Interests and emotions in negotiations

When two parties first begin to negotiate, there’s a blank slate. Each party focuses on the issues in an attempt to, in light of their negotiating power, trade away those issues that are less important to them in exchange for getting what they want with regards to those issues that are more important to them. The exchange is primarily interest-based.

However, as a negotiation progresses, emotions emerge.

If each party is respectful of the other, they may feel good and continue the negotiation even if their ranges of acceptable outcomes seem unlikely to overlap.

On the other hand, if one party is repeatedly conceding ground, they begin to feel bad. Similarly, if a party feels like their good intentions are being abused, they also begin to feel bad.

The negotiation develops an emotional history which becomes an important determinant of the negotiation’s outcome, beyond that suggested by a purely interest-based approach.

Depending on the emotional history of the negotiation, one or more parties may take actions contrary to their own interest in order to prevent their counterpart from getting what they want. In other words, they might trade away their interests in order to not trade away their perceived fairness of the eventual outcome.

They may also refuse to budge on what is actually a relatively less important issue to them in order to get back at their counterpart for their actions on a more important issue.

At the extreme, since a party’s negotiating style is a signal for how they will act post-negotiation, a party might leave the table due to the emotional layer of the negotiation, even after securing an outcome that is otherwise in line with their interests.

In order to not let the emotional layer of a negotiation get in the way of an otherwise mutually beneficial partnership, it’s useful to keep two principles in mind:

  1. Treat your counterpart as you would like to be treated
  2. Communicate kindly

Acting in line with these maxims isn’t easy in the heat of a negotiation. And they don’t guarantee that you’ll reach a mutually satisfying outcome.

However, if you’re able to act in line with them, they go a long way in ensuring that the outcome that you do reach reflects the interests rather than the emotions of both parties.

Originally published at Thoughts of a VC.