreements. Negotiators from the egalitarian culture placed much greater value on their relationship with their opponents than did the negotiators from the hierarchical culture.

Curhan, Neale, and Ross argue that these results suggest that negotiators should shift their attention from value creation to relationship building. But are the two goals truly incompatible? The best route is to focus on creating strong relationships and using the openness and honesty they foster to maximize mutual gains.

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