Negotiations that suit both parties can lead to the best outcomes.
Einav Hart, assistant professor of management at the George Mason University School of Business, considers negotiating styles.
Einav Hart is an assistant professor of management at the George Mason University School of Business. Her research interests include negotiation, trust, and ethics. Previously, Hart was a postdoctoral researcher at the University of Pennsylvania, and a data scientist at Uber; she holds a PhD from the Hebrew University of Jerusalem. Her work has been published in Organizational Behavior and Human Decision Processes, Psychological Science, and others, and reported in media outlets such as The New York Times, the Wall Street Journal, and Freakonomics.
When “Winning” a Negotiation Can Make You Worse Off
Much of the advice about how to negotiate focuses on the terms of the negotiated deal. You might think, then, that more—and more aggressive—negotiations would always lead to better outcomes.
By employing aggressive tactics, you might obtain great deal terms—but you may also ultimately harm your relationship with your negotiation counterpart in ways that makes you worse off.
In many negotiations—particularly involving services and employment—the total economic value we get includes both the deal (e.g., the salary amount) and post-negotiation behavior (e.g., how hard the employee works after receiving that salary—which depends on the relationship). For example, if you hire a babysitter, you care about their hourly wage—but you care even more about how well they treat your children. This value is created after the negotiated deal.
How should you approach a negotiation? Ask yourself: “After this negotiation, how important is it that the counterpart has high morale?” If the other person’s morale is irrelevant to you, aggressive or competitive tactics may work just fine. But if you care about the other person’s morale after the negotiation (think babysitter), collaborative tactics may get you the best outcome—even if you give up some profit at the bargaining table.
Read More:
Relevant publications:
[Science Direct] – When we should care more about relationships than favorable deal terms in negotiation: The economic relevance of relational outcomes
[Science Direct] – Getting to less: When negotiating harms post-agreement performance
