Dear Negotiation Coach: Having Difficult Conversations Online

Difficult conversations don’t have to devolve into name-calling and hurt feelings. Here’s how to have more productive conversations.

PON Staff • April 14, 2025

Online conversations about politics and other hot-button issues often spiral quickly into conflict, leaving us feeling misunderstood, angry, and sometimes even ashamed of our own behavior. Harvard Law School lecturer Sheila Heen—coauthor of Thanks for the Feedback: The Science and Art of Receiving Feedback Well and Difficult Conversations: How to Discuss What Matters Most—spoke to the Program on Negotiation in 2020 about how to look beyond the controversy and condemnation, and form deeper connections, both online and offline.

Program on Negotiation: Many of us who are active on social media have gotten into heated arguments that escalated into insults, mockery, and other types of behavior that we rarely engage in when arguing in real life. Why do conflict and incivility seem to be so much more common online?

Sheila Heen: There are a few reasons why we shy away from conflict in the real world. First, we don’t want to harm our relationships with the real people in our lives. Second, we’re worried about their reaction in the moment—that they’ll get angry, cry, and so on. Third, because we have a relationship with ourselves, we worry about how we’re behaving. Online, all these costs feel somewhat removed or at least mitigated, whether because we’re arguing with a stranger or, if we’re talking to people we know, because we’re not faced with their reaction in person.

To make matters worse, online forums are usually public. Any time you have an audience, your identity—“Am I a good or bad person? Am I the problem, or am I the person who speaks truth to power?”—is on the line, which is why people are more reactive. Suddenly it feels as if “everyone on this forum views me as what’s wrong with this country.” In a real-life relationship, we may disagree on an issue that feels really important, but it’s easier to remember that there are good things about each other, and we have the opportunity to change the topic and salvage the dinner. Online, people become two-dimensional caricatures of actual human beings, and we forget there is a real person behind that online handle.

Program on Negotiation: It’s not that hard to step away from difficult conversations with online strangers. What should you do when you get into an online disagreement with someone you know in real life?

SH: Any form of online discussion—emails, texts, private messages—is not dialogue; it is serial monologue. Once a conflict is escalating in serial monologue, it’s really hard to solve it in that format because we’re each explaining why we’re right. You need to either pick up the phone or, more ideally, have these difficult conversations in person. Shift your purpose from having the other person finally see that you’re right to understanding why you see things so differently. Exploring why you see things differently means you each better understand the other—and feel understood—which helps protect the relationship even if you continue to strongly disagree.

Program on Negotiation: Many of us are so set in our political opinions these days that we refuse to listen to the other side, especially online. For issues that people view as having a moral dimension, such as abortion or family separations at the U.S.-Mexico border, is there still room for discussion?

SH: Sure, if the purpose of the difficult conversations is to better understand why you both think what you think or feel what you feel. But if the purpose is to change their mind or prove to them that they’re being immoral, that’s unlikely to happen, partly because of what we believe the conversation is about—for example, that separating children from their families and traumatizing them is deeply problematic.

We’re pretty sure we’re right about that, and we probably are right about that, but that’s not what the other person thinks this issue is about. The other person believes what’s important about this issue is that we need a meaningful way to manage our borders and that there are a lot of real costs of not doing that. And they’re pretty sure they’re right about that, and they probably are.

So the conversation doesn’t go anywhere because we’re talking past each other, each insisting that we’re right about our own topic alone. If we shift our purpose to understanding what we each think the conversation is about and why we see things differently, we at least land in a better place. It helps to be open to their perspective, which can mean learning out loud: “Oh, that’s interesting. That’s something I hadn’t thought about.” Then the other person is more likely to reciprocate by being open themselves.

People don’t change their minds about deeply held beliefs quickly. Sometimes we assume that the conversation didn’t have any impact. But if we both walk away thinking about at least a couple of new things, then that actually is progress.

What dispute resolution strategies have you used with online counterparts?

Negotiation Briefings Articles

Ask A Negotiation Expert: Getting Along When Social Media Pulls Us Apart

PON Staff • January 31, 2020

Online discussions of politics and other hot-button issues often spiral quickly into conflict, leaving us feeling misunderstood, angry, and sometimes even ashamed of our own behavior. We spoke to Harvard Law School lecturer Sheila Heen—coauthor of Thanks for the Feedback: The Science and Art of Receiving Feedback Well (Viking, 2014) and Difficult Conversations: How to Discuss What Matters Most (Penguin, 2010)—about how to look beyond the controversyand condemnation, and form deeper connections, both online and offline.

Negotiation Briefings: Many of us who are active on social media— Twitter, Facebook, etc.—have gotten into heated arguments that escalated into insults, mockery, and other types of behavior that we rarely engage in when arguing in real life. Why do conflict and incivility seem to be so much more common online?

Sheila Heen: There are a few reasons why we shy away from conflict in the real world. First, we don’t want to harm our relationships with the real people in our lives. Second, we’re worried about their reaction in the moment—that they’ll get angry, cry, and so on. Third, because we have a relationship with ourselves, we worry about how we’re behaving. Online, all these costs feel somewhat removed or at least mitigated, whether because we’re arguing with a stranger or, if we’re talking to people we know, because we’re not faced with their reaction in person.

To make matters worse, online forums are usually public. Any time you have an audience, your identity—“Am I a good or bad person? Am I the problem, or am I the person who speaks truth to power?”—is on the line, which is why people are more reactive. Suddenly it feels as if “everyone on this forum views me as what’s wrong with this country.” In a real-life relationship, we may disagree on an issue that feels really important, but it’s easier to remember that there are good things about each other, and we have the opportunity to change the topic and salvage the dinner. Online, people become two-dimensional caricatures of actual human beings, and we forget there is a real person behind that online handle.

NB: It’s not that hard to step away from online conflicts with strangers. What should you do when you get into an online disagreement with someone you know in real life?

SH: Any form of online discussion— emails, texts, private messages—is not dialogue; it is serial monologue. Once a conflict is escalating in serial monologue, it’s really hard to solve it in that format because we’re each explaining why we’re right. You need to either pick up the phone or, more ideally, talk in person. Shift your purpose from having the other person finally see that you’re right to understanding why you see things so differently. Exploring why you see things differently means you each better understand the other—and feel understood—which helps protect the relationship even if you continue to strongly disagree.

NB: Many of us are so set in our political opinions these days that we refuse to listen to the other side, especially online. For issues that people view as having a moral dimension, such as abortion or family separations at the U.S.–Mexico border, is there still room for discussion?

SH: Sure, if the purpose of the discussion is to better understand why you both think what you think or feel what you feel. But if the purpose is to change their mind or prove to them that they’re being immoral, that’s unlikely to happen, partly because of what we believe the conversation is about—for example, that separating children from their families and traumatizing them is deeply problematic.

We’re pretty sure we’re right about that, and we probably are right about that, but that’s not what the other person thinks this issue is about. The other person believes what’s important about this issue is that we need a meaningful way to manage our borders and that there are a lot of real costs of not doing that. And they’re pretty sure they’re right about that, and they probably are.

So the conversation doesn’t go anywhere because we’re talking past each other, each insisting that we’re right about our own topic alone. If we shift our purpose to understanding what we each think the conversation is about and why we see things differently, we at least land in a better place. It helps to be open to their perspective, which can mean learning out loud: “Oh, that’s interesting. That’s something I hadn’t thought about.” Then the other person is more likely to reciprocate by being open themselves.

People don’t change their minds about deeply held beliefs quickly. Sometimes we assume that the conversation didn’t have any impact. But if we both walk away thinking about at least a couple of new things, then that actually is progress.

Negotiation Briefings Articles

Negotiation research you can use: When men are—and aren’t—more likely to negotiate than women

PON Staff • January 31, 2020

Women can be less likely than men to initiate negotiations, a meta-analysis of existing studies on the topic concluded last year. Because negotiation is widely perceived as requiring stereotypically “masculine” traits, such as assertiveness and independence, rather than stereotypically “feminine” traits, such as concern for others and passivity, women may feel less comfortable launching negotiations than men do. And women who do initiate negotiations can face a backlash for violating traditional gender roles.

Notably, however, most of the research done on gender and negotiation has focused on single-issue job negotiations over compensation. Are women less likely to initiate negotiations in other contexts?

To find out, researcher Julia A.M. Reif of the Ludwig Maximilian University of Munich and her colleagues asked about 1,300 German university students to describe situations in which they might consider initiating negotiations. Based on their responses, students identified 13 broad categories of negotiations: compensation; contracts; finances (such as fees, debt, and financial support); workplace (such as hours and tasks); leisure; markets (such as flea markets); communal living (negotiations with roommates and neighbors); products and prices; public institutions (such as negotiations with teachers or the police); rent; services (hairdresser, restaurants, etc.); social environment (friends and family); and stores.

In another online experiment, 358 students and employed adults were asked to imagine themselves in 13 specific negotiation contexts (each based on one of the 13 categories) and to indicate the likelihood that they would initiate such negotiations. They were also asked to assess how confident they were in their ability to handle such negotiations and whether they expected to benefit from negotiating.

Men were more likely than women to say that they would conduct negotiations in the categories of public institutions, contracts, compensation, workplace, and rent. Women felt less confident in their ability to handle negotiations in these contexts and also believed they would receive little benefit from them, perhaps because they anticipated a backlash. Women had higher intentions than men to negotiate communal-living situations. For the other seven categories (finances, leisure, markets, products and prices, services, social environment, and stores), men and women had similar intentions to negotiate.

More research is needed to determine whether people’s predictions of whether they would negotiate in a given situation are accurate. But the results of Reif and her colleagues’ study suggest that women are just as likely as men to feel comfortable initiating negotiations in a variety of contexts not captured by past research. The findings also help to pinpoint contexts in which organizations—and society at large—need to work on eliminating the backlash that women have learned they will face when they assert themselves.

Source: “Negotiation Contexts: How and Why They Shape Women’s and Men’s Decision to Negotiate,” by Julia A.M. Reif, Fiona A. Kunz, Katharina G. Kugler, and Felix C. Brodbeck.Negotiation and Conflict Management Research, 2019.

Not taking no for an answer

Have you ever done business with a negotiator who just won’t stop asking for more? A sense of entitlement may be to blame, Lukas Neville of the University of Manitoba in Winnipeg, and Glenda M. Fisk of Queen’s University in Kingston, Ontario, found in a new study.

Psychological entitlement is a stable personality trait that has been defined as feeling as if one is “owed special treatment and unearned rewards,” according to Neville and Fisk. People who score high on psychological entitlement on personality tests demand more than their fair share and react negatively when others don’t meet their excessive demands. Dealing with the entitled can be stressful, as they tend to be selfish, low in empathy, and hostile when they don’t get what they want.

The entitled can also be difficult negotiating partners, the researchers confirmed in three experiments. In one experiment, 325 participants in an online study were surveyed about their most recent negotiation. As compared to other participants, those who scored high on entitlement in a separate survey reported being more ambitious, confident, and confrontational in their recent negotiation. They also were more likely to endorse unethical negotiating behaviors, such as offering bribes to curry favor with a counterpart. In another experiment, those who scored high on entitlement were more open to unethical behaviors in negotiation than those who scored high on a related trait, narcissism (excessive preoccupation with or admiration of oneself).

What should you do when faced with a negotiator who seems to think he’s entitled to as much as you can possibly give him? Try to show him how he personally could benefit from reframing negotiation as a collaborative enterprise rather than a win-lose contest. If that doesn’t work, consider finding a new negotiating counterpart who may be less prone to unethical behavior and more interested in working with you to create value.

Source: “Getting to Excess: Psychological Entitlement and Negotiation Attitudes,” by Lukas Neville and Glenda M. Fisk. Journal of Business and Psychology, 2019.

Leadership Skills

Negotiation research you can use: When men are—and aren’t—more likely to negotiate than women

PON Staff • January 31, 2020

Women can be less likely than men to initiate negotiations, a meta-analysis of existing studies on the topic concluded last year. Because negotiation is widely perceived as requiring stereotypically “masculine” traits, such as assertiveness and independence, rather than stereotypically “feminine” traits, such as concern for others and passivity, women may feel less comfortable launching negotiations than men do. And women who do initiate negotiations can face a backlash for violating traditional gender roles.

Notably, however, most of the research done on gender and negotiation has focused on single-issue job negotiations over compensation. Are women less likely to initiate negotiations in other contexts?

To find out, researcher Julia A.M. Reif of the Ludwig Maximilian University of Munich and her colleagues asked about 1,300 German university students to describe situations in which they might consider initiating negotiations. Based on their responses, students identified 13 broad categories of negotiations: compensation; contracts; finances (such as fees, debt, and financial support); workplace (such as hours and tasks); leisure; markets (such as flea markets); communal living (negotiations with roommates and neighbors); products and prices; public institutions (such as negotiations with teachers or the police); rent; services (hairdresser, restaurants, etc.); social environment (friends and family); and stores.

In another online experiment, 358 students and employed adults were asked to imagine themselves in 13 specific negotiation contexts (each based on one of the 13 categories) and to indicate the likelihood that they would initiate such negotiations. They were also asked to assess how confident they were in their ability to handle such negotiations and whether they expected to benefit from negotiating.

Men were more likely than women to say that they would conduct negotiations in the categories of public institutions, contracts, compensation, workplace, and rent. Women felt less confident in their ability to handle negotiations in these contexts and also believed they would receive little benefit from them, perhaps because they anticipated a backlash. Women had higher intentions than men to negotiate communal-living situations. For the other seven categories (finances, leisure, markets, products and prices, services, social environment, and stores), men and women had similar intentions to negotiate.

More research is needed to determine whether people’s predictions of whether they would negotiate in a given situation are accurate. But the results of Reif and her colleagues’ study suggest that women are just as likely as men to feel comfortable initiating negotiations in a variety of contexts not captured by past research. The findings also help to pinpoint contexts in which organizations—and society at large—need to work on eliminating the backlash that women have learned they will face when they assert themselves.

Source: “Negotiation Contexts: How and Why They Shape Women’s and Men’s Decision to Negotiate,” by Julia A.M. Reif, Fiona A. Kunz, Katharina G. Kugler, and Felix C. Brodbeck.Negotiation and Conflict Management Research, 2019.

Not taking no for an answer

Have you ever done business with a negotiator who just won’t stop asking for more? A sense of entitlement may be to blame, Lukas Neville of the University of Manitoba in Winnipeg, and Glenda M. Fisk of Queen’s University in Kingston, Ontario, found in a new study.

Psychological entitlement is a stable personality trait that has been defined as feeling as if one is “owed special treatment and unearned rewards,” according to Neville and Fisk. People who score high on psychological entitlement on personality tests demand more than their fair share and react negatively when others don’t meet their excessive demands. Dealing with the entitled can be stressful, as they tend to be selfish, low in empathy, and hostile when they don’t get what they want.

The entitled can also be difficult negotiating partners, the researchers confirmed in three experiments. In one experiment, 325 participants in an online study were surveyed about their most recent negotiation. As compared to other participants, those who scored high on entitlement in a separate survey reported being more ambitious, confident, and confrontational in their recent negotiation. They also were more likely to endorse unethical negotiating behaviors, such as offering bribes to curry favor with a counterpart. In another experiment, those who scored high on entitlement were more open to unethical behaviors in negotiation than those who scored high on a related trait, narcissism (excessive preoccupation with or admiration of oneself).

What should you do when faced with a negotiator who seems to think he’s entitled to as much as you can possibly give him? Try to show him how he personally could benefit from reframing negotiation as a collaborative enterprise rather than a win-lose contest. If that doesn’t work, consider finding a new negotiating counterpart who may be less prone to unethical behavior and more interested in working with you to create value.

Source: “Getting to Excess: Psychological Entitlement and Negotiation Attitudes,” by Lukas Neville and Glenda M. Fisk. Journal of Business and Psychology, 2019.

Negotiation Briefings Articles

When High Prices Are a Bitter Pill to Swallow

To promote transparency and fairness in sales negotiations, bring objective standards to the table.

PON Staff • January 31, 2020

There’s at least one thing that politicians as ideologically dissimilar as President Donald Trump and Senator Elizabeth Warren have agreed on: Prescription drug prices are too high in the United States. Americans pay about $1,200 per year, on average, for their medication, according to the Organization for Economic Cooperation and Development— about twice as much as citizens of other countries. As a result of ever-rising drug costs, more Americans are choosing not to fill prescriptions or to skip doses, CNBC reports.

Numerous factors underlie the sky-high prices. To begin with, pharmaceutical firms have the exclusive right to sell new drugs for a certain number of years before generic versions can enter the U.S. market. This monopolistic pricing power is intended to give drugmakers incentives to invest in producing new medications. Yet drug prices rose 9% annually from 2008 to 2016 not because of the entry of new drugs, but because manufacturers raised the prices of existing drugs, a study by University of Pittsburgh School of Pharmacy professor Inmaculada Hernandez and her colleagues showed. Such price hikes help maintain the industry’s high profit margins: The pharmaceutical industry recorded the 10th-highest after-tax profits, about 22.8% of income, of the 100 business sectors studied by New York University professor Aswath Damodaran in 2019.

Making matters worse for consumers, the U.S. government is prohibited by law from negotiating the prices of drugs administered through Medicare. And while other governments can walk away from negotiations with pharmaceutical firms if they demand too much, the U.S. government doesn’t usually exclude medicines from Medicare or Medicaid on the basis of cost.

Across industries, price negotiations can be fraught with uncertainty for buyers, who often lack objective information about a product’s or service’s value. Buyers may be unsure about the quality of what’s being sold and how useful it will be to them over time. They also may know little about how much money, time, and other resources the seller invested in the commodity or service, or be unable to verify the seller’s claims. Lack of transparency can lead sellers to take advantage and buyers to vastly overpay—especially when the seller has a monopoly on the good or service.

Several remedies have been proposed to lower prescription drug prices in the United States, such as allowing the federal government to negotiate Medicare drug prices. As we’ll see, one innovation—or disruption, depending on one’s perspective— that’s begun to give consumers some relief involves applying independent objective standards to drug-pricing negotiations, as Denise Roland writes in a recent in-depth article in the Wall Street Journal. It’s an approach that buyers and even sellers in other realms should be motivated to apply to improve the transparency and fairness of their negotiations.

In sickness and in health

In 2006, Harvard Medical School lecturer Steve Pearson founded the Boston-based Institute for Clinical and Economic Review (ICER), a nonpartisan, independent nonprofit group that uses an economic model known as QALY (or quality-adjusted life year) to assess the medical and economic value of various health-care innovations, including prescription drugs. ICER’s main investor is hedge-fund billionaire John Arnold, an advocate of lower drug prices.

ICER evaluates prescription drugs based on how many years of good health patients can be expected to gain from them. In its calculations, a single QALY is equivalent to one year of perfect health. Each QALY that a drug gives back to a person has a maximum value of $150,000 across a person’s life span. ICER uses such calculations to reach a “value-based price benchmark” for the annual cost of a drug that can be compared to the manufacturer’s price.

ICER has judged less than one-third of the 79 drugs it has reviewed since 2015 as being fairly priced, which has led the pharmaceutical industry’s trade group, PhRMA, to call the group biased toward insurers. PhRMA and others also say QALY is a blunt instrument that undervalues the elderly, as well as people with disabilities and chronic illness.

Others object to the very idea of putting a dollar value on the quality of a person’s life. The Obama administration banned the use of QALY-based analysis in Medicare in the Affordable Care Act, and the Trump White House has not accepted the concept. But as Michael Sherman, chief medical officer of insurer Harvard Pilgrim Health Care, told the Journal, “We are [already] putting a price on a year of life. We just let the pharmaceutical companies choose it.”

“The goal is to have independent information available to catalyze the kinds of discussions that should be happening in broad daylight … and not behind closed doors,” ICER founder Pearson told the Journal.

Taking their medicine

Canada, Britain, the Netherlands, and other countries have used QALY-based methodologies for years to gain leverage in price negotiations with drugmakers. In the United States, private insurers have begun drawing on ICER’s conclusions to negotiate discounts from drugmakers. And pharmaceutical firms Sanofi, Amgen, Novartis, and others have lowered the prices of new drugs to fall in line with ICER assessments. Why? Because insurers and other payers are more likely to cover and nudge patients toward drugs that have an ICER endorsement, industry publication FiercePharma reports.

It’s not yet clear if ICER will become an industrywide source for information on the value of prescription drugs. PhRMA believes more stakeholders should be involved in setting prices, including patients, according to FiercePharma. But ICER has won over some drugmakers by listening when they object to its conclusions, even reversing its decisions in a few cases.

Expert Rx: The value of joint fact finding

As this story from the pharmaceutical industry illustrates, in a sales negotiation, buyers are more likely to view price negotiations as transparent and fair when they have access to objective, unbiased data about the value of the product or service being sold.

Home inspectors, mechanics, jewelry appraisers, lawyers, and other experts can help us determine the true value of various commodities and whether to bid on them. But it’s not always the norm to have experts weigh in on whether a good or service is worth the price. Lacking such input, a buyer and seller may reach self-serving valuations and fail to come to agreement.

“We are [already] putting a price on a year of life. We just let the pharmaceutical companies choose it.”

Whenever you feel objective data is missing in a sales negotiation, it can be wise to consult with an unbiased expert for his opinion. An even better move can be to engage your negotiating partner in a joint fact-finding process, as MIT professor Lawrence Susskind recommends in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014). In joint fact finding, negotiators decide together what data they need, which expert (or experts) to hire, how to pay them, and so on. The negotiators then assess the expert’s findings together and jointly decide how to apply them. Parties will still have incentives to interpret the results to their advantage or reject them entirely. But if they agree up front to abide by the expert’s conclusions, they will be less likely to walk away from a mutually beneficial deal.

When you and your counterpart jointly solicit objective data, you will foster a more collaborative and trusting relationship. That, in turn, is likely to turn your negotiation from a single-minded focus on price to an exploration of whether a deal would be right for each of you in the long run.

In baseball, sabermetrics create a more level playing field

When negotiators replace intuitive decision making with rational analysis, it can be a whole new ball game. That’s what Major League Baseball (MLB) teams—inspired by Billy Beane’s turnaround of the Oakland A’s, as recounted in Michael Lewis’ book Moneyball: The Art of Winning an Unfair Game—found when they began using advanced computer models to analyze players’ ability and value in the early 2000s. The widespread use of so- called sabermetrics in baseball has led to seismic changes in the sport, from how it’s played to how player contracts are negotiated.

The power wielded by sports agents has shifted as well. Scott Boras, a baseball agent who is as famous as many of the star players he represents, used to be able to “enter negotiations with reams of statistics and information that at times outclassed what was available to the teams,” writes Jared Diamond in the Wall Street Journal. That’s no longer the case. Armed with their own painstakingly gathered data, baseball executives are in a much better position to refute agents’ outsized claims and hold the line on costs. As a result, negotiations for top free agents have slowed to a crawl this winter, with agents and teams playing a slow-motion game of chicken to see who caves in first on salary and other issues.

The seismic changes in baseball show what a dramatic effect objective data can bring to negotiations and industry practices more generally. These changes can’t always be anticipated, but they do make the game more exciting.

Dealmaking

When High Prices Are a Bitter Pill to Swallow

To promote transparency and fairness in sales negotiations, bring objective standards to the table.

PON Staff • January 31, 2020

There’s at least one thing that politicians as ideologically dissimilar as President Donald Trump and Senator Elizabeth Warren have agreed on: Prescription drug prices are too high in the United States. Americans pay about $1,200 per year, on average, for their medication, according to the Organization for Economic Cooperation and Development— about twice as much as citizens of other countries. As a result of ever-rising drug costs, more Americans are choosing not to fill prescriptions or to skip doses, CNBC reports.

Numerous factors underlie the sky-high prices. To begin with, pharmaceutical firms have the exclusive right to sell new drugs for a certain number of years before generic versions can enter the U.S. market. This monopolistic pricing power is intended to give drugmakers incentives to invest in producing new medications. Yet drug prices rose 9% annually from 2008 to 2016 not because of the entry of new drugs, but because manufacturers raised the prices of existing drugs, a study by University of Pittsburgh School of Pharmacy professor Inmaculada Hernandez and her colleagues showed. Such price hikes help maintain the industry’s high profit margins: The pharmaceutical industry recorded the 10th-highest after-tax profits, about 22.8% of income, of the 100 business sectors studied by New York University professor Aswath Damodaran in 2019.

Making matters worse for consumers, the U.S. government is prohibited by law from negotiating the prices of drugs administered through Medicare. And while other governments can walk away from negotiations with pharmaceutical firms if they demand too much, the U.S. government doesn’t usually exclude medicines from Medicare or Medicaid on the basis of cost.

Across industries, price negotiations can be fraught with uncertainty for buyers, who often lack objective information about a product’s or service’s value. Buyers may be unsure about the quality of what’s being sold and how useful it will be to them over time. They also may know little about how much money, time, and other resources the seller invested in the commodity or service, or be unable to verify the seller’s claims. Lack of transparency can lead sellers to take advantage and buyers to vastly overpay—especially when the seller has a monopoly on the good or service.

Several remedies have been proposed to lower prescription drug prices in the United States, such as allowing the federal government to negotiate Medicare drug prices. As we’ll see, one innovation—or disruption, depending on one’s perspective— that’s begun to give consumers some relief involves applying independent objective standards to drug-pricing negotiations, as Denise Roland writes in a recent in-depth article in the Wall Street Journal. It’s an approach that buyers and even sellers in other realms should be motivated to apply to improve the transparency and fairness of their negotiations.

In sickness and in health

In 2006, Harvard Medical School lecturer Steve Pearson founded the Boston-based Institute for Clinical and Economic Review (ICER), a nonpartisan, independent nonprofit group that uses an economic model known as QALY (or quality-adjusted life year) to assess the medical and economic value of various health-care innovations, including prescription drugs. ICER’s main investor is hedge-fund billionaire John Arnold, an advocate of lower drug prices.

ICER evaluates prescription drugs based on how many years of good health patients can be expected to gain from them. In its calculations, a single QALY is equivalent to one year of perfect health. Each QALY that a drug gives back to a person has a maximum value of $150,000 across a person’s life span. ICER uses such calculations to reach a “value-based price benchmark” for the annual cost of a drug that can be compared to the manufacturer’s price.

ICER has judged less than one-third of the 79 drugs it has reviewed since 2015 as being fairly priced, which has led the pharmaceutical industry’s trade group, PhRMA, to call the group biased toward insurers. PhRMA and others also say QALY is a blunt instrument that undervalues the elderly, as well as people with disabilities and chronic illness.

Others object to the very idea of putting a dollar value on the quality of a person’s life. The Obama administration banned the use of QALY-based analysis in Medicare in the Affordable Care Act, and the Trump White House has not accepted the concept. But as Michael Sherman, chief medical officer of insurer Harvard Pilgrim Health Care, told the Journal, “We are [already] putting a price on a year of life. We just let the pharmaceutical companies choose it.”

“The goal is to have independent information available to catalyze the kinds of discussions that should be happening in broad daylight … and not behind closed doors,” ICER founder Pearson told the Journal.

Taking their medicine

Canada, Britain, the Netherlands, and other countries have used QALY-based methodologies for years to gain leverage in price negotiations with drugmakers. In the United States, private insurers have begun drawing on ICER’s conclusions to negotiate discounts from drugmakers. And pharmaceutical firms Sanofi, Amgen, Novartis, and others have lowered the prices of new drugs to fall in line with ICER assessments. Why? Because insurers and other payers are more likely to cover and nudge patients toward drugs that have an ICER endorsement, industry publication FiercePharma reports.

It’s not yet clear if ICER will become an industrywide source for information on the value of prescription drugs. PhRMA believes more stakeholders should be involved in setting prices, including patients, according to FiercePharma. But ICER has won over some drugmakers by listening when they object to its conclusions, even reversing its decisions in a few cases.

Expert Rx: The value of joint fact finding

As this story from the pharmaceutical industry illustrates, in a sales negotiation, buyers are more likely to view price negotiations as transparent and fair when they have access to objective, unbiased data about the value of the product or service being sold.

Home inspectors, mechanics, jewelry appraisers, lawyers, and other experts can help us determine the true value of various commodities and whether to bid on them. But it’s not always the norm to have experts weigh in on whether a good or service is worth the price. Lacking such input, a buyer and seller may reach self-serving valuations and fail to come to agreement.

“We are [already] putting a price on a year of life. We just let the pharmaceutical companies choose it.”

Whenever you feel objective data is missing in a sales negotiation, it can be wise to consult with an unbiased expert for his opinion. An even better move can be to engage your negotiating partner in a joint fact-finding process, as MIT professor Lawrence Susskind recommends in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014). In joint fact finding, negotiators decide together what data they need, which expert (or experts) to hire, how to pay them, and so on. The negotiators then assess the expert’s findings together and jointly decide how to apply them. Parties will still have incentives to interpret the results to their advantage or reject them entirely. But if they agree up front to abide by the expert’s conclusions, they will be less likely to walk away from a mutually beneficial deal.

When you and your counterpart jointly solicit objective data, you will foster a more collaborative and trusting relationship. That, in turn, is likely to turn your negotiation from a single-minded focus on price to an exploration of whether a deal would be right for each of you in the long run.

In baseball, sabermetrics create a more level playing field

When negotiators replace intuitive decision making with rational analysis, it can be a whole new ball game. That’s what Major League Baseball (MLB) teams—inspired by Billy Beane’s turnaround of the Oakland A’s, as recounted in Michael Lewis’ book Moneyball: The Art of Winning an Unfair Game—found when they began using advanced computer models to analyze players’ ability and value in the early 2000s. The widespread use of so- called sabermetrics in baseball has led to seismic changes in the sport, from how it’s played to how player contracts are negotiated.

The power wielded by sports agents has shifted as well. Scott Boras, a baseball agent who is as famous as many of the star players he represents, used to be able to “enter negotiations with reams of statistics and information that at times outclassed what was available to the teams,” writes Jared Diamond in the Wall Street Journal. That’s no longer the case. Armed with their own painstakingly gathered data, baseball executives are in a much better position to refute agents’ outsized claims and hold the line on costs. As a result, negotiations for top free agents have slowed to a crawl this winter, with agents and teams playing a slow-motion game of chicken to see who caves in first on salary and other issues.

The seismic changes in baseball show what a dramatic effect objective data can bring to negotiations and industry practices more generally. These changes can’t always be anticipated, but they do make the game more exciting.

Negotiation Briefings Articles

Negotiating beyond the finish line

Just because a negotiation has ended doesn’t mean you should call it quits.

PON Staff • January 31, 2020

It happens to the best of us: A critical negotiation comes to an impasse, and you’re crushed. Maybe your efforts to find a buyer for your business have been fruitless, your job contract is being terminated, or you’ve sat by helplessly as others negotiated decisions that could affect your health or well-being. Whatever the desperate situation may be, there seems to be nothing left to do. But is that really the case? Several recent news stories demonstrate that with tenacity, inventiveness, and a clear-eyed reading of the situation, you may be able to get parties back to the table and renew hope for agreement.

Trying to bring Barneys back from the brink

For decades, luxury department store Barneys New York was the preening peacock of Madison Avenue. Founded in 1923 by Barney Pressman as a men’s discount clothing store, Barneys transformed into an uber-chic, overpriced curator of cutting-edge brands in the 1970s. Adored by Manhattan’s trendsetters for its embrace of outré designers and its wacky window displays, Barneys branched out in the 1980s and 1990s, opening 100 stores nationwide.

In 1996, though, overexpansion triggered a bankruptcy. Barneys recovered but then floundered through changes in ownership and leadership while struggling to compete in an era of fast fashion, e-commerce, and soaring rents.

On August 6, 2019, the company, owned by former hedge-fund manager Richard Perry, was forced to declare bankruptcy for a second time. Yet Barneys’ leaders were determined to once again rise from the ashes—and “fought to the end” to save jobs and stores, write Vanessa Friedman and Sapna Maheshwari in the New York Times.

Barneys CEO Daniella Vitale spent the summer meeting with potential buyers in the hopes of driving up the sale price at an auction. But by mid-October, the company had attracted only one serious bid, from brand-licensing firm Authentic Brands and liquidator B. Riley. Authentic planned to license the Barneys name to other companies, including rival Saks Fifth Avenue, while B. Riley would sell off Barneys’ high-end merchandise at a discount. Horrified by the prospect of their beloved store disappearing, customers launched an online “Save Barneys” campaign.

Even after the bidding deadline had passed, Barneys’ lawyers scrambled to find last-minute bidders willing to preserve some of its stores and 2,300 jobs. Investor Sam Ben-Avraham said he was planning to make an offer, as did a former CEO of a Dubai-based group that had owned Barneys in the past, according to the Times.

At a suspenseful Halloween bankruptcy hearing held to authorize a sale to Authentic and B. Riley, Joshua Sussberg, a lawyer representing Barneys, asked Judge Cecelia G. Morris to give potential buyers until the next morning to make a bid that could keep “jobs and stores open, viable, available for employees, for landlords, for trade vendors,” according to the Times. Against Authentic’s objections, the judge agreed and offered up conference rooms at the courthouse to facilitate any last-minute negotiations. But no bid had appeared by the morning of November 1, and Barneys was “sold for parts” to Authentic and B. Riley, the Times reports.

After years of flawed business decisions, neglect, and bad luck, negotiations to right a sinking ship can be too little, too late. Once it was headed toward its second bankruptcy, Barneys’ leadership tried hard to save the company, entertaining and soliciting bids beyond its final deadline, even appealing dramatically to the judge for a brief stay of execution. As we’ll see in our next story, such heartfelt appeals for help can pay off in seemingly hopeless situations.

Weaving a delicate web

For fans of superhero movies, the news this past August was heartbreaking: Disney-owned Marvel Studios would no longer be featuring the Spider-Man character in its blockbuster films after failing to renegotiate a licensing arrangement with Sony, which owns the rights to the character.

Back in 2015, Sony and Marvel inked a deal to share Spider-Man across five films. Welcoming Spider-Man, as portrayed by actor Tom Holland, to the “Marvel cinematic universe”—which is populated by the likes of Iron Man, Captain America, Black Widow, and Thor—proved to be a blockbuster move: 2017’s Spider-Man: Homecoming earned $880 million, and 2019’s Spider-Man: Far from Home raked in $1.1 billion. Holland also donned Spider-Man’s trademark red-and-blue suit for appearances in three of Marvel’s hit Avengers films.

Yet negotiations for a third Spidey film produced by Marvel-universe mastermind Kevin Feige dragged on for months, finally grinding to a halt on August 20, 2019, according to Hollywood Reporter. Disney wanted a much larger share of profits than the small percentage Marvel had negotiated; Sony flatly rejected the proposed 50-50 cofinancing offer. Though a deal would almost surely be lucrative, both parties believed they’d be fine without the other. Sony had produced hit Spider-Man movies without Marvel in the past (starring Tobey Maguire and Andrew Garfield) and thought it could do so again. And with Avengers: Endgame grossing $2.79 billion in 2019, Disney knew there was plenty of life after Spider-Man.

The negotiations were “100 percent dead,” an industry source told the Hollywood Reporter, when an unlikely hero swooped in to save the day. On the talk show Jimmy Kimmel Live!, 23-year-old Holland recounted that he was “devastated” to learn—while attending a Disney convention, no less—that he’d no longer play Spider-Man. He said he emailed Disney chairman and CEO Bob Iger to thank him for “an amazing five years.” Iger wrote back to say he’d like to talk to Holland on the phone.

A few days later, while drinking at a pub with his family, the English actor got a phone call. “I’m like, ‘I think this is Bob Iger, but I’m drunk,’” he told Kimmel. Holland became “really emotional” on the call—to the point of tears, he said, as he shared how much the Spider-Man films meant to him and to fans.

“It was clear that he cared so much,” Iger said in his own interview with Kimmel, “ . . . and that the fans wanted all this to happen.” After his call with Holland, Iger phoned Disney Studios team members and then Sony Pictures chairman Tom Rothman. “I said, ‘We’ve got to figure out a way to get this done. For Tom [Holland], and for the fans.’”

A month later, the news broke that the two studios had reached a deal for Marvel to produce a third Spider-Man film for Sony, which will receive 25% of net gross and pay 25% of the film’s budget. Spider-Man will also appear in at least one other Marvel film, according to the Hollywood Reporter.

How to explain the studios’ change of heart? The many millions, even billions of dollars they stand to earn from Spider-Man films and merchandising could have had something to do with it. But according to Iger, there was a deeper lesson to be learned: “Sometimes companies . . . or people, when they’re negotiating with one another, they kind of forget that there are other folks out there who actually matter.”

Appeal to their compassion with reason

Winning the sympathy of a powerful decision maker such as Iger might not be that hard if you’re a charismatic movie star whose inhibitions are down. How can we mere mortals ensure that gatekeepers take our own desperate pleas seriously?

Appealing to people’s emotions can help, particularly by referencing how parties outside the negotiation could be hurt. When asking for a bargaining- deadline extension, Barneys’ lawyer Sussberg reminded Judge Morris of the many people who would lose their jobs if the company dissolved. And Holland told Iger how disappointed the devoted fans of the Marvel Spider-Man movies were by the Disney-Sony impasse. Reminding the powerful of the impact of their decisions on outsiders can be an effective way of triggering empathy and compassionate decision making.

We might conclude that tugging on decision makers’ heartstrings is the best strategy when you’ve exhausted other options, but that may not always be the case. Recently on NPR’s Marketplace, reporter Stephanie Hughes described the difficult situation faced by Judy Masonbrink, a 73-year- old Midwesterner diagnosed with Stage 4 of an extremely rare form of cancer. A team of oncologists thought a breast-cancer drug called Nerlynx might help her, but Masonbrink couldn’t afford its annual cost of $180,000. (For more on the high cost of prescription drugs in the United States, see the article “When High Prices Are a Bitter Pill to Swallow”.) Masonbrink’s private insurer would cover the cost of Nerlynx only to treat breast cancer, not the cancer she has. After an unsuccessful appeal to the insurer, she and her family applied to the drug’s manufacturer to see if it would give her the drug for free. The company refused.

Masonbrink’s doctor had a final idea: He wrote what’s called a “compassion letter” to the pharmaceutical company. “I thought it would be heartfelt, about the life of this perky lady, but it wasn’t,” Masonbrink’s daughter Abbey told Marketplace. “It was really technical and science-y, but it worked.” The company agreed to give the drug to Masonbrink for free. Unfortunately, after two months, the drug did not slow the spread of Masonbrink’s cancer, and she began taking another drug that is covered by her insurance.

In this case, a persuasion effort was effective because it was fact- based, scientific, and written by a knowledgeable source. In fact, a more emotional appeal from Masonbrink’s physician might have undermined his message by making him seem less rational. Thus, it’s important to tailor appeals to your audience, the context, and prevailing norms. Moreover, be aware that enlisting a credentialed expert to lobby on your behalf can open doors.

Ultimately, the biggest lesson we can take from these stories is that you don’t need to give up on agreement just because the final deadline has passed and impasse has been declared. Armed with courage, determination, and a carefully crafted persuasion strategy, you just might be able to bring negotiators back to the table and save the day.

Business Negotiations