Negotiation is the discussion and arrangement of terms between people attempting to reach a mutually satisfactory agreement. Negotiations generally occur when two or more people or parties have conflicting interests regarding a division of resources. Such discussions develop when no single party has a right to dictate the outcome. Negotiations commonly involve money, opportunities, products, and services. For example, a job applicant might negotiate with a potential employer about the starting date or salary for a job.
Negotiations typically involve both cooperative and competitive motives. Negotiators usually understand that they must cooperate with each other to reach an agreement—for example, a good working relationship between an applicant and employer. However, negotiators also compete with each other. They want to achieve as much as possible of their own interests. For example, an applicant’s desire for a high salary conflicts with an employer’s wish to keep the salary low.
Negotiators need to know how to get past conflicting positions to identify underlying interests. They also must understand how to trade off interests. Imagine, for example, that two people have a dispute over an orange (the resource). Each person takes the position of claiming the right to the orange. However, each one has an underlying interest. One wishes to drink the orange’s juice. The other wants the orange peel to use in a cake. But the two people do not discuss these interests with each other. They decide to compromise by cutting the orange in half. The first person drinks the juice from half the orange and throws the peel away. The second person uses the peel from the other half to make a cake and throws the juice away. Both people compromised their positions but failed to reach the best outcome.
Negotiators can improve their negotiations by making trade-offs, or even exchanges, geared toward mutual satisfaction. For example, if the two people involved in the orange dispute identify the interests underlying their positions—that one wants the juice and the other the peel—they could use that information to negotiate a trade-off. The two people could agree that the first person would get all the juice and the second person would get the entire peel. This would be the best outcome for both parties involved in the dispute. Negotiators often fail to negotiate trade-offs because they lack information about each other’s interests.
On the other hand, negotiators are frequently reluctant to share information about interests. They fear that doing so will give the other party an unfair advantage. Negotiators may overcome their reluctance to share information by building trust.
Bargaining power often depends on a person’s alternatives to negotiation—that is, the other choices open to him or her. A negotiator with many alternatives to negotiation, such as a job applicant with several different job offers, holds increased bargaining power. A negotiator with fewer alternatives, such as an applicant with only one offer, holds decreased bargaining power. Generally, successful negotiators do not reveal their alternatives unless their alternatives are good.
