Negotiation Success: Balancing the Contentment of Your Opposing Party

Negotiating a win-win deal isn't a walk in the park, but there are some savvy tactics that can help. Here's the down-low on navigating those tricky negotiations and keeping both parties satisfied.

Keeping Your Counterpart Content: A Happy Dance in Negotiations

Win-Win Negotiation Example 1. The Dance of Expectations

Prior to and during a negotiation, expectations shape how people perceive their outcomes. Professors Richard Oliver and Bruce Barry of Vanderbilt University, as well as Sundar Balakrishnan of the University of Washington, have shown that negotiators compare what they actually get to what they expected before crossing the negotiation stage.

The result? Even with identical outcomes, people can feel very different about their deal.

Example: Two car buyers, both spending $30,000 on a car. The one who thought they'd pay $29,000 will be bummed, while the one expecting $31,000 will be more than pleased.

Skilled negotiators play those expectations like a fiddle. Some folks just get it intuitively.

Example: In the month leading up to salary negotiations, managers may hint the company's been struggling. Lowered expectations mean that some employees might just be happy with a measly cost-of-living raise.

Your response to an opening offer can also sway your counterpart's expectations about the possible Zone of Agreement (ZOPA). React with a shocked face, a laugh, or a gasp, and you can narrow their ZOPA expectations. On the flip side, showing cooperation or eagerness can dial those expectations to the max.

One common mistake that kills a win-win deal is escalating expectations with a massive concession, which might prompt the other side to believe you can make yet another big concession.

Picture this: You're after a house on the market for $390,000, and you start with a lower offer: $300,000. The seller counters with a slight reduction, and in an attempt to bridge the gap, you propose $340,000. The seller may believe a $40,000 jump is easy for you, and instead of agreeing to your offer, they may hike up their expectations.

A similar blunder is agreeing too quickly. Negotiators Adam Galinsky and Victoria Medvec of Northwestern University, Vanessa Seiden of Ruda Cohen and Associates, and Peter Kim of USC, found that folks who had their initial offers accepted immediately were less satisfied with the deal compared to those whose offers were accepted after a delay — even if the former group reached better outcomes than the latter.

Win-Win Negotiation Example 2. Perception Meets Reality

Just as smart negotiators assess how good a deal is for them, they also gauge the same for their counterpart. For example, unions negotiating a labor agreement may be concerned not only about their wage and benefit concessions but also about how management is faring.

This lesson was tough to learn for Donald Carty, former CEO of American Airlines. In 2003, the airline was struggling, and management asked employee unions to cut their benefits by $10 billion over six years. After lengthy talks, the unions eventually agreed to wage cuts ranging from 15.6% to 23%.

The unions thought they'd made a good deal — until they found out about the sweet deals the top execs had cooked up for themselves. Six bigwigs, including Carty, had arranged for big bonuses if they stayed at the company through 2005. The company also set a special pension fund for 45 executives in case American Airlines filed for bankruptcy. Once disclosed, these perks cost Carty his job one week later.

Social psychologists George Loewenstein at Carnegie Mellon University, Leigh Thompson at Northwestern University, and Max Bazerman at Harvard University discovered that negotiator satisfaction is influenced by social utility — the comparisons people make between their outcome and their counterpart's outcome. The American Airlines workers were on board with wage concessions, but they wanted their sacrifices to be shared with the company as a whole.

When negotiating, we develop perceptions about both sides' claims. The American Airlines deal teaches us that these perceptions can be misguided. Unions didn't learn about the execs' benefits until management was forced to spill the beans.

The lesson? Applaud your counterpart's hard bargaining and play humble about your gains to create a win-win situation.

Professor Maurice Schweitzer of Wharton School and Yale University professor Nathan Novemsky highlight the importance of social comparisons in showcasing win-win negotiator satisfaction.

Negotiators don't just compare their profit with what they imagine their counterpart earned but also with the profits of folks in similar situations. For example, a car buyer doesn't just evaluate how much the dealership made from the deal; they compare their price with the price their neighbor paid. If the neighbor paid more for the same model, the buyer will be more pleased with their purchase.

Social comparisons can significantly impact our perception of a particular outcome. Unfortunately, our ability to make accurate social comparisons is limited. We typically compare our own outcomes with those close to us—neighbors, coworkers, and family members.

To negotiate win-win outcomes:

Be mindful of the comparisons your counterpart selects.
Encourage detailed disclosure of relevant information.

Win-Win Negotiation Example 4. Negotiation Experience

Social psychologist Jerald Greenberg of Ohio State University has found that we value not only the outcome but also the process that led to that outcome. To foster win-win perceptions:

Offer your counterpart a voice in the decision process.
Provide thorough, detailed explanations for unappealing actions or outcomes.

By incorporating these strategies into your negotiation approach, you increase the likelihood of achieving a win-win outcome.

Bonus Tips for Win-Win Negotiations

Active Listening and Empathy: Show genuine interest in what the other party is saying, and acknowledge their feelings to foster trust and mutual understanding.
BATNA and Alternatives: Know your BATNA (Best Alternative to a Negotiated Agreement), and be open to exploring creative solutions and alternatives.
Creativity and Flexibility: Embrace creativity and collaboration to craft innovative solutions that satisfy both parties.
Building Relationships: Frame the negotiation as an opportunity to build a lasting relationship, and focus on adding value for both sides.
Adaptability: Stay flexible and open-minded, and be willing to adapt your strategy as needed based on the changing negotiation context.

Effective leadership among faculty members in a university can foster an environment where students learn the art of win-win negotiations, which is crucial in business and law.
A keen understanding of the faculty's expectations in salary negotiation, coupled with strategic finance management, can yield win-win outcomes for both the institution and its staff members.
Research on business strategy can provide insights into the effective use of social comparisons during negotiations, ensuring mutual satisfaction for all parties involved.
Negotiation skills, supplemented with active listening and empathy, can lead to cooperative agreements in law and business, enhancing relationships and promoting lasting partnerships.