Click here for a discussion of the two major types of negotiation and the key concepts underlying them.

Other topics include the role of power and authority.

Click here for procedures that can help you prepare for and launch a negotiation, handle an initial offer,
and close a deal.

Click here for brief reminders about setting the time, place, and tone of a negotiation.

Click here for worksheets that can help you prepare for a negotiation—including assessing your and the
other side’s positions and interests.

Click here to test your knowledge of negotiating.

Click here for recommended resources that can help you fine-tune your knowledge of negotiating.

Summary
This topic contains relevant information on how to

• understand the basic types of negotiation and the key concepts underlying them
• know how to prepare for, conduct, and close a negotiation
• be able to make effective use of power and authority in a negotiation

• be familiar with strategies that can help you maintain a good negotiating relationship with the
other side and maximize value for both sides.

Topic Outline

The Fundamental Framework

Two Types of Negotiation
Real Sources of Power
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Authority—Theirs and Yours
Multiphase Transactions
Multiparty Negotiations
Special Problems
Frequently Asked Questions

Steps for Preparing for a Negotiation

Steps for Getting an Integrative or Win-Win Negotiation Under Way
Steps for Handling an Initial Offer in a Zero-Sum Negotiation
Steps for Closing the Deal

Tips for Setting the Time and Place

Tips for Establishing the Right Tone
Tips for Getting Off to a Good Start

Preparing for a Negotiation

Identifying Your BATNA
Setting Your Reservation Price
Assessing the Other Side’s Position and Interests
Authority—Theirs and Yours
Sales Negotiation Planner

Harvard Online Article

Notes and Articles
Books
Other Information Sources
eLearning Programs

Key Terms

Apparent withdrawal. A tactic used in sales or other negotiations where one party implies that it may
withdraw from the negotiation.

BATNA. The acronym for "Best Alternative to a Negotiated Agreement." Knowing your BATNA
means knowing the options of what you will do or what will happen if you do not reach agreement in
the negotiation at hand. For example, the BATNA for a consultant negotiating with a potential client
about a month-long assignment might be to spend three weeks developing marketing materials for a
different client.

Bluffing. When one party in a negotiation indicates that it may be willing to do or accept something
that it actually has no intention of following through on. For example, a tenant may bluff that he will
not renew his lease unless certain improvements are made to his office space.

Deadlining. A tactic used in sales or other negotiations whereby one party gives a specific date at
which particular benefits will be forfeited if the other party (or customer) has not met certain
conditions.

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Diverting/feinting. A means of portraying small concessions as big or important ones, in order to
distract the other party away from more important issues.

Die-hard bargainers. People for whom every negotiation is a battle.

Forbearance. A tactic in which one party stalls instead of giving in immediately to the other party’s
request.

Integrative negotiation/win-win negotiation. One of two types of negotiation, this type occurs when
the parties cooperate to achieve maximum mutual benefit in an agreement. Long-term partnerships and
collaborations between colleagues are often characterized by integrative negotiation.

Interests. The goals underlying a party’s negotiation position.

Multiparty negotiations. Negotiations that involve more than two parties. Such negotiations can differ
significantly from two-party negotiations, especially when coalitions—alliances among parties that
wield less power separately than they do together—form among the parties.

Multiphase transactions/future dealings. Negotiations that will be implemented in phases, or that

have the prospect of subsequent involvement in the future. The context of the negotiations allows
parties to negotiate based on follow-through and continuing communication.

Natural coalition. A group of allies who share a broad range of common interests.

Negotiable issues. Issues in a negotiation that can be traded, or around which there is flexibility.

Negotiator’s dilemma. The tension caused by the negotiator’s attempt to balance competitive
strategies—trying to discern when compete where interests conflict, and when to create value by
exchanging the information that leads to mutually advantageous options.

Parameters. Set boundaries that define for the negotiator the minimum and maximum offers that will
be made.

Pareto optimality. In an ideal situation, negotiators are able to maximize the total value that can be
derived from a deal or transaction; this is known as achieving "Pareto optimality." A deal is said to be
Pareto optimal when none of its terms can be changed to the benefit of one side without diminishing its
value to the other side.

Partisan perception. The psychological phenomenon that causes people to perceive truth with a built-
in bias in their own favor, or toward their own point of view. For example, both teams in a baseball
game may perceive that the umpire was unfair to their side.

Positions. What the parties in a negotiation are asking for—in other words, their demands.

Puffing. When one party seeks to improve or advance its position by exaggerating it.

Reservation price/walk-away. The least favorable point at which a party would accept a negotiated
deal. The reservation price is derived from, but is not usually the same thing as, the BATNA.

Shared interests. Part of an integrative, or win-win, strategy, this tactic involves appealing to interests
or goals that are shared by both parties in a negotiation.

Single-issue coalition. A group whose members may differ on other issues, but who nevertheless unite

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(though often for different reasons) to support or block a certain particular issue.

Strategy. A planned sequence of how one is going to approach a negotiation, including what the
negotiator will offer and ask for (give and get).

Tactics. The specific methods for implementing a strategy.

Trade off. To substitute or bargain one issue for another; this tactic is often used in sales negotiations.

Trial balloon. A tactic that involves resenting a party (or customer) with possible options or
hypothetical situations. This is often done to clarify the other side’s position.

Wiggle room. The flexibility that may exist in a particular offer, whether it has to do with money or
time frame. If you have no wiggle room, you should strongly convey the message that this is your best
offer.

Winner’s curse. The nagging conviction—after a deal has been reached—that one could have
negotiated a more favorable deal.

Zero-sum negotiation/distributive negotiation. One of two types of negotiation, this type occurs
when the parties compete over the distribution of the benefits of an agreement. The sale of a house, for
example, involves two parties who want the best for themselves at the expense of the other.

ZOPA. The acronym for the "Zone of Possible Agreement." This is the area in which a potential deal
can take place. Each party’s reservation price defines one of the boundaries of the ZOPA. The ZOPA
itself exists, if at all, in the overlap between the parties’ reservation prices.

About the Mentor

Marjorie Corman Aaron

Marjorie Corman Aaron, J.D. is a consultant and trainer with more than 13 years experience in
mediation, negotiation, and dispute resolution. She spent four years as Executive Director of the
renowned Program on Negotiation at Harvard Law School, from which was born the best-selling book
Getting to YES by Roger Fisher. She uses an in-depth understanding of the theory of negotiation as well
as the practical experience of having mediated hundreds of business and legal disputes to help
managers develop the skills and judgment to be better negotiators.

What Would YOU Do?

The Big Move

When Nathan checked his voice mail, he found another message from Ron, the eager office park
developer. Every week, Ron sweetened his offer to Nathan’s company. What would it be this time?
Better carpeting? Extra parking? The offer was great, but Nathan didn’t want to move the office. He
preferred to stay in their current, downtown location. Their major clients were nearby, and most of the
employees preferred to stay where they were.

The company’s current lease was up for renewal, and the landlord was demanding almost three times
the rent they were paying now. Nathan was pretty sure that no other tenant would pay such a high price,
but he did not have much time left to hammer out a deal. He’d looked around the same area, and found
some less costly space, but it didn’t suit their needs as well. Luckily, the landlord had no idea how

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much they wanted to stay. What more could Nathan find out that might help him negotiate a lower
price? Was there anything else he could do to keep the same location without overpaying?

What would YOU do?

The Big Shot

When Alice started recruiting José, she knew he’d provide the high profile expertise the department
needed, and she knew he’d be expensive. But his demands seemed to be getting out of control. Every
time he had asked her to improve the offer, she had said "yes," and he had then asked for more. So far,
she’d upped the already high salary, added extra vacation time, and increased the number of stock
options. Now he was asking for a high level job for his wife and talking about a tempting competing
offer from another firm. Alice thought about her short list. The closest qualified applicant was very
eager for the job, but lacked the experience and prestige that José would bring. Alice preferred José, but
she was becoming uncomfortable with his increasing demands. Should she say "no" on principle and
risk losing him? Or should she agree to his latest request and hope it was the last?

What would YOU do?

The Big Sale

Rick wondered whether all Rima cared about was getting her commission quickly. He almost asked her
as much, but insulting people was against the rules their team had developed. Then again, why else
would she want to bow to Lightwave, Inc.’s demands and rewrite the bid again? The prospective client
was the biggest they’d ever approached, and everyone in the industry was eager to get their foot in the
door. Lightwave knew it and wanted to revise every single line item. Rick had cut the numbers so many
times, he finally pointed out to Rima that vendors are not supposed to pay clients—it’s generally done
the other way around.

Rima assured Rick that this client was promising a lot more work down the road. They should make the
most of this opportunity, she argued, to prove themselves. "Any more work at these prices," quipped
Rick, "and the sheriff will show up with the padlocks and a bankruptcy sticker to slap across the front
door!" But Rick knew Rima was right in one way. Lightwave was an extremely important client. Just
having them as a reference could help sell other major accounts. Still, it was also obvious that if he
went ahead with these changes in the bid, his company would lose money on the job. Rick wasn’t sure
how he should proceed.

What would YOU do?

Negotiating. Some people enjoy it and other people find it awkward, but it is a fact of life. Managers
can be called upon to negotiate anything from a job offer to a contract to the terms of a performance
appraisal. By getting information, understanding both sides’ positions, and mapping out options in
advance, a manager can do much to ensure a favorable outcome.

In this topic, you’ll learn how to identify the information you’ll need to negotiate successfully, how to
work with another party toward an integrative or win-win result, and when to walk away from the table.

The Fundamental Framework

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Negotiation occurs throughout your professional and personal life. It may be a formal affair that takes
place across the proverbial bargaining table, in which you negotiate over price and performance, or the
complex terms of a partnership venture. But it may just as easily involve a very simple deal or a very
messy dispute. Given the money, issues, and emotions that are regularly involved in negotiations, even
a modest improvement in your negotiating skill can yield a sizable payoff.

When you don’t have the power to force a certain outcome or behavior, you seek to negotiate in order
to influence that outcome or behavior. You agree to negotiate because you believe it is to your
advantage to do so. But a negotiated solution is advantageous to you only under certain conditions—
that is, only if you don’t have a better option. Any successful negotiation, therefore, must have a
fundamental framework established by each side knowing

• what its best alternative to a negotiated deal is

• what its minimum threshold for a negotiated deal is
• how flexible it is willing to be, and precisely what tradeoffs it is willing to make.

Three concepts are especially important for establishing this framework: BATNA (Best Alternative to a
Negotiated Agreement), reservation price, and ZOPA (Zone of Possible Agreement).

BATNA

BATNA is the acronym for "Best Alternative to a Negotiated Agreement." Knowing your BATNA
means knowing what you will do or what will happen if you do not reach agreement in the negotiation
at hand.

For example, if you are negotiating with a potential client about a month-long consulting assignment,
your BATNA might be to spend the month developing marketing materials for other potential clients,
which is likely to be more profitable.

Reservation price

Your reservation price (also referred to as your "walk-away") is the least favorable point at which you
would accept a deal. Your reservation price should be derived from your BATNA, but it is not usually
the same thing. If the deal is only about money, however, and a credible dollar offer is your BATNA,
then your reservation price would be approximately equal to your BATNA.

Example:
When preparing to negotiate with a commercial landlord over a lease for office space, you determined
that you will not pay more than $20 per square foot in a downtown high-rise. If more than that is
required, you will walk away and attempt to lease space in a different building. At the end of a lengthy
negotiation session, the landlord declares that he will not accept less than $25 per square foot. You
graciously suggest that the negotiations be terminated and walk away from the deal.

ZOPA

The "Zone of Possible Agreement" is the area in which a deal can take place. Each party’s reservation
price determines one end of the ZOPA. The ZOPA itself exists (if at all) in the overlap between these
high and low limits, that is, between the parties’ reservation prices.

Here is an illustration. A buyer has set a reservation price of $275,000 for the purchase of a commercial
warehouse (and would like to pay as little as possible). The seller has set a reservation price of
$250,000 (and would like to obtain as much as possible). The ZOPA, therefore, is the range between

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$250,000 and $275,000.

If the numbers were reversed, and the buyer had set a reservation price of $250,000 while the seller had
set a reservation price of $275,000, there would be no ZOPA—no overlap in the ranges in which they
would agree. No agreement would be possible, no matter how skilled the negotiators, unless there were
other elements of value to be considered—or one or both sides’ reservation prices changed.

Optimizing value

In an ideal situation, negotiators are able to maximize the total value that can be derived from a deal or
transaction. The technical term for this is achieving "Pareto optimality." A deal is said to be Pareto
optimal when none of its terms can be changed to the benefit of one side without diminishing its value
to the other side.

Two Types of Negotiation

There are essentially two kinds of negotiation:

• A zero-sum negotiation, in which the parties compete over the distribution of the benefits of an
agreement. This is also known as a "distributive" negotiation.
• An integrative or win-win negotiation, in which the parties cooperate to achieve maximum
benefits by integrating their interests into an agreement. This is also known as an "integrative"
negotiation.

Most, if not all, of your negotiations combine elements of both types: there will be some direct
competition between the parties’ interests and goals, as well as some opportunities to integrate the
parties’ interests and preferences. But for the purposes of understanding, let’s examine each type in its
pure form right now.

Zero-sum negotiations

Classic examples of zero-sum negotiations include

• the sale of a house, where the buyer and the seller do not know one another
• the commodities market, in which the vendor and purchaser negotiate over price—of, say,
silver, or hog bellies.

In a zero-sum negotiation, you are competing to "claim" value for yourself—to take it away from the
other party. Cooperation and disclosure of information can make you less effective.

Often, there is only one issue in a zero-sum negotiation: money. The seller’s goal is to negotiate as high
a price as possible; the buyer’s goal is to negotiate as low a price as possible. A dollar more to one side
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is a dollar less to the other. Thus, the seller and the buyer compete to claim the best deal possible for
themselves, and bottom lines define what is possible.

A "tug of war" is the underlying negotiation dynamic (whether the parties have friendly or difficult
styles). The goal of each negotiator is to "pull" the final deal point as close to the other side’s
reservation price as possible (or even beyond it). They are competing to claim as much of the value in
the ZOPA as possible.

Similarly, relationship and reputation are completely irrelevant: the negotiators are not willing to trade
value in the deal for value in their relationship with the other negotiator.

To achieve success in a zero-sum negotiation, remember the following:

• Harness the power of anchoring. The first offer can become a strong psychological anchor,
one that sets the bargaining range. Studies show that negotiation outcomes often correlate to the
first offer. So start at the right place.
• Do not disclose any significant information about your circumstances—including why you
want to make a deal, what your real interests or business constraints are, what your preferences
among issues or options are, and what your BATNA and reservation price are.
• Learn as much as possible about the other side’s circumstances and preferences—
including why they want to make a deal, what their real interests and business constraints are,
what their preferences among issues or options are.
• Exploit what you learn about the other side in setting your first offer or demand.
• Don’t overshoot. If you claim aggressively or greedily, the other side may walk away. You will
have lost the opportunity to make a deal that would have been better than both sides’ BATNAs.

See also Steps.

Integrative or win-win negotiations

In business, essentially integrative negotiations are more likely to take place

• in structuring complex, long-term partnerships or other collaborations

• after financial terms (or the competitive aspects) of a deal have been set
• among partners or co-venturers who value their long-term relationship
• between professional colleagues or superiors and subordinates whose long-term interests benefit
from the other’s satisfaction.

In a win-win negotiation, your task is to "create" as much value as possible for you and for the other
side. Often, the two sides’ interests do not compete at all. Their task is to arrive at a deal that integrates
their interests as efficiently as possible. Agreeing to more of what one negotiator values does not
require the other to take less of anything he or she values. The ability of one to claim or win what one
side wants or needs in the deal does not detract from the other’s ability to claim or win just as much.
Cooperation carries no cost here; indeed, cooperation and disclosure of information make you more
effective.

In a win-win negotiation, there are often many items or issues to be negotiated; opportunities for
creativity abound and the relationship between the two negotiators is often highly valued.

When participating in a win-win negotiation, do the following:

• Provide significant information about your circumstances. Explain why you want to make a
deal. Talk about your real interests or business constraints. Reveal and explain your preferences
among issues or options. Consider and reveal any additional capabilities or resources you have
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 that might meet their interests, and could be added to the deal. However, if the parties’ interests
are in conflict at all, it is generally not wise to reveal your BATNA or to state your minimal
requirements for a deal.
• Learn as much as possible about the other side’s circumstances and preferences—including
why they want to make a deal, what their real interests and business constraints are, what their
preferences among issues or options are, and what additional capabilities or resources they have
that might meet your interests and could be added to the deal.
• Use what you learn to find creative options that will meet both of your interests to the
greatest extent possible.

See also Steps.

The negotiator’s dilemma

Most business negotiations are neither pure zero-sum nor pure win-win situations; rather, competitive
and cooperative elements are intertwined. The resulting tension, known as "the negotiator’s dilemma,"
requires difficult strategic choices, which means balancing competitive strategies that make it hard to
cooperate and create value effectively with cooperative strategies that make it hard to compete and
claim value effectively. Knowing whether to compete where interests conflict—claiming more instead
of less—or to create value by exchanging the information that leads to mutually advantageous options
is at the core of the negotiator’s art.

Real Sources of Power

Power "away from the table" doesn’t always translate into power at the
negotiating table. While a supply reserve of resources and capital is rarely a
handicap, it need not determine the outcome.

For example, Goliath Inc. files suit against SlingShot Computer, a sole proprietorship, alleging that
keyboards manufactured and shipped by SlingShot were defective. In response to Goliath’s demand for
payment of high consequential damages in addition to the replacement cost, SlingShot explains that it
will file for bankruptcy if the settlement or jury verdict is anything close to the demand. In order to
recover any damages of significance, Goliath must work with SlingShot to set up a payment schedule
and take highly discounted replacement keyboards for orders.

The reality is that a manager’s need to meet a deadline or other objective may put him at the mercy of
the smallest vendor or subcontractor, who may have the ability to solve the manager’s problem.

If size and money aren’t guarantors of success, what are the real sources of power in negotiation? You
want to have the following on your side when you sit down at the bargaining table:

• a good BATNA

Your Best Alternative to a Negotiated Agreement determines the point at which you can
say no to an unfavorable proposal. If your BATNA is good, you can afford to negotiate
for more favorable terms.

• a lousy BATNA on the other side

If the other negotiator doesn’t have a good alternative (or hasn’t thought through their
BATNA), it will be hard for him or her to walk away from your proposal. An even
greater source of power is your knowledge that the other side’s BATNA is not a good

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 one.

How can you get that knowledge? That is the $64,000 question (in 1956 dollars),
because the other negotiator may be savvy enough not to reveal his or her BATNA and
may instead be "puffing" about it. Sometimes, however, the other party’s circumstances
are either clear or ascertainable. Asking questions during the negotiation helps you learn
about the other side’s BATNA, but you can also learn much in advance by

• contacting sources within the industry

• checking potentially relevant business publications
• reviewing annual reports (or public filings)
• asking questions informally of the negotiator or others within the company
• imagining what your interests, preferences, and needs would be if you were
• in their position.
• information

Knowing the other side’s BATNA lets you know how far you can go. But other
knowledge is equally important. For instance, the more you know about the other side’s
broader concerns, industry, corporate structure, other deals and goals, the better able you
will be to find creative ways of meeting their interests (preferably at low cost to you).

• ambitious (but not overblown) aspirations

Aspirations strongly influence the outcome of a negotiation: if you don’t aim for high
achievement, you won’t get there. When you aspire to obtain a large share of the deal’s
value and to persuade the other side to accept terms favorable to you, you project a
powerful negotiation presence.

• a good relationship

An obnoxious show of strength or a disrespectful approach to the other negotiator(s)

doesn’t make you powerful: it makes the other side defensive and loath to deal with you,
which makes it easier for them to walk away from any deal you propose. Conversely, if
you have built a good relationship, the other negotiator(s) will find it difficult to walk
away. Many people are willing to adjust their positions for the sake of a good
relationship.

Forward and lateral ties. You gain power when you link a negotiation (explicitly or
implicitly) to prospects of future business with your company or with others in the
industry.

Preparation, analysis and awareness. No matter how good your BATNA, you won’t
be successful if you don’t prepare beforehand, analyzing the interests and issues at stake
for both sides, and consciously developing your strategy accordingly.

Authority—Theirs and Yours

Conventional wisdom says you should insist that the negotiator on the other side of the table have full
authority. Otherwise, you’ll fall victim to the old "car dealer" trick, where just as you are about to reach
agreement with the salesman, he has to check with his manager. In other words, the first negotiation
with the salesman is used to bring you to your bottom line, and the second negotiation with the
manager, to push you beyond it.

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There are advantages to negotiating with the person who has the power to sign on the dotted line:

• You know that all of your reasoning is heard directly by the decision maker.
• The benefits of the good relationship you have built are likely to be reflected in the deal and its
implementation.
• You are less likely to have disputes or confusion about the interpretation of a particular
provision.
• You avoid the "car dealer" trick described above.

As a practical matter, you won’t always be able to negotiate with the individual (or committee) who
retains final authority. This can sometimes be an advantage, however: people without formal authority
may be freer to discuss their company’s interests and to invent creative options. If you are dealing with
someone who does not have full authority, view this as freedom from the need to commit.

• Confirm the ground rule that neither side will be committing his or her company in the
negotiation. (If they’re not committing, you shouldn’t have to either.)
• Suggest using the opportunity to discuss your respective interests and to come up with creative
options and packages.
• When negotiating about dollar issues, leave yourself some "wiggle room," in case the final
negotiator pushes harder in a second round.
• If there’s no "wiggle room," strongly convey the message that this is your best offer.

Instead of insisting on full authority, it’s more important that you determine the authority level of the
person with whom you will be negotiating, so that you can plan accordingly. Thus, try to ascertain

• who will be at the negotiating table

• what her formal title and area of responsibility are
• how long she has been with the company
• how the company is structured. Is it very hierarchical, with significant decision-making powers
centered at the top, or is it relatively decentralized?
• how the negotiator is viewed within the organization. Is she generally respected and listened to,
or not? (Granted, this information may be difficult to obtain, but it’s well worth digging for. If
you know other players in the industry or business community, you may be able to learn this
through an informal, off-the-record phone call or two.)

If you learn that the negotiator for the other side has very little formal authority and is not respected or
listened to by the decision makers, try to get another representative to participate in the negotiations as
well. One tactful way to do this is to suggest that you will be bringing a colleague (either with more
formal authority or because your joint recommendation will carry more weight), and request that the
other side do the same.

As for your side, always know exactly how much authority you have in a negotiation. For example:

• Are you authorized only to commit to a predetermined deal for which committee approval has
been obtained? What if you can negotiate something better? What would the committee
consider to be better?
• Are you authorized to commit to a deal that meets certain objectives (with freedom to structure
the deal in the best way you can)? Would your company prefer that you bring such a deal back
for formal review and approval?
• Is your authority limited on dollar issues but not on other creative options without significant
financial implications?
• Are you authorized to provide information about your company’s needs, interests, and
preferences if the other side engages in a good-faith, reciprocal exchange?

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You may be frustrated if you don’t get the authority you seek, but at least you won’t unwittingly
overstep your bounds. Here again, less authority is sometimes better. The need to check back for certain
decisions may be strategically helpful, and may enable you to be more creative in inventing options.

Multiphase Transactions

Multiphase transactions, or the prospect of future dealings, offer important advantages for parties who
are trustworthy and who would like to foster cooperative negotiation behavior.

• Early phases allow parties to build trust by performing as promised.

• Early phases allow parties to become familiar with each other’s communication and negotiation
styles.
• A party’s failure to perform as promised in an early round can serve as a warning signal of the
need to create enforcement mechanisms, security provisions, or other sanctions against a future
nonperformance.
• If failure to perform in an early round appears to have been intentional or otherwise egregious,
you may be able to walk away before it is too late.

Protect yourself during the final phase of a multiphase transaction, when incentives to breach are the
greatest, by

• creating enforcement mechanisms against nonperformance or other breach of trust

• making sure that the last phase is not the most significant in dollars or impact, or the most
difficult to accomplish (most parties will not risk great injury to reputation by failing to perform
a relatively insignificant item)

• never letting the negotiation end by referencing possible future work or the connections
between your respective business or professional communities.

Multiparty Negotiations

Business and professional negotiations commonly involve more than two parties, and certainly more
than two people. Such multiparty negotiations can differ significantly from two-party negotiations:
coalitions—alliances among parties that wield less power separately than they do together—can form
among the parties. The combined power may enable the coalition to push through its preferred
proposal, or at least to block one it finds unacceptable.

There are at least two types of coalitions:

• a natural coalition of allies who share a broad range of common interests

• a single-issue coalition, in which parties that differ on other issues unite to support or block a
single issue (often for different reasons).

The challenge of multiparty negotiation is to manage the coalitions, to break them apart or keep them
together depending on your own party’s interests. Just as in a two-party negotiation, you must
understand all of the many parties’ goals, interests, and relationships, and work from there.

A natural coalition of allies is hard to break. For example, an environmental agency and a citizen’s
nature conservation group share basic agendas and will often act in concert to block development
initiatives, even without explicit agreement to do so.

A single-issue coalition of otherwise disassociated parties may be more vulnerable. For example, a
labor union and a citizen’s nature conservation group might form a coalition to block an anti-union

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developer from building a strip mall in a wooded area. Each has different reasons for joining the
blocking coalition. If the tax-conscious mayor finds a different developer and a usage mix more
favorable to the unions, the unions are likely to withdraw their opposition. Or, if the original developer
agrees to move the project to a different location, the nature conservation group will cease its protest.

Special Problems

Differences in gender and culture

Our language, thought processes, perceptions, styles of communication, and personalities are formed by
a dense thicket of culture, gender, family dynamics, and genetic inheritance. Although culture—a
cluster of tendencies, accurately observed to be more prevalent in one group than another—is only one
of these determinants, we often think of it as the most influential. And so we attribute a particular
(usually mystifying) behavior to, say, the French national character, the ways of women, the personality
of lawyers, or even to the culture of a certain company.

But culture does not determine or predict any single individual’s behaviors or choices: there will
always be great variations within given populations. Thus, an Italian engineer may have more in
common with a German engineer than with an Italian artist. A female lawyer may have more in
common with a male lawyer than with a female musician. Two British male physicians may have
nothing else in common.

Don’t be trapped by over-attribution. People often attribute a breakdown or difficulty in negotiation

to obvious gender or cultural differences, when these may not be the cause of the problem. We often
apply common cultural stereotypes when making the attribution. We throw up our hands and say, "The
problem is that she’s a woman and can’t deal with confrontation." Or, "He’s late because that’s how
Italians are with time."

When you attribute these problems to culture, you may miss the fact that the female negotiator is
signaling her company’s resistance point. Or you may fail to pick up on efficiency and production
problems at the Italian company.

If you are negotiating with someone from a culture very different from your own, and you are
experiencing problems understanding or dealing with each other, examine the situation.

• Look for a pattern to diagnose the problem. What kinds of issues trip you up? What types of
misunderstandings have you had?
• Consider what assumptions each party has brought to the table.
• Review any available literature about the other negotiator’s culture and how it compares with
yours. How is it different? Does this explain the pattern of problems you have had?
• In your next meeting, adjust your communication style, or articulate the differing norms or
assumptions you believe to have been the source of the problem.

Note that this advice holds true whether or not you are from different cultures. The cultural difference
merely provides a reasonable and ready set of hypotheses about where the problem might lie.

Difficulties in communication

Poor communication renders the simple treacherous and the difficult impossible. Communication
problems cause deals to go sour and disputes to ripen. When you suspect that communication is causing
the negotiation to go off track, try the following steps:

• Ask for a break. Replay in your mind what has been communicated, how, and by whom.
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 • Look for a pattern. Does the confusion or misunderstanding arise from a single issue? Did you
have assumptions or expectations that were not articulated? Did the other side?
• After the break, raise the issue in a nonaccusatory way. Offer to listen while the other side
explains its perspective on the issue. Listen actively, acknowledging their point of view. Explain
your perspective. Then, try to pinpoint the problem.

Does a member of your negotiating team seem to infuriate the other side? Switch the spokesperson.

Do problems arise between stages of a multiphase negotiation, when one side writes up the progress
made? Jointly draft key points as you make progress or at the end of each session.

See also Managing Difficult Interactions: Core Concepts.

Partisan perception

"Partisan perception" is the psychological phenomenon that causes people to perceive "truth" with a
built-in bias in their own favor, or toward their own point of view. For example, loyal fans of either
team in a baseball game may perceive that the umpire was unfair to their side. Democrats and
Republicans watching the same presidential debate may perceive that their candidates "won."

How can you alter partisan perception?

For yourself:

• Recognize it as a phenomenon to which we all fall prey.

• Imagine yourself in the other side’s head. How would the issue look to you then?
• Pose the problem or the issue to colleagues (without telling them which side you are on) and
solicit their opinions.

For the other party:

• Try to pose the problem as it appears to you, and ask how they would view it.
• Use an analogy or a hypothetical situation to frame the problem as you see it.
• Suggest bringing in a neutral third party or expert to provide unbiased guidance.

The barriers of emotion and irrationality

People tend to assume that emotion and irrationality occur in divorce or other personal negotiations, but
rarely in business. Not so. Business partnership dissolutions are called business divorces because of the
tremendous bitterness and high emotion often involved. Some people may become angry and emotional
in difficult financial transactions. When emotional needs take precedence, we stop focusing on logic or
rational self-interest.

To overcome the barrier of emotion and irrationality, do the following:

• Ask yourself what is making the other negotiator angry. What does this deal or this dispute
mean to him? What is his position in the company? Did he have an emotional or professional
investment in the project that is the subject of the dispute? What is the history between this
negotiator and your company? Listen very carefully when he gets angry. Search for clues.
• Respond to what seems to be the emotional problem. Express empathy for what this means
to him.
• Remember that people are most often angered and frustrated at a personal level by
perceived deception, humiliation, or loss of pride and lack of respect. Has that happened in the
negotiator’s dealings with your company? As a result of the dispute? During the negotiations? If

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 so, you may want to acknowledge the perception, provide reassurance, or address the grievance.

If you find dealing with high emotion and psychological baggage too difficult in a business meeting,
you might call for a break in the negotiations. Try to make arrangements to work with a negotiator who
is less emotional, if that is possible. Otherwise, suggest that the negotiations proceed with a neutral
facilitator.

Die-hard bargainers

They are out there: the die-hard bargainers, for whom every deal is a battle. How can you work with
such highly competitive negotiators?

• Know their game, and don’t be thrown off-balance. Anticipate "high-ball" or "low-ball" offers,
grudging concessions, and bluffing and puffing all the way. Don’t let this prevent you from
analyzing your BATNA and setting your reservation price and aspirations as well as assessing
theirs, and proceeding accordingly.
• Be more guarded in the information you disclose. Disclose only the information that cannot
be used to exploit you.
• Suggest alternative packages or options; ask which they prefer, and why. Even if they
won’t disclose their interests, you will have learned something about their preferences. Ask if it
would be better or worse for them if you added or eliminated one of the options. And so on.
• Don’t count on being able to change them. Don’t let them unnerve you. Remember that any
insults or jabs thrown your way are just part of their game. But try not to enter into the
negotiation assuring that you're locked into a zero-sum situation. At least ask about their
perspective and then listen actively: it may be a long shot, but it could lead them to a more
cooperative and reciprocal stance.

"Dirty rotten scoundrels"

You suspect the other side is lying. You know they’re bluffing. At best, they’re just telling you what
they think is needed for an agreement, and have no intention of following through on their promises.
How should you respond?

• Emphasize that the deal is predicated on their accurate and truthful representation of the
situation.
• Require that they provide back-up documentation, and that the terms of the deal be explicitly
contingent on its accuracy.
• Insist on enforcement mechanisms, such as a security deposit, escrow arrangement, and/or
penalties for noncompliance (or perhaps positive incentives for early performance).

Potential saboteurs of a good deal

Particularly in multiparty negotiations, smaller external or internal stakeholders may have the power to
block or sabotage a good deal.

• Anticipate this problem by mapping out the stakeholders, their respective interests, and power
to affect the agreement and its implementation.
• You may wish to "sweeten" the deal by including something to benefit stakeholders who would
otherwise have the incentive to sabotage.

An unexpected turn in the road—before or after an agreement

Analyze how what has happened affects the decision to go forward. If a deal still makes sense, or if you
need to undo the deal that has been negotiated,

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 • contact the negotiator(s) on the other side immediately
• acknowledge the unexpected nature of what has happened
• affirm your commitment to working on the problem (if that is so)
• jointly discuss the underlying principles and intent of the deal as originally negotiated, and
agree upon what issues or provisions are affected
• pick up the negotiations again.

Assume that you enter a fixed price contract with a general contractor to build new office suites and
conference rooms in an older brick building purchased by the company. The suites and conference
rooms are to be paneled in a lovely pear wood. But after the contract is signed, a pear wood blight is
discovered, which triples the cost of pear wood.

Under your negotiated agreement, the contractor is to bear the risk of fluctuation in material cost. If you
insist on that term, the contractor may try to make up some of the cost in other ways, perhaps by
shorting the detail work. If you agree to renegotiate, absorbing some or all of the additional cost (or
choosing a different wood), the contractor is more likely to do a high quality job.

The next month, you discover that the bottom floor of the building is sinking and walls are cracking,
due to settling in the foundation. This was not part of the original contract, but you want the contractor
to take it on as soon as possible and at a reasonable price. What goes around comes around.

Frequently Asked Questions

When asked by the other side to name a dollar figure, is it okay to state my range?

Not unless you can be happy with a deal that is at the least favorable end of that range—or worse. If
you tell someone that you would pay $20,000 to $25,000 for a piece of property, rest assured that you
will pay at least $25,000. That is the only number he will pay attention to.

The only reason to mention a range occurs toward the end of the negotiating process, to discourage the
other side from pushing you beyond it. After several rounds of back and forth on a dollar figure, you
are at $23,000, and the other side is at $30,000 and seems to be pushing for a deal at approximately
$28,000. You could say, "My preferred range walking into this negotiation was $20,000 to $23,000,
but not above $25,000." Revealing your range may make it easier for the seller to accept $25,000
because he will feel that he has pushed you to the top.

Is it okay to bluff or puff during a negotiation? If I do not want to be a positional hard bargainer,
does that mean I can’t bluff or puff at all?

One man’s puff is another’s positive spin. One woman’s bluff is another’s best foot forward.

Lying about a material fact in a negotiation is unethical, and it is almost certainly grounds for legal
action. In certain circumstances, creating a false impression or failing to disclose material information
may be a formal ethical breach and actionable as well.

Even a cooperative, creative negotiator, however, must have a sense of strategy. As long as what you
bring to the table has real value, you need not reveal all the circumstances making you desperate for a
deal. Thus, if you are negotiating the terms of a job offer, there is nothing wrong with describing the
major projects for which you have been responsible, and the likely next step on the corporate ladder in
your current company. There is no shame in describing your achievements in a positive light. You need
not mention that the new division president is impossible to deal with or that one or two projects have
not turned out well. This is not hard bargaining; it is effective self-advocacy or salesmanship.

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Should I ever tell the other side my real bottom line?

Only if you’ve reached it (or are about to). If you do reveal your bottom line, make sure you call it just
that, with appropriate emphasis or firmness. Otherwise, the other side may not take you seriously, and
may view that number or proposal as just another step on the way to a final deal.

In a complex deal, is it better to reach agreement issue by issue, or wait until the end?

Every deal is different, but it’s generally better to aim for tentative agreements, or agreed-upon ranges,
for each issue, one at a time. This will give you the necessary flexibility to make value-creating
tradeoffs between issues, and to create alternative packages of different options.

Is it better to deal with difficult or easy issues first?

In general, dealing with easier issues will build momentum, deepen the parties’ commitment to the
process, and enable the parties to become familiar with each other’s negotiation and communication
styles before hitting the tough stuff.

In some instances, however, you may want to deal with a more difficult issue as a threshold matter. If
you cannot reach tentative agreement on the difficult issue(s), then you will not have wasted time on
the smaller issues. It is also true that once the most difficult issue is resolved, smaller issues often fall
more easily into place.

What happens when you put an effective, cooperative negotiator against a positional hard
bargainer?

An effective, cooperative negotiator should be able to do just as well on the competitive issues. After
all, she will have analyzed her BATNA, set a reservation price, and considered opening and first offer
strategies. Once the positional hard bargainer refuses to disclose information and begins to use any
disclosures against the cooperative bargainer, she will seek reciprocity or refrain from providing
additional information.

The real question is whether the effective, cooperative negotiator will be able to "convert" the hard
bargainer, at least sufficiently to create some value in the deal. The answer is maybe. If the cooperative
negotiator is effective and resourceful, she should be able to tease out some of the interests underlying
the hard bargainer’s positions. The cooperative negotiator may then suggest different options and
packages to meet both parties’ interests. Even the most recalcitrant hard bargainer can recognize when
it benefits his interests to join in creating value.

How should I respond if the other side seeks to change something (in its favor, of course), after a
deal has been reached?

Chances are they’re afflicted with the "winner’s curse": whenever they reach a deal, they become
cursed with the thought that they could have gotten more.

When the other side seeks to change one item, you should express some surprise or disappointment.
Explain that if they must make a change, then they must understand that you will want to open up other
issues as well. You agreed to a total package. A change on one issue affects the whole package. Are
they willing to renegotiate other issues?

If the answer is yes, then the other side was sincere, and you should proceed with the renegotiating. If
they reconsider and withdraw the request for change, then they were just testing you. If they insist that
they must have this change and no others, you can express dismay, but you must decide whether the

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adjusted deal has sufficient value for you to agree.

What should I do when the negotiator on the other side has a temper tantrum?

You need your counterpart to be rational and in control of his emotions—or else you need a new
negotiator. Don’t respond in kind; instead, try to help him regain control. The right response will
depend upon how angry or upset you feel, the value of the deal, and whether it is your choice to
proceed, but here are some alternatives:

• Sit quietly. Say nothing. After a few moments, resume the negotiation with a calm voice.
• Sit quietly. Wait a moment. After he has stopped shouting, ask if there is anything you have
done to make him this angry. Listen, calmly and actively. To help him save face, you might also
interject a remark such as, "Oh well, everyone gets jumpy every once in a while."
• Get up. Turn to leave the room. As you get to the door, explain quietly and calmly that you
understand that something has made him terribly angry, but that you really can’t continue the
negotiation thinking that such an outburst might occur again. Suggest that he calm down. You
might also say that you will need time to calm down after hearing his outburst. Suggest that he
call you in a day or two if he wants to continue the negotiation.

If his shouting was intended to get you upset and off-balance, you certainly shouldn’t reward the
strategy by negotiating in that less-than-top-form condition. If you can afford to bypass the deal, you
may choose to. Dealing with this person in the future may not be worth the headache or stomach acid
involved.

If he was representing his company in the negotiations, depending upon his status and the company
structure, you might contact someone else in the company to suggest that another negotiator be
assigned to the deal.

When can I negotiate over the telephone or by e-mail? Or is it essential to insist on a face-to-face?

It is far better to negotiate face-to-face when personal, nonverbal cues will matter. For example, is this
a deal in which the other side might be tempted to lie or shade the truth? Are the parties professionally
or emotionally invested in what’s at stake?

Some research indicates that people are less likely to lie in person, perhaps because they fear that the
other side will detect it. When we are in a face-to-face negotiation, we see the sideways glances of the
members of the other negotiating team, we sense when they are becoming uncomfortable, we pick up
the nonverbal cues that indicate something is more important than the other side’s words do.

Anecdotal evidence indicates that e-mail or other written messages may have a greater tendency to
result in disputes and impasses. The person who receives an e-mail (or fax) may interpret a comment
negatively when the sender did not intend it that way. Because the sender is not there to read the facial
expression or exclamation, he or she can’t correct the impression. The original sender is surprised and
feels unjustifiably attacked when the return message carries a nasty tone, and responds in kind.

Some, but not all of these problems are partially solved over the telephone. You can use and interpret
tone of voice to keep communication on track. However, it is more cumbersome to throw out creative
ideas. You can’t put them on a chalkboard or easel. And some recent research indicates that people are
more likely to bluff over the telephone.

On the other hand, if the negotiation is over a simple issue, where personal communication is not likely
to matter, the most efficient method works best.

How should I react when the other side opens with an incredibly unreasonable number? Should I
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counter with an equally unreasonable number, or decline to counter at all?

Consider one of the two following strategies:

• Clearly state that this number is entirely out of the range you had imagined for the deal, but treat
it as a serious first move by the other negotiator. Then, ask questions about it. Ask, "Why that
number, what is it based on?" Ask how you might justify such a number to your company.
• Clearly state that his number is entirely out of the range you had imagined for the deal. Then
change the subject. Go back to talking about interests. Ask about a specific issue of some
import. Explain your perspective on the deal—how it might have value to you or others
similarly situated. (You will of course be describing value that would fall in an entirely different
ballpark.) Let some considerable time and discussion go by. Then you might suggest a number
or proposal that you can justify as reasonable, and that is in the favorable end of your range (or
close to where you estimate their reservation price, whichever is better). Do NOT refer to their
initial number or proposal. Ignore it.

If you counter with an equally unreasonable number, you will either contribute to the impasse or make
the road to agreement longer and more difficult.

Is it ever acceptable to bid against myself—to make two moves in a row?

It’s not generally a good idea. Because most people have been taught this rule, you usually aren’t called
upon to do so. Just invoke the rule, by saying, "Wait, you seem to be asking me to make another move
here. I made the last offer, I don’t want to bid against myself." This usually elicits at least a token move
on the other side.

If it doesn’t, if they are stuck and the only way to make progress is for you to move again, you should
announce your awareness of what you are doing, and state that it should not be considered a precedent.
Make your next move in good faith, to a proposal or number you can justify as reasonable, explain your
reasoning, and ask the other side to do the same. If they don’t, you may have reached an impasse.

To bridge the gap, consider broadening the discussion of the parties’ interests, and formulating other
creative options, perhaps through joint brainstorming. You might bring in a third party facilitator.

How should I react when the other side immediately challenges my credentials, status, or
authority to make a deal?

The question is why they are challenging you. Are they just trying to make you defensive, put you off-
balance? Or do they have genuine concerns?

The best approach is to assume sincerity and to answer accordingly. You might respond by saying that
you appreciate that their concerns mean they view this negotiation as important, and that you have
parallel concerns. Ask them to explain their credentials, status, or authority (whichever they challenged
in you).

If the question was posed to make you feel defensive, you will have demonstrated that such strategies
will not be successful.

Steps for Preparing for a Negotiation

1. Think through a good outcome.

A negotiation’s success is judged by its outcome, not its process. As you prepare, consider what
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 a good outcome would be.

• What do you hope to accomplish through the negotiation?

• What would the best result look like?
• What outcomes would not be acceptable?
• Why would they not be acceptable?
2. Assess your needs and interests.

Make a list of what you must have and what you would like to have, and why. For example, if
you are negotiating your salary for a new job, you might need

• a certain minimal salary to provide basic necessities for yourself

• a salary at a higher level that would give you more discretionary income
• a certain level of responsibility and challenge
• an appropriate title that would position you for a move to the next level
• a flexible schedule so that you can juggle childcare or a marathon training regime
• agreeable colleagues to work with.
3. Identify your BATNA—Best Alternative to a Negotiated Agreement.

Make a list of what your alternatives would be if the negotiation ends without agreement.
Review the list to determine which alternatives would be best. For example, if your company is
being bought out and you are negotiating the salary for a possible new job, your list of
alternatives might include

• remaining in your current job through the impending buyout of the company, in the hope
that you will survive any downsizing and reorganization by new management
• remaining in the current job after the buyout and accepting a likely three-to-four-month
severance package
• quitting your current job to look full-time for another one
• accepting a less exciting but more stable job that does not permit a flexible schedule.
4. Improve your BATNA, if possible.

For example, if you’re negotiating for a specific product or service, options for improving your
BATNA may include

• pursuing better tentative arrangements with other suppliers of the product or service
your are purchasing
• seeking to ease one of the constraints that makes your current BATNA unsatisfactory
• investing in improved internal capability, so that you or your organization can reduce the
need for that product or service.
5. Determine your reservation price.

If you are negotiating the sale of your house with a qualified buyer, and an equally qualified
buyer has previously offered you $325,000 (and has left the offer open), your BATNA in this
negotiation is the $325,000. All other things being equal (the closing date, the condition of the
house upon sale, etc.), your reservation price should be $325,000. You should walk away if this
prospective buyer does not offer you $325,000 or more.

In most business negotiations, however, things are not that simple. When there are other terms
and interests to be met, you must compare the value to you of the deal on the table and the value
to you of your BATNA. In a salary negotiation, for example, referenced earlier, you will have to
assess the value of the differences between your alternatives. Ask yourself the following
questions:

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 • How much does it matter to you that the new job will be more challenging?
• How much less salary would you accept in the new job in order to acquire a better title
and more responsibility?
• How insecure is your current job, and how much does that bother you?
• How compatible do you think you and your prospective colleagues (and particularly
your prospective supervisor) will be both at the competitor firm and at the firm with
which you are currently negotiating?

Your answers to such questions will determine what minimal terms would be equivalent to your
BATNA in the deal being negotiated.

6. Evaluate the tradeoffs between issues and interests.

To evaluate the other side’s proposals and to make proposals that advance your interests, ask
yourself the following:

• Which issue(s) or term(s) do you care most about?

• Are any of these issues or terms linked? That is, does more or less of what you want on
one issue give you more or less flexibility on the others?
• How much of what you want on one issue or term would you trade off against another?
• Are there different package deals that would be equivalent in value to you?

Let’s assume that you are negotiating about the price, delivery date, and customization of a
product. You should be able to answer the following questions:

• Which do you care more about—price, delivery date, or customization?

• How much would greater customization affect what you would be willing to pay?
• If the delivery is two weeks later than you would prefer, would you require additional
customization?
• How much of a premium would you pay for earlier delivery?

If you don’t know the answer to these questions, and the other side’s offer doesn’t give
everything you want, you will be unable to evaluate which alternative proposal best meets your
interests: (1) very little customization, delivery in 60 days, and a low price, or (2) a moderate
degree of customization, delivery in 45 days, and a very high price.

7. Assess the other side’s BATNA.

If the other side does not have a good BATNA and you know it, you may be able to negotiate a
highly favorable deal for your company. To assess the other side’s BATNA, you should learn as
much as possible about

• their business circumstances. What is their credit rating? What does their annual report
show? How strong have quarterly earnings been? Has management dictated any new
initiatives relevant to this deal?
• the value this deal has to them. How important is it? Is it necessary for them to meet a
larger objective?
• the availability of a replacement. Is what you offer easy to find elsewhere? Can it be
obtained in time to meet their deadlines? Have they already obtained bids or initiated
informal negotiations with anyone else?
8. Assess the other side’s interests.

Consider

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 • the other side’s broader business objectives and what they need in order to achieve them
• possible reasons why the other side’s business growth might be hampered
• what goods or services you have that would benefit the other side.

Assume that you are negotiating a significant contract with a graphic designer. You know that
she works out of her home, but that her award-winning work means that she is in great demand.
You want her to redesign all of your company’s internal and external brochures as well as the
packaging and promotional materials for your various product lines.

When trying to assess her interests, put yourself in her shoes. As a small independent, she might
value some flexibility on deadlines. Would she be willing to charge a lower rate for the large
quantity of work, if you allow her to stagger the deadlines? Also, she may not have any systems
or secretarial support in her home office. Would she value the opportunity to work from one of
the company’s empty offices, with limited secretarial support? Would she value the use of your
company’s technical support department? Would she accept a lower fee if she were given such
support? Would she rather remain an independent contractor or become an employee, even part
time, or for a specified contract period? If she has aspirations to direct a larger graphic design
department someday, a formal title with your company might interest her.

9. Anticipate the authority issue.

Try to determine the formal and informal decision-making authority of the people with whom
you will be negotiating. What is their rank and scope of responsibility? Were they authorized to
negotiate only within certain preset limits?

How much authority do you have? Must you account for the process and results? Can you bind
your organization to any deal you find acceptable, or must you obtain approval?

10. Learn all you can about the people and the culture on the other side. Pay particular
attention to the people doing the negotiating for the other side.

The people in the other organization. Although you can’t gather complete information, some
knowledge about the other organization’s culture can help you avoid being misunderstood. For
example, does the other side value efficiency above everything else, or do they put greater
emphasis on creativity?

The people negotiating. You don’t negotiate with companies or "other sides"—you negotiate
with people. Give two people exactly the same facts about a negotiation, and they will think
about the facts differently, establish different preferences and tradeoffs, open the negotiation
differently, be comfortable with different types of process choices, and have different
negotiating styles.

Even with perfect information about someone’s personality, style, and background, you cannot
predict perfectly how they will handle a negotiation, or how they will react to the other side’s
negotiation style or process suggestions. Still, the more you know about the other negotiators,
the more effective your own choices will be. For example, you might seek to learn

• where they are from

• where they live
• how long they have been with the organization
• what their career path(s) have been
• whether they have families
• whether they have any notable hobbies or extracurricular activities

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 • what their politics are.

You may share interests as amateur violinists, avid golfers, or parents of toddlers. Such interests
can provide the source of tension-relieving conversation before the negotiation, during breaks,
or over meals.

Such information may also help you avoid a faux pas. If your political and religious convictions
are diametrically opposed to those of your counterparts, you will know to avoid religion and
politics as small talk.

11. Strive for fairness by gathering external standards and criteria relevant to the negotiation.

Both sides want to believe that any deal reached is fair and reasonable, regardless of whether
their BATNA is acceptable or not. If you are in desperate circumstances, you might capitulate to
terms that seem unfair, but you are also likely to feel exploited.

External or "objective" criteria are often accepted as establishing what is fair and reasonable.
Because there are often many relevant criteria, an important part of preparation is

• researching which criteria might be applied

• being prepared to show why those more favorable to you are more relevant
• being prepared to show why those less favorable to you are less relevant.

If you can convince the other side that a certain criterion or formula is fair and reasonable, they
will find it harder to reject a proposal incorporating that standard, and they are more likely to
feel satisfied about the deal.

12. Prepare for flexibility in the process—don’t lock yourself into a rigid sequence.

Don’t assume that the negotiation must proceed according to a predetermined sequence—you’ll
be thrown off-balance when events turn out differently. Effective negotiators plan by carefully
considering each issue, and the linkage between issues, rather than by trying to anticipate the
precise order of events.

Steps for Getting an Integrative or Win-Win Negotiation Under Way

1. Don’t start with numbers—try to uncover the other side’s real reservation price by
initiating a conversation about interests and concerns.

Don’t make a proposal too quickly because a premature offer won’t benefit from information
gleaned during the negotiation process itself. If you are the buyer in the negotiation, such
information could alert you to the seller’s desperate financial situation, thereby leading you to
make a lower initial offer than you otherwise might have. On the other hand, the information
could reveal that the seller is not desperate at all, thereby preventing you from making a low
initial offer that might insult the seller.

Instead of hastily throwing out offers, try these techniques:

• Ask open-ended questions about the other side’s needs, interests, concerns, and goals.
• Listen closely to the other negotiator’s responses without jumping in to cross-
examine, correct, or object. Every so often, paraphrase these responses or give
nonverbal cues to the other side to demonstrate that you have understood her
perspective.
• Express empathy for the other side’s perspective, needs, and interests. An expression
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 of empathy is especially important in highly charged situations. It takes active listening
one step further, confirming that you can connect with the speaker and the underlying
tensions or emotional issues.
• Adjust your assumptions based on what you’ve learned. The assumptions that you
made about the other side’s interests and circumstances when preparing for the
negotiation may be wrong, in which case you’ll need to revisit your strategy quickly.
• Gently probe for the other side’s underlying positions by asking why certain
conditions—for example, a particular delivery date—are important.
• Be forthcoming about your own business needs, interests, and concerns. It is just as
important to assert what you need and want (and why) as it is to listen carefully to the
other side. Indeed, striking a balance between empathy and assertiveness is essential to
effective negotiating. If you are too empathetic and insufficiently assertive, you may
shortchange your own interests. If you are too assertive and insufficiently empathetic,
you risk missing a deal and escalating emotions. But don’t barrage the other side with all
of your interests and concerns at once.
• Work to create a two-way exchange of information. Stay flexible about who asks
questions and who states concerns first. If the other side seems uncomfortable with your
initial questions, offer to talk about one or two of your most important points—and
explain why they are important.
2. Continue your relationship-building efforts even after the negotiating has begun.
• Show empathy, respect, and courtesy throughout the proceedings.
• Remember that the other side consists of human beings with feelings, limits, and
vulnerabilities.
• Don’t launch personal attacks. Don’t accuse or blame.
• Maintain a sense of humor.
• When an issue seems to make another negotiator tense, acknowledge the thorniness of
the issue.
3. Don’t feel pressure to close a deal too quickly. Instead, generate options that offer mutual
gain.

When preparing for the negotiation, you formulated positions that satisfied your own interests.
During the negotiation, you are confronted with the other side’s positions; you come to
understand the interests underlying those positions. The challenge now: to arrive at an outcome
that satisfies both parties’ interests.

But beware of the temptation to close the deal too quickly—when the first acceptable proposal
is on the table but little information has been exchanged. Spend a bit more time to find a deal
that is better for both sides. Signal that the proposal on the table is worth considering, but also
state that it may be improved by learning more about your respective interests and concerns.
Then, begin the search for mutually beneficial options.

Here are some suggestions for generating win-win solutions:

• Move from a particular issue to a more general description of the problem, then to
theoretical solutions, and finally back to the specific issue.
• Pay special attention to shared interests and opportunities for cooperation.
• Don’t overlook differences in preferences, resources, and capabilities. For instance, what
issue(s) does one side care little about? What could you provide cheaply that the other
side would value highly? If this product or service could be added to the deal, would the
other side agree to a reduction in price?

• Consider joint brainstorming with the other side—it can be a very fruitful way of
generating creative alternatives. Set ground rules that encourage the participants to
express any and all ideas—no matter how wild or impractical. Be careful not to criticize
or express disapproval of any suggestion: at this stage, such judgment inhibits creativity,
24
 making people reluctant to make further suggestions—and more likely to criticize any
ideas you volunteer as well.

Steps for Handling an Initial Offer in a Zero-Sum Negotiation

1. Harness the power of "anchoring."

The first offer can become a strong psychological anchor, setting the bargaining range. In fact,
studies show that negotiation outcomes often correlate to the first offer. So start at the right
place. In a negotiation in which capturing maximum value is the primary goal, your first offer or
proposal should be

• at or just a bit beyond what you believe is the other side’s reservation price--if, and only
if, you can articulate why this offer or proposal is reasonable, or
• at the most favorable point that you can justify.
2. Don’t drop an anchor without a line.

If you anchor the negotiation with a first offer, and then discover that your estimate of the other
negotiator’s reservation price is way off target, you will need to retreat gracefully. In this case,
make sure that you

• don’t indicate that your initial offer is final

• have a different line of reasoning ready to support your shift to a less aggressive offer.
3. Brace for the weight of the other side’s anchor.

If the other negotiator makes the first offer, you should recognize and resist its potential power
as a psychological anchor. Don’t let it set the bargaining range, unless you think it’s a sensible
starting point. If you think it suggests an unfavorable or unacceptable bargaining range,

• steer the conversation away from numbers and proposals. Focus instead on interests,
concerns, and generalities.
• after some time has passed, put your initial number or proposal on the table, supported
by sound reasoning, of course.
• to the extent possible, avoid direct comparison between the two offers. If their initial
offer was not serious, and you ignore it, they may also. If it was serious, and the other
side refers to it again, you should respectfully ask them to explain why the offer is
reasonable.
4. Keep in mind the traditional assumptions about concessionary moves.

In a traditional, back-and-forth negotiation over numbers, a large movement signals significant

additional flexibility, while very little movement signals that the negotiator is approaching her
reservation price. At this point, people tend to move in increasingly small increments, and the
other side often expects such a pattern of behavior.

You don’t have to follow these conventions, but you do have to understand them because your
offers and counter-offers may be interpreted in this light. So if you make a substantial move, but
are not prepared to move much further, you should say so. Also, be prepared to explain the
reason that you are willing to make this significant concession—and expect to have your
explanation tested by the other side.

See also Giving and Receiving Feedback: Core Concepts.

25
 5. Look for options that exploit differences.

People know intuitively to build upon their shared interests. Less obvious sources of value are
the differences between the parties. By trading on differences, you create value that neither
party could have created on its own. In particular, look for differences in

• access to resources. For example, a retail store and restaurant owner negotiating with an
interior designer agrees to pay a somewhat higher price than he planned for the
restaurant design in exchange for the designer’s lending him appropriate catalogs,
explaining some of the technical specifications, and ordering the store fixtures and
furnishings at discount. The owner would not have ready access to this information, or
to the discount—yet they cost nothing to the designer to provide. Value has been created
for both sides.
• capability
• future prediction and confidence levels. For example, the current owner of a business
demands a high price because he predicts that the market for his product will increase
over time. The buyer is unwilling to pay the price, because he believes the market has
peaked and may decline over the next five years. They agree to a base price, plus a
percentage of the company’s increased revenues over the next five years, with the
current owner providing advice and assisting with marketing and distribution plans.
• time preference or value
• risk aversion and risk tolerance.
6. Package options for a favorable deal.

Offering alternative proposals (two or more) has dual benefits. First, people don’t like to feel
pushed into a corner. A single proposal on the table may feel to the other side like an ultimatum.
But when presented with alternative proposals, they may compare the proposals to each other
instead of to their original goals. In addition, when the other negotiators won’t discuss their
interests, you can often infer them by noticing which proposal the other side prefers.

Before presenting alternative proposals,

• assess the value of each option to each side

• consider whether the diminution of one option would be offset by an enhancement of
another
• if you determine that you actually prefer one of the alternatives, adjust at least one of the
proposals so that you feel equally about at least two of them.
7. Tap into, but don’t be trapped by, the power of fairness and legitimacy.

Fairness and legitimacy have great power—and multiple dimensions. No one likes feeling
exploited. Deals often fall apart when one side is convinced they are being fair while the other
side is not.

What seems fair to you is determined largely by your perspective. If the other side asserts a
position you believe to be unfair,

• ask them to explain why they think it is fair. Listen to their answer; try to adopt their
perspective. Then, explain why their position seems unfair to you.

• draw on external criteria that lends legitimacy to an alternative proposal you consider to
be fair and favorable for you. Frame your proposal as consistent with this external
standard or other common measures of fairness.

Steps for Closing the Deal

26
 1. Signal the end of the road before you get there.

If you have been negotiating back and forth, showing flexibility on various issues, and then
suddenly announce you’re at your bottom line, you are likely to be challenged or ignored. So as
you approach the parameters of what you would like to be a final deal, say so. Repeat the
warning, not as a threat but as a courtesy, particularly if the other negotiator seems to expect a
lot more movement in his or her direction.

2. Allow flexibility if you anticipate going beyond the final round.

If you are aware that the other negotiator does not have final authority, leave yourself some
flexibility, or "wiggle room," in the final terms.

• Don’t create so much flexibility that the deal will be rejected by the decision maker.
• Consider a final trade you would be willing to make if you end up requesting significant
adjustment in the final terms.
3. Discourage the other side from seeking further concessions.

If you appear to have reached a final deal that is acceptable to the other side (and perhaps also
favorable to you), discourage further "tweaking" in their favor.

• Express your willingness to accept the total package, without changes.

• Explain that adjustment in their favor on one term would have to be balanced by
adjustment in your favor on another. For example, "If we open that issue, then I’m
afraid we’ll have to re-open the whole deal for it to work for me."
4. Write down the terms.

If your negotiation time has been well spent, don’t risk ruining it by failing to record and sign
your agreement. People’s memories of their agreement will inevitably diverge; recording the
terms of the agreement avoids future disputes and confusion.

• Even if counsel will draft the official documents, write an informal agreement in
principle. Decide whether it is binding or not, and say so in the document.
• Even if your informal agreement is nonbinding, it will be a common text for reference
by both parties as future, good-faith questions arise.
5. Don’t gloat.

If you brag about your great deal, and how much more you would have been willing to give up,
you will

• encourage the other side to find a way to get it back

• increase their aggressiveness in the next negotiation

• increase the aggressiveness of anyone else who hears the story and later negotiates with
you.

Tips for Setting the Time and Place

Before you meet to negotiate, contact the other side to discuss when and where you will meet.

Ask questions about the other side’s preferences, to learn what they reveal about their underlying
interests.

27
 Use the conversation to start the business relationship on the right foot.

Choose a facility that offers the necessary technical support, access to information, and creature
comforts.

Consider holding the negotiation on the other side’s "turf": it may enable you to learn more about
the other side, and may make them feel more comfortable, cooperative, and less likely to walk
away from a deal.

On the other hand, a neutral site buffers both sides from voice mail, e-mail, and collegial
interruptions.

Beware the pressure tactic some negotiators use: delaying the start of the negotiation until right
before your vacation or another deadline.

Tips for Establishing the Right Tone

Make sure that coffee, soft drinks, or light snacks will be available. Never underestimate the value
of "breaking bread" to establish a working relationship.
Don’t overlook the importance of small talk at the beginning—it helps make everyone feel less
defensive, and more cooperative and communicative.

Even in a zero-sum negotiation, small talk helps you get to know the other side better—it makes
you better able to judge when the other negotiator is being truthful.

Take your cue from what the small talk reveals about the other negotiator’s style and manner.

If the other side is more formal, don’t speak too casually—they may interpret this as a lack of
seriousness on your part.

If the other side is decidedly informal, speak in a more casual way, perhaps using metaphors with
which they are comfortable.

Tips for Getting Off to a Good Start

In your opening remarks, try to relieve the tension that is undoubtedly there: express respect for the
other side’s experience and expertise. Frame the task positively, as a joint endeavor. Emphasize
your openness to the other side’s interests and concerns.
After the opening remarks, start with the agenda; make sure both parties have a common
understanding of the issues to be discussed.

Explicitly discuss the process, especially since people often hold different assumptions about how
the negotiation should work. Some assume that there will be haggling. Some expect proposals to be
made at the outset, while others expect an open discussion of issues to come first.

Listen carefully to the discussion of process—it will tell you a great deal about the other side’s
negotiation style.

Offer to explain some of your interests and concerns first. This is a good-faith demonstration that
you are prepared to disclose information, provided that the exchange is reciprocal.

Test Negotiating. Test Yourself

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 A zero-sum

See also

In an ideal situation, negotiators are able to maximize the total value that can be derived
from a deal or transaction. What is the technical term for this?

Pareto optimality.

The technical term is achieving "pareto optimality."

A deal is said to be pareto optimal when none of its terms can be changed to the benefit
of one side without diminishing its value to the other side.

See also Negotiating: Core Concepts, The Fundamental Framework.

You, the buyer, have set a reservation price of $300,000 for a new home and the seller
of the home you are interested in has a reservation price of $325,000. What is the
ZOPA (Zone of Possible Agreement)?

There is no ZOPA in this example.

In this situation, there is no overlap between the ranges that you and the seller find
acceptable.

No agreement would be possible, no matter how skilled you both were, unless there
were other elements of value to be considered—or one or both of you changed your
reservation price.

See also Negotiating: Core Concepts, The Fundamental Framework.

Why is it important, in negotiating, to know your "BATNA"?

Your BATNA is important because it describes the best alternative available to you if
the negotiation at hand does not work.

Knowing your Best Alternative to a Negotiated Agreement, your BATNA, means

knowing what you will do or what will happen if you do not reach agreement in the
negotiation at hand.

Your BATNA determines the point at which you can say no to an unfavorable
proposal. If your BATNA is good, you can afford to negotiate for more favorable
terms.

See also Negotiating: Core Concepts, The Fundamental Framework.

To achieve success in a zero-sum negotiation should you, or should you not, disclose
significant information about your circumstances?

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Should not.

To achieve success in a zero-sum negotiation, you should not disclose any significant
information about your circumstances.

In a zero-sum negotiation, you are competing to claim value for yourself—to take it
away from the other party. Cooperation and disclosure of information may make you
less effective.

See also Negotiating: Core Concepts, Two Types of Negotiation.

Why is it a source of power for you when you have a good BATNA and know that the
other side has a lousy BATNA?

If the other negotiator doesn’t have a good alternative (or hasn’t thought through their
BATNA), it will be hard for him or her to walk away from your proposal.

Plus, knowing about the other side’s BATNA lets you know how far you can go.

See also Negotiating: Core Concepts, Real Sources of Power.

What is the "good news" about a negotiating situation in which you don’t have the
authority you’d like to have?

It can be strategically helpful to need to check back for certain decisions.

Sometimes, having less authority in a negotiating scenario is better. Needing to check

back for certain decisions can be strategically helpful, and may help you to be more
creative in inventing options.

See also Negotiating: Core Concepts, Authority—Theirs and Yours.

In a zero-sum negotiation, the suggested first step in handling an initial offer is to

harness the power of "anchoring." What does this mean?

Anchoring means that your initial proposal should be at the most favorable point (for
your side) that you can justify.

The first offer frequently becomes a strong psychological anchor, setting the bargaining
range. In fact, studies show that negotiation outcomes often correlate to the first offer.

So your first offer ideally needs to be as favorable as possible, just a bit beyond what
you believe is the other side’s reservation price—if, and only if, you can articulate why
this proposal is reasonable.

See also Negotiating: Core Concepts, Two Types of Negotiation.

You are working to get a win-win negotiation under way in a bargaining session with a

32
 customer. Should you start with a proposal with numbers or not?

Don’t start with numbers.

When you want to get a win-win negotiation under way, don’t start with numbers. Try
instead to uncover the real ZOPA (Zone of Possible Agreement) by initiating a
conversation about interests and concerns.

See alsoNegotiating: Steps, Steps for Getting a Win-Win Negotiation Under Way.

You are ready to close the negotiations with an offer. Should you first signal that you
are ready, or straightforwardly present the offer in order to persuade the other party of
your sincerity?

You should signal that you are approaching a final deal.

If you have been negotiating back and forth, showing flexibility on various issues, and
then suddenly announce you’re at your bottom line, you are likely to be challenged or
ignored.

See also Negotiating: Steps, Steps for Closing the Deal.

Harvard Management Update, September 1996

The Only Four-Page Guide to Negotiating You’ll Ever Need

by Walter Kiechel

B ooks on how to negotiate almost invariably begin with the same observation: That the reader,
whether he or she realizes it, is constantly engaged in the N-activity—when buying or selling a house, of
course, or dickering with the boss for a raise, but also, if less obviously, when trying to reach terms with
the local ten-year-old on how much TV she may watch. While one might question some aspects of this
assertion—do you really want to approach little Jessica exactly the same way you do plaid-pants Phil at
the used car lot?—basically it’s true, and in the workplace growing more so.

As employee expectations chip away at hierarchy, old notions of "Just tell ’em what to do" increasingly
get supplanted by negotiation in deciding what a so-called subordinate will undertake, how, and by when.
33
These days what enlightened businessperson would say to an important customer or supplier, "Here’s the
price—take it or leave it"? No, you’re supposed to build a relationship, explore the other party’s interests,
and try to figure out where these may overlap with your own. To negotiate, in other words.

With the increased importance of the subject in mind, Management Update has surveyed a half-dozen of
the guides to negotiating available at your local bookstore. We deliberately sought a wide variety of
approaches, expecting, for example, to find collections of nasty tricks for clobbering the other guy that
we could compare and contrast to more judicious counsel. Maybe it’s just our bookstore, but what we
turned up was a remarkable degree of consensus across books ranging from the Ur-text Getting to Yes-
authors from the Harvard Negotiation Project, over two million copies in print—to The Complete Idiot’s
Guide to Winning Through Negotiation. What follows is a distillation of the best advice.

Before you sit down with the other party. . .

While preparing yourself beforehand is a good idea in most endeavors, in negotiating it’s critical, lest you
be immediately overwhelmed by the other side. You will need to prepare on two fronts: getting the right
attitude, and gathering information on what your interests are and what the other party’s might be.

The recommended attitude for negotiating is a bit clinical, detached, even selfless in a Zen sense. As
Getting to Yes co-authors Roger Fisher and William Ury stress, you want to separate the people from the
problem, and the first person to separate is yourself. Letting your feelings hang out over the bargaining
table is like wearing a sign saying "Hey, it’s okay to do weird emotional judo on me."

The imperative to plumb interests lies at the heart of what distinguishes enlightened negotiating from the
other kind. What you want to avoid, the experts agree, is bargaining over, or from, positions. You know:
"I’ll give you a hundred bucks for it." "I wouldn’t take less than $50." And so on, tiresomely and
unimaginatively, offer and counteroffer, each side trying to arrive at a final number closer to its initial
proposal. More effort goes into asserting and defending successive positions than arriving at a solution
that’s optimal for both parties.

In negotiating based on interests, by contrast, the point is to get beyond positions to uncover the desires,
needs, and hopes that have given rise to those positions. Once the two parties have explored their
respective interests together, they may well be able to arrive at an outcome not contemplated in either’s
initial offer but that satisfies each far better than the result of a long haggle.

In his book Win-Win Negotiating, Fred E. Jandt offers a nifty real-world example. A friend, a lawyer in
solo practice, was approached by his secretary asking for a raise. She came armed with all sorts of
objective data indicating that most legal secretaries in the area made 30% to 50% more than she did, and
that it would cost him three years of the raise just to hire and train a replacement if she left. The trouble
was, with a practice skewed toward public interest work—read "not that lucrative"—the lawyer couldn’t
afford the increased outlay.

But instead of countering with his own position ("The money just isn’t there"), the enlightened lawyer
asked her questions—the key technique in negotiating from interests—to get at what was behind her
request. It turned out that she really did need more money to get by. He also found out that she liked
working for him, didn’t particularly want to go somewhere else, and would be happy to put in some extra
time.

Which presented the opening for a win-win solution: The lawyer arranged for her to do part-time work
for another attorney, and, to sweeten the bargain, offered her the free use of the word processor in their
office. So equipped, as a free-lancer in her spare time she was able to earn an hourly rate five times what
he was paying her, and three times the rate at other law firms. Working every other Saturday, she grossed
more than she would have received from the raise, and kept the full-time job that she enjoyed.

34
In understanding your own interests, and in calculating what the books call your "negotiating power," the
key is determining your best alternative to a negotiated agreement, usually abbreviated as BATNA (also
BATANA). Where will you be left if you can’t strike a deal? How can you satisfy your interests without
the cooperation of the other party? Think hard about this. In negotiating to buy a car, for example, the
better BATNA is probably not "Gee, I won’t have the joy of owning this snazzy little roadster that I’ve
had my heart set on," but rather something like "Well, my current car still runs fine, I’ll save a ton of
money, and maybe I can find a vehicle that’s even more fun."

The stronger your BATNA, the greater your negotiating power. A standard illustration of the point:
Who’s better situated to ask the boss for a promotion, the woman with job offers from two other
employers in her attaché case, or the woman without clear prospects elsewhere? Which suggests an
important, if easy to overlook, step in preparing to bargain: Go out and improve your BATNA. Scrounge
up the two job offers.

Once you’ve determined your BATNA, you can use it to help sharpen the guidelines you set for yourself
in the negotiation and the proposals you may want to make in starting the discussions. Particularly for
dealing with a party who’s not inclined to interest-based bargaining, Jandt recommends a strategy called
mini-max. (Fair warning: Some partisans of getting to you-know-what might consider this strategy too
positional.) Ask yourself four questions:

1. What’s the minimum you’re prepared to accept? Consult your BATNA. How ready are you to fall
back on it?

2. What’s the maximum you can ask for without getting laughed out of the room?

3. What’s the maximum you can give away, the limit beyond which you will not go?

4. What’s the least you can offer without getting laughed out of the room? Here, ruminate over the other
party’s BATNA, then make sure your worst offer to them is at least some improvement over it.

One final detail before sitting down: Where to conduct the proceedings? John Ilich, author of The
Complete Idiot’s Guide, says preferably on your own home field; failing that, at a neutral location; but
never at their place if you can avoid it. Fisher and Bruce Patton, Fisher’s co-author for the second edition
of Getting to Yes, are more flexible. Where would the other party feel most comfortable, if that would
serve your purposes? Where are the files, flip charts, white boards, or experts you both will need?

Starting off. . .

You walk in, shake hands, sit down, and you smile. From the first face-to-face contact with the people on
the other side, and indeed, in any conversations that may precede the formal negotiation, try to establish
as good a person-to-person relationship as possible. Youwant everybody’s energies to go into analyzing
the issues and arriving at an imaginative, mutually beneficial solution, not into posturing, bullying,
feeling offended, or any other state of high dudgeon that may get in the way of a reasonable outcome.

You can’t banish emotions from the proceeding. Rather, the point is to get feelings out into the open,
acknowledge them, and, at the least, minimize them as obstacles. At best, you can hope to use them to
forge an alliance to speed the work along and, at the end of the negotiation, leave people wanting to do
business together again. Without being totally Esalen about it, talk a little about your own feelings, and—
carefully—perhaps essay a few words on how the others might be feeling. ("I can imagine that you, too,
would like to see a good result from our discussions.") Be polite, respectful, friendly. Show it by not just
listening, but hanging on their every word.

To the age-old question, "Do you wait for them to make the first offer, or should you push yours out there

35
first?", Fisher and Patton offer a novel answer: What’s the hurry? Putting a number down too soon may
foreclose the exploration of interests that both sides should pursue at first. It might even happen that a
potential agreement emerges without anybody having to make a "first offer."

If somebody does have to, though, let it be the other guy or gal, advises Ilich. Their first offer
immediately sets the upper or lower limit for the negotiation, he argues, the highest you’ll have to pay or
the lowest you’ll be forced to accept.

But why shouldn’t you set the limit, other experts retort, particularly since the first offer may well
"anchor" the rest of the negotiation, skewing the final result in its direction. In Negotiating Rationally,
Max H. Bazerman and Margaret A. Neale recount a study they performed asking real estate agents to
estimate the right price for a particular house. They divided the realtors into four groups, and gave
members of each group packets of information on the house that were identical except for one detail, the
price at which the house was supposedly listed for market. Sure enough, the group given the highest
listing price set the highest "right price" on it, with the prices estimated by the other groups anchored at
successively lower levels by the listing prices provided them.

Setting the anchor yourself works best when the other side hasn’t bothered to gather the necessary facts
or to think through its interests. To avoid being anchored, counsel Bazerman and Neale, don’t make a
counteroffer to a ridiculous initial proposal. Better to say, "No thanks; let me know when you’re prepared
to negotiate seriously."

Moving the process along. . .

Much of the emerging wisdom on how to proceed through a negotiation can be distilled into a four-
sentence, only semifacetious injunction: To move matters along, ask a question, even in response to a
question. If you can’t ask a question, fall silent and wait for the other side to step in to end the awkward
pause. Only rarely, perhaps to keep up the human side of things, should you make an observation or an
assertion. And then immediately tag on a question.

Dig, dig, dig for those interests. Clarify your understanding of what the other side says, this for their
edification as well as yours—"How did you arrive at that offer?" Brainstorm together to devise the
proverbial "outside the box" solution. Fisher and his colleagues are big proponents of bringing
independent, objective standards to bear—benchmarks like market value, costs, past settlements, or
scientific judgment—and of using questions to try to get the other side to see the value of such standards.
Jandt counters that objectivity flies out the window when the bargaining gets serious.

If both parties are willing to submit to the facts, but can’t agree on what the facts are, perhaps a neutral
observer can determine both them and the deal they should give rise to. The experts almost all agree that,
particularly if you seem headed for an impasse, you should consider submitting your differences to a
mediator.

But what if it’s only you and them, and they get nasty or tricky? By now you probably can guess the
answer—separate the people from the problem, dig for underlying interests, ask a question. A couple of
our favorite exemplary responses from Getting to Yes, the second edition: "Is there a theory behind
having me sit in the low chair with my back to the open door?" And "Shall we alternate spilling coffee on
one another day by day?"

Or kick the discussion up one level from a negotiation on the issues to a negotiation on how both sides
will negotiate. That is, recognize the other side’s gambit for what it is, call it, and suggest getting back to
business: "Wow, I haven’t seen that classic an example of good cop/bad cop for years. Shall we go back
to looking at prices the market has been setting in situations comparable to ours?"

Getting to finished. . .
36
As soon as the framework for a possible agreement emerges, ever so gently begin herding the doggies in
that direction. Ilich recommends a technique he calls funneling: Remind the other side that this particular
issue has been settled, refresh their recollection of what you agreed on, refuse to reopen it, and move on
to what’s still open.

Especially in a complicated negotiation—say, when there’s more than two parties involved—it may help
to write down a draft agreement after every major meeting of the minds: "I know we still have a way to
go, but I thought I’d set down the terms we appear to have settled on so far? Have I misunderstood
anything? What changes would you make?" The mere prospect of having to read the draft over one more
time may encourage assent.

Don’t hurry them or yourself, Ury counsels. If they feel pressured, they may blow up over a small point.
In your haste, you may forget to consult your interests one last time in considering the final terms
proposed.

Then, when you think you’re in accord at last, ask one more question. Ilich suggests "Have we got a
deal?" If they say yes, shake hands, and stop lobbing interrogatories. Should you find yourself at a loss
for something to say, talk about the weather.

If you want to learn more . . .

The Complete Idiot’s Guide to Winning Through Negotiation by John Ilich

(1996, Alpha books, 245 pp., $16.95, Tel. 800-957-3529)

Getting Past No by William Ury

(1993, Bantam Books, 189 pp., $10.95, Tel. 800-323-9872)

Getting to Yes by Roger Fisher and William Ury

(1991, Penguin Books, 200 pp., $12.95, Tel. 800-337-4624)

Negotiating Rationally by Max H. Bazerman and Margaret A. Neale

(1992, The Free Press, 196 pp., $16.95, Tel. 800-223-2336)

Win-Win Negotiating by Fred E. Jandt

(1985, John Wiley & Sons, 300 pp., $17.95, Tel. 800-225-5945)

Copyright © 1996-1998 by the President and Fellows of Harvard College. Quotation is not permitted. Material may not be reproduced in whole or part in any form
whatsoever without permission from the publisher. This document may have been reformatted to accommodate electronic format restrictions.

Notes and Articles

Marjorie Corman Aaron. "The Right Frame: Managing Meaning and Making Proposals." Harvard
Management Communication Letter, September 1999.

The way you frame a proposal—what aspect of the subject you choose to focus on, and which
you choose to obscure—can have an enormous impact on the audience's reaction and the
outcome of the proposal or presentation. Frames have the power to both influence and distort;
the authors offer advice about how to maximize the power of framing.

Jay Conger. "The Necessary Art of Persuasion." Harvard Business Review OnPoint Enhanced Edition.
Boston: Harvard Business School Publishing, 2000.
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 Persuasion is a major part of any negotiation. This article explains the four essential elements of
persuasion: (1) establishing credibility, (2) finding common ground, (3) providing vivid
evidence for your position, and (4) connecting emotionally with your audience.

Danny Ertel. "Turning Negotiation into a Corporate Capability." Harvard Business Review OnPoint
Enhanced Edition. Boston: Harvard Business School Publishing, 2000.
Every company today exists in a complex web of relationships formed, one at a time, through
negotiation. Purchasing and outsourcing contracts are negotiated with vendors. Marketing
arrangements are negotiated with distributors. Product development agreements are negotiated
with joint-venture partners. Taken together, the thousands of negotiations a typical company
engages in have an enormous effect on both its strategy and its bottom line. But few companies
think systematically about their negotiating activities as a whole. Instead they take a situational
view, perceiving each negotiation to be a separate event with its own goals, tactics, and
measures of success. Coordinating them all seems an overwhelming and impracticable job. In
reality, the author argues, it is neither. He presents four broad changes in practice and
perspective that, taken together, will let companies establish closer, more creative relationships
with suppliers, customers, and other partners.

Harvard Business School Publishing. "How to Get What You Want." Harvard Management
Communication Letter, March 2000.
How do you improve your chances while negotiating? Start by understanding how you can help
or hurt your competition, and how they can help or hurt you. Answer these three questions: (1)
What do you want?; (2) Why should your competition negotiate with you?; and (3) What are
your alternatives? Includes dos and don'ts for navigating negotiation sessions.

Deborah M. Kolb and Judith Williams. "Breakthrough Bargaining." Harvard Business Review OnPoint
Enhanced Edition. Boston: Harvard Business School Publishing, 2001.
Unspoken, subtle elements in the bargaining process—the "shadow negotiation"—can set the
tone for any negotiation. The authors provide three kinds of strategies for successful bargaining:
(1) Power moves show "the other side" that it's in their interest to negotiate with you; (2)
process moves influence how others view the negotiation; and (3) appreciative moves alter the
tone of the interaction so that the parties can have a more collaborative exchange.

Robert Mnookin, Scott Peppet, and Andrew Tulumello. "The Tension Between Empathy and
Assertiveness." Negotiation Journal 12, no. 3 (1996).
This article explores two central dimensions of negotiation behavior: empathy and
assertiveness. The authors take these concepts from psychological literature and adapt them to
make prescriptions for effective negotiation.

H. Joseph Reitz, James A. Wall, and Mary Sue Love. "Ethics in Negotiation: Oil and Water, or Good
Lubrication?" Business Horizons, May 1998.
The authors evaluate 10 common negotiation tactics in light of various ethical criteria, such as
the Golden Rule, Universalism, Utilitarianism, and Distributive Justice. As they explain,
unethical bargaining may reap short-term, one-time benefits. In the long run, however, it
damages relationships, sullies reputations, and closes the door on future fruitful transactions.
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James K. Sebenius. "Six Habits of Merely Effective Negotiators." Harvard Business Review OnPoint
Enhanced Edition. Boston: Harvard Business School Publishing, 2002.
Even seasoned negotiators fall prey at times to six all-too-common mistakes that keep them
from solving the right negotiation problem. These mistakes include: neglecting the other party's
problem, letting price eclipse other interests, letting positions eclipse interests, searching too
hard for common ground, neglecting no-deal alternatives, and failing to correct for skewed
vision. The author contrasts good and bad negotiating practice, drawing from 50 years of
research and analysis.

Richard Shell. "When Is It Legal to Lie in Negotiations?" Sloan Management Review 32, no. 3 (spring
1991).
This short and clearly written article sets forth the legal framework for understanding when and
why lying will get you into trouble in negotiation. Using case examples, it provides guidance
for those uncomfortable with the sometimes fuzzy distinctions between lying and bluffing,
puffing, or not telling.

Monci J. Williams. "Don't Avoid Conflicts—Manage Them." Harvard Management Update, July
1997.
Regardless of our hierarchical position in an organization, most of us believe it is expedient, and
therefore preferable, to avoid conflict. Research indicates, however, that avoiding conflict may
hinder managers in achieving their goals. To manage conflict successfully you need to
understand the difference between positions and underlying needs. You should also understand
the other party's position before asserting your own. By concentrating on common interests and
knowing your own "hot buttons," you and your partners in conflict can arrive at an optimal
solution rather than a simple compromise.

George Wu. "Sources of Joint Gains in Negotiation." Harvard Business School Case Note. Boston:
Harvard Business School Publishing, 1996.
Presents two basic principles that underlie the creation of joint gains. Four sources of joint gains
—differences in interests, opinion, risk preference, and time preference—are discussed, and
simple examples are provided to illustrate the basic concepts. Teaching Purpose: Can be used as
supplementary reading to provide deeper insight into the different types of joint gains.

George Wu. "Two Psychological Traps in Negotiation." Harvard Business School Case Note. Boston:
Harvard Business School Publishing, 1996.
This article describes two psychological traps—anchoring and framing—and their roles in
negotiation. The anchoring section describes how opening offers serve as an anchor, changing
one side's perception of the other side's bottom line and hence the set of possible outcomes. The
framing section describes how an alternative description of an object, event, or situation can be
used effectively in negotiation. The article uses a real estate scenario to illustrate three common
varieties of framing: losses versus gains, short and long horizons, and aggregation and
segregation.

Books
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Max Bazerman and Margaret Neale. Negotiating Rationally. New York: The Free Press, 1992.

Professors Bazerman and Neale bring their psychologists' lens to this delightful work on
negotiation theory and practice. Their bottom-line advice is much like that in Getting to Yes and
The Manager as Negotiator (see entries below), but they also weave in explanation and insight
from psychological research and literature.

Roger Fisher and Danny Ertel. Getting Ready to Negotiate: The Getting to Yes Workbook. New York:
Penguin, 1995.
This book is written for devotees of Getting to Yes who really want a mentor to walk them
through the preparation process. From quick prep to more detailed prep, it shows the reader how
to use Fisher and Ertel's forms and approach to prepare for numerous negotiation examples. The
toolkit contains blank forms for the reader's negotiation.

Roger Fisher, William Ury, and Bruce Patton. Getting to Yes: Negotiating Agreement Without Giving
In. 2d ed. New York: Penguin, 1991.
If you can only read one book and it must be short, this is it. The original 1981 edition has had a
tremendous impact on everything from international politics to professional schools and
executive education courses in negotiation. Getting to Yes set up a polemic between "positional
bargaining" and "principled negotiation." The heart of the book articulates a basic prescriptive
framework for "principled negotiation" or "negotiation on the merits" (separate the people from
the problem; focus on interests, not positions; invent options for mutual gain; insist on objective
criteria).

Harvard Business School Publishing. Harvard Business Review on Negotiation and Conflict
Resolution. Harvard Business Review Paperback Series. Boston: Harvard Business School Publishing,
1999.
This collection of Harvard Business Review articles offers the best thinking on negotiation
practice and conflict management.

Harvard Business School Publishing. The Manager's Guide to Negotiation and Conflict Resolution.
Harvard Management Update Collection. Boston: Harvard Business School Publishing, 2000.
One of the most difficult issues managers must deal with everyday is negotiation in the broadest
sense. Whether it's negotiating for a raise, or with your colleagues to promote a project, or more
formally with other companies to find ways to work together, this essential interpersonal task
produces anxiety and stress in most of us.

William Ury. Getting Past No: Negotiating Your Way from Confrontation to Cooperation. New York:
Bantam Books, 1991.
This book is a treasure trove of useful advice for the hard part of negotiating. Building upon the
approach in Getting to Yes, it suggests ways to deal with the other side when confrontation,
objection, or rejection seem inevitable. It is particularly insightful about how to recognize and
handle your own reactions so that they don't get in the way.

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Richard J. Zeckhauser, Ralph L. Keeney, and James K. Sebenius, eds. Wise Choices: Decisions,
Games, and Negotiations. Boston: Harvard Business School Press, 1996.
Leading scholars in economics, psychology, statistics, and decision theory grapple with
strategic uncertainty and the question of how to make good decisions. The papers in this
collection address topics such as individual decision making under uncertainty, games of
strategy in which one player's actions directly influence another's welfare, and the process of
forging negotiated agreements.

Other Information Sources

Roger Fisher, William Ury, and Bruce Patton. Getting to Yes! Video Workshop on Negotiation. Boston:
Harvard Business School Publishing, 1991. Videocassette.

This video workshop is the next best thing to having Roger Fisher as your managers' personal
negotiation trainer and coach. It brings Fisher's work to life and makes it easy to apply to your
managers' own situations. You'll see more than a dozen vignettes that vividly illustrate how to
turn adversarial negotiations into mutual problem solving. The workshop gives you everything
you need to help your managers become more powerful negotiators:

Seven video segments that bring you step-by-step through the key elements of successful
negotiation and act as a springboard for role play:

• Getting to Yes, the classic reference tool on which the entire workshop is based
• an engaging audiocassette that challenges concepts and reinforces ideas from the
video
• a Viewer's Guide (6 copies) that provides succinct overviews of the content and
links to the book and videos

• a Facilitator's Guide that helps you use the workshop components most
effectively with groups or individuals—even if you're not a professional trainer.

eLearning Programs

Harvard Business School Publishing. Influencing and Motivating Others. Boston: Harvard Business
School Publishing, 2001. Online program.

Have you ever noticed how some people seem to have a natural ability to stir people to
action? Influencing and Motivating Others provides actionable lessons on getting better
results from direct reports (influencing performance), greater cooperation from your peers
(lateral leadership), and stronger support from your own boss and senior management
(persuasion). Managers will learn the secrets of "lateral leadership" (leading peers),
negotiation and persuasion skills, and how to distinguish between effective and ineffective
motivation methods. Through interactive cases, expert guidance, and activities for immediate
application at work, this program helps managers to assess their ability to effectively persuade
others, measure motivation skills, and enhance employee performance.

Harvard Business School Publishing. YES! The Online Negotiator. Boston: Harvard Business School
Publishing, 2000. Online program.

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Based on the proven techniques developed by world-renowned negotiation expert Roger
Fisher and the Harvard Negotiation Project, and detailed in the best-seller, Getting to Yes, this
program helps you build strategies for effective negotiation and conflict resolution. You'll
negotiate in realistic scenarios, see the consequences of your choices play out, and receive
coaching, feedback, and expert advice from Roger Fisher and other experts.

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