What is Negotiation? 3 Things You Need to Know

What does negotiation mean to you? Arguing with your counterpart? Haggling for the best price possible? Meeting in the middle?

The way you mentally represent your actions determines how you behave in real life. If you think that negotiating means meeting in the middle, that’s exactly the outcome you will achieve. If you believe negotiating means yelling at each other, that’s what you will do.

A central aspect of negotiation training involves reframing our understanding of what negotiation means. In today’s issue, I will demonstrate how your perspective on negotiation can impact the outcomes you receive.

I will conclude the issue with what I believe to be a good way of thinking about negotiation. Using this definition can help you be in the right mindset in any upcoming negotiation you might have. Ready? Go! 

Negotiation is a conflict resolution method.

We, humans, are goal-directed creatures. Everything we do has an underlying motive, a goal we are trying to reach. Sometimes, our progression toward our goals is hindered by other people. Maybe they want the same thing we want, or maybe they are refusing us access to something we want.

For example, imagine that you just received a job offer. You really want the position, but the salary is lower than you expected. In this situation, your goal of being paid X is incompatible with the employer’s goal of paying you Y, a lower amount.

When two interdependent parties pursue incompatible goals, they are in a conflict.

How do we respond to such situations? A surprisingly high number of people decide to avoid the conflict altogether. Most working adults avoid negotiating their job offers for fear of looking greedy or having the offer rescinded.

Is conflict avoidance a good strategy? Absolutely not. Avoiding a conflict is the inferior option in nearly every situation. Think about your salary negotiation. Unless you manage to brainwash yourself into thinking the offer is fair, the conflict will still exist in your mind and continue to fester.

The better alternative is to bring up the “incompatible” goal and try to solve the conflict. Conflicts don’t have to always evoke a fight or flight response; we can approach the situation constructively and collaboratively. The role of negotiation training is teaching you the right techniques to do so.

Negotiation relies on persuasion techniques.

Let’s go back to the salary negotiation example. The employer and you are interdependent in the sense that you wish to work together in the future. At the same time, you both have some degree of autonomy; you can’t force the employer to increase the salary, and they can’t force you to sign the contract.

When two autonomous parties have a conflict, their only way of moving forward is through persuasion. Each party uses language to change the other party’s mind, and ultimately, their behavior. 

Negotiating is not just asking for something; it’s attempting to persuade the other party that you should get it.

In a salary negotiation, you most likely won’t get the employer to give you higher pay unless you persuade them to do so. Similarly, they most likely won’t get you to accept a lower salary without persuading you that it’s fair compensation for your work.

How does one persuade others? It’s been the focus of fascination for thousands of years, ranging from the philosophy of Aristotle to the theories in modern-day management books. 

Persuasion is an art, but it is also a science. The goal of negotiation training is to provide you with the tools to persuade your counterpart, and that starts at the preparation stage. 

Negotiation can create value.

Most people enter negotiations with a fixed-pie mindset, a presupposition that one party’s gain is automatically the other party’s loss. Such negotiators focus on one issue at a time and compete with the other party to claim as much of the surplus as possible. Then, they leave the negotiation thinking they “won.”

Going back to the salary negotiation example, you could focus the entire discussion on the issue of salary. The problem? You’ll only be able to meet somewhere in the middle between X and Y, if the employer budges at all.

How can you get a better deal? You should discuss your underlying interests first so that you can identify potential differences in preferences. If you and the other party have different relative preferences, you can expand the pie and form an integrative agreement.

Let me illustrate this principle with the story of two sisters fighting for an orange. They argue back and forth about who should get the orange, trying to persuade the other one. Both sisters are stuck in their position, so they compromise (i.e. they meet in the middle) and split the orange in half.

Was it the best outcome they could have gotten? Let’s see. With their orange half in hand, the first sister eats the flesh and throws away the peel, while the second sister keeps the peel and throws away the flesh. It turns out one was hungry and the other one was baking a cake.

They could have gotten additional value. If so, one sister would have had twice more fruit to eat, and the other one would have had twice the rind for her cake.

I run this scenario as a negotiation simulation in my Introduction to Organizational Behavior class every year, and very few groups ever realize the distinction between peel and flesh. Most go straight to competition and pie-slicing instead. They only realize how bad their deal actually is when we debrief the negotiation.

Going back to the job offer you received, maybe the employer has limited flexibility on the salary part but can be flexible on working hours. Would flexible hours compensate for a lower salary? Maybe. If not, maybe something else would.

One thing is for sure: If you add more parameters to the negotiation equation, you increase the chance of finding win-win agreements.

What’s our definition of negotiation?

So, where do we go from there? What’s a good way to think about negotiation? We can disagree on the specifics, but there are three main elements you should keep in mind:

  1. You are trying to resolve a conflict.
  2. You are using persuasion to obtain what you want.
  3. You are trying to create additional value.

If you walk into every negotiation with this mindset, you are already set to a good start. In my next issues, I will talk about how to make good first offers.