Many people say they dread negotiating and avoid it whenever possible. Why? Most often, it’s because they see negotiation as a competition in which one party’s gains come directly at the expense of the other. What we tend to overlook is that most negotiations allow room for both competition and collaboration. Add the collaborative element to the table, and negotiation becomes not only more productive but also far more rewarding.
A small subset of negotiations are distributive, or single-issue negotiations. A negotiation over the price of a used car, for example, may focus on just one issue: price. In this type of value-claiming negotiation, the parties are competing over a fixed pool of resources, and one side’s gain does come at the other’s expense.
Far more often, however, negotiations involve multiple issues. These are known as integrative negotiations, or value-creating negotiations, because they allow parties to expand the pool of value through tradeoffs and creative deal design. Even a used-car negotiation can become integrative if you look beyond price. For instance, if you run a public relations business, you might negotiate a lower price in exchange for offering the dealership some PR support—a tradeoff that could benefit both sides.
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3 guidelines for creating value in negotiation
How can you make the most of integrative negotiations, creating as much value as possible before dividing it? Here are three guidelines drawn from research and teaching at the Program on Negotiation at Harvard Law School.
1. Capitalize on differences.
When negotiators encounter differences, they often see them as obstacles. In reality, differences are frequently opportunities to create value, write Max H. Bazerman and **Don A. Moore their book Judgment in Managerial Decision Making. By trading across different preferences—a process known as logrolling—negotiators can gain more of what they value most by conceding on issues they value less.
For example, you might negotiate a lower per-unit price in exchange for faster payment, a longer contract, or a larger order size.
Differences go beyond preferences. You can also create value by leveraging different expectations about the future through contingent contracts. Suppose you’re negotiating with a contractor over a home renovation and believe the project is unlikely to be completed by the stated deadline. You might propose paying a higher price for on-time completion and a lower price if the project runs late. If the contractor is confident in her timeline, she may be happy to accept the arrangement.
2. Ask questions and share information.
Negotiators often reach impasse because they focus narrowly on stated positions, such as a long closing period or a firm delivery date. One way to move past these sticking points is to ask thoughtful questions that uncover underlying interests.
For example, instead of rejecting a lengthy closing period outright, you might ask, “Can you help me understand why you need that much time?” The answer may reveal interests that are open to tradeoff. If the delay is tied to a legitimate constraint, you might agree to it in exchange for a better price or other concessions that offset the inconvenience.
Sharing information can also help break deadlock. While you should never reveal your bottom line or other sensitive details that would weaken your position, Bazerman and Moore advise negotiators to share limited information about the trades they are willing to consider. Doing so incrementally can encourage reciprocity and lead to more productive problem-solving.
3. Negotiate multiple issues simultaneously.
Many negotiators believe they are being systematic when they address issues one at a time—price first, then delivery, then service terms. In fact, this approach often limits opportunities to create value.
A more effective strategy is to negotiate multiple issues simultaneously. Start by agreeing that nothing is final until everything is agreed upon. This mindset encourages flexibility and makes it easier to identify beneficial tradeoffs across issues. From there, propose package deals that reflect your preferred combinations of outcomes, rather than isolated demands.
Integrative negotiation doesn’t require sacrificing your interests in the name of cooperation. On the contrary, it allows both sides to get more of what they want by identifying what each party values most. Once you’ve expanded the pie, you’re in a much stronger position to claim your share of it.
Which of these approaches have you found most effective for creating value in negotiation?
Claim your FREE copy: Negotiation Skills
Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
