People in business are constantly engaged in negotiation: with current and potential clients; with suppliers and other vendors; and with others within their own organizations. Those who are successful in business are usually those who have developed the skill set necessary to become effective negotiators. Good negotiators recognize that a successful negotiation is more than just doing a deal: it’s about making a well negotiate. Good agreements are more likely to occur when the parties can agree to a contractual agreement that satisfies one or more of the interests of each of the parties.
Interests are the underlying needs and concerns that the business negotiator seeks to satisfy through a contractual relationship with another party. Interests are the underlying reasons why a company engages in a negotiation. Successful business negotiators approach a negotiation as a problem-solving exercise in which the basic problem is to come up with a solution that satisfies one or more of the underlying interests of each of the parties. Conversely, less effective negotiators tend to approach trade negotiations by focusing on the positions they are intended to present for the other party’s consideration. The difference between interest-based and positional bargaining is illustrated in the following example:
“Consider the story of two men fighting in a library. One wants the window open and the other wants it closed. They argue back and forth over how much to leave it open: a crack, in the middle, three-quarters of the way. There is no solution to satisfy them both.
The Librarian enters. She asks one why he wants the window open: “To get some fresh air.” She asks the other why he wants it closed: ‘To avoid the current’. After thinking about it for a minute, open a window in the next room to let in fresh, draft-free air. “Roger Fisher and William Ury, Getting to Yes: Negotiating a Deal Without Giving Up (1991), P. 40.
Each of the two men focused on their own positions and a solution that effectively reconciled their underlying interests was completely missed. As the example above suggests, trading positions tends to block the negotiator from defending or advancing his position to the point where his own ego identifies with the position. As more attention is paid to the position, less attention is paid to the underlying interests of the parties. Agreement becomes less likely and any agreement that results may simply be “splitting the difference” between the final positions of the parties rather than exploring a solution that could have accomplished more for each party. That makes it an ineffective process in the sense that both parties tend to start with extreme positions and slowly and reluctantly give ground by increasing the time and costs of reaching an agreement, as well as the risk of no agreement being reached. .
The ability to identify the interests of the other party in the course of the negotiation process can be critical to achieving a mutually beneficial contractual relationship. The reality is that if the party you are negotiating with cannot satisfy their own interests in a deal with you, then they will either make a deal with someone else or run out of it. Knowing the other party’s interests will help you determine what you have or can offer that is of value to that other party. That will allow you to come up with a proposal that meets the other party’s interests and also makes good business sense for yours.
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