Emotion and the Art of Negotiation

From The Harvard Business Review:

Summary.   

Negotiations can be fraught with emotion, but it’s only recently that researchers have examined how particular feelings influence what happens during deal making. Here the author shares some key findings and advice.

Anxiety leads to poor outcomes.

You will be less nervous about negotiating, however, if you repeatedly practice and rehearse. You can also avoid anxiety by asking an outside expert to represent you at the bargaining table.

Anger is a double-edged sword.

In some cases, it intimidates the other parties and helps you strike a better deal, but in other situations, particularly those involving long-term relationships, it damages trust and goodwill and makes an impasse more likely. To avoid or defuse anger, take a break to cool off, or try expressing sadness and a desire to compromise.

Disappointment can be channeled to reach a more satisfactory outcome.

Before disappointment becomes regret, ask plenty of questions to assure yourself that you’ve explored all options. And don’t close the deal too early; you might find ways to sweeten it if you keep talking.

Excitement isn’t always a good thing.

Getting excited too early can lead you to act rashly, and gloating about the final terms can alienate your counterparts. But if feelings of excitement, like other emotions, are well managed, everyone can feel like a winner.

. . . .

It is, without question, my favorite day of the semester—the day when I teach my MBA students a negotiation exercise called “Honoring the Contract.”

I assign students to partners, and each reads a different account of a (fictitious) troubled relationship between a supplier (a manufacturer of computer components) and a client (a search engine start-up). They learn that the two parties signed a detailed contract eight months earlier, but now they’re at odds over several of the terms (sales volume, pricing, product reliability, and energy efficiency specs). Each student assumes the role of either client or supplier and receives confidential information about company finances and politics. Then each pair is tasked with renegotiating—a process that could lead to an amended deal, termination of the contract, or expensive litigation.

What makes this simulation interesting, however, lies not in the details of the case but in the top-secret instructions given to one side of each pairing before the exercise begins: “Please start the negotiation with a display of anger. You must display anger for a minimum of 10 minutes at the beginning.” The instructions go on to give specific tips for showing anger: Interrupt the other party. Call her “unfair” or “unreasonable.” Blame her personally for the disagreement. Raise your voice.

Before the negotiations begin, I spread the pairs all over the building so that the students can’t see how others are behaving. Then, as the pairs negotiate, I walk around and observe. Although some students struggle, many are spectacularly good at feigning anger. They wag a finger in their partner’s face. They pace around. I’ve never seen the exercise result in a physical confrontation—but it has come close. Some of the negotiators who did not get the secret instructions react by trying to defuse the other person’s anger. But some react angrily themselves—and it’s amazing how quickly the emotional responses escalate. When I bring everyone back into the classroom after 30 minutes, there are always students still yelling at each other or shaking their heads in disbelief.

During the debriefing, we survey the pairs to see how angry they felt and how they fared in resolving the problem. Often, the more anger the parties showed, the more likely it was that the negotiation ended poorly—for example, in litigation or an impasse (no deal). Once I’ve clued the entire class in on the setup, discussion invariably makes its way to this key insight: Bringing anger to a negotiation is like throwing a bomb into the process, and it’s apt to have a profound effect on the outcome.

Until 20 years ago, few researchers paid much attention to the role of emotions in negotiating—how feelings can influence the way people overcome conflict, reach agreement, and create value when dealing with another party. Instead, negotiation scholars focused primarily on strategy and tactics—particularly the ways in which parties can identify and consider alternatives, use leverage, and execute the choreography of offers and counteroffers. Scientific understanding of negotiation also tended to home in on the transactional nature of working out a deal: how to get the most money or profit from the process. Even when experts started looking at psychological influences on negotiations, they focused on diffuse and nonspecific moods—such as whether negotiators felt generally positive or negative, and how that affected their behavior.

Bringing anger to a negotiation is like throwing a bomb into the process.

Over the past decade, however, researchers have begun examining how specific emotions—anger, sadness, disappointment, anxiety, envy, excitement, and regret—can affect the behavior of negotiators. They’ve studied the differences between what happens when people simply feel these emotions and what happens when they also express them to the other party through words or actions. In negotiations that are less transactional and involve parties in long-term relationships, understanding the role of emotions is even more important than it is in transactional deal making.

This new branch of research is proving extremely useful. We all have the ability to regulate how we experience emotions, and specific strategies can help us improve tremendously in that regard. We also have some control over the extent to which we express our feelings—and again, there are specific ways to cloak (or emphasize) an expression of emotion when doing so may be advantageous. For instance, research shows that feeling or looking anxious results in suboptimal negotiation outcomes. So individuals who are prone to anxiety when brokering a deal can take certain steps both to limit their nervousness and to make it less obvious to their negotiation opponent. The same is true for other emotions.

In the pages that follow, I discuss—and share coping strategies for—many of the emotions people typically feel over the course of a negotiation. Anxiety is most likely to crop up before the process begins or during its early stages. We’re prone to experience anger or excitement in the heat of the discussions. And we’re most likely to feel disappointment, sadness, or regret in the aftermath.

Avoiding Anxiety

Anxiety is a state of distress in reaction to threatening stimuli, particularly novel situations that have the potential for undesirable outcomes. In contrast to anger, which motivates people to escalate conflict (the “fight” part of the fight-or-flight response), anxiety trips the “flight” switch and makes people want to exit the scene.

Because patience and persistence are often desirable when negotiating, the urge to exit quickly is counterproductive. But the negative effects of feeling anxious while negotiating may go further. In my recent research, I wondered if anxious negotiators also develop low aspirations and expectations, which could lead them to make timid first offers—a behavior that directly predicts poor negotiating outcomes.

In work with Maurice Schweitzer in 2011, I explored how anxiety influences negotiations. First we surveyed 185 professionals about the emotions they expected to feel before negotiating with a stranger, negotiating to buy a car, and negotiating to increase their salary. When dealing with a stranger or asking for a higher salary, anxiety was the dominant emotional expectation; when negotiating for the car, anxiety was second only to excitement.

To understand how anxiety can affect negotiators, we then asked a separate group of 136 participants to negotiate a cell phone contract that required agreeing on a purchase price, a warranty period, and the length of the contract. We induced anxiety in half the participants by having them listen to continuous three-minute clips of the menacing theme music from the film Psycho, while the other half listened to pleasant music by Handel. (Researchers call this “incidental” emotional manipulation, and it’s quite powerful. Listening to the Psycho music is genuinely uncomfortable: People’s palms get sweaty, and some listeners become jumpy.)

Link to the rest at The Harvard Business Review

A long time ago, PG mentioned one of the best continuing legal education programs he ever attended featured a presentation on what was then called something like The Harvard Negotiating Studies Program. The program was a joint activity involving both the Law School and the Business School.

A lot of businesspeople and lawyers back then believed that negotiation skills were mostly a talent that someone either possessed or didn’t. Various negotiation strategies were thought to be optimum – Take it or Leave it – Always start with a higher price than you are willing to accept. Nobody should pay list price for anything.

There were a few business and law professors who had conducted studies and written papers and books about negotiation. PG remembers that a couple of professors at The University of Minnesota were writing about the subject.

The Harvard Program posited that negotiation skills could be learned. The first stage involved a series of experiments involving students and, in some cases, professors. Each participant played the role of a business executive negotiating the price and terms of an agreement with a third-party supplier of an important component needed by the business executive for her/his business.

Both the buyer and the seller were tasked with getting the best deal for their business—the seller wanted a higher price/better terms, and the buyer sought a lower price/better terms.

If the parties were not able to come to an agreement, the negotiation was regarded as a failure.

A large number of these negotiations were held and videotaped, using law and business students as negotiators. The videotapes were carefully analyzed and a variety of new ideas about effective negotiations and negotiation strategies were developed.

One of the main discoveries was that preparation in advance for a negotiation was very important for success. One of the preparation tasks involved determining the Best Alternative to a Negotiated Agreement – BATNA.

BATNA allowed a negotiator to avoid being trapped into a mindset that she/he absolutely had to get a deal from the negotiation. BATNA meant that there was always an alternative to coming to an agreement in this particular negotiation.

Between when PG first discovered negotiation science and now, it appears to PG that the Harvard Project has grown into a full-blown permanent organization involving both the Harvard Law School and the Business School.

Here’s how the Law School describes it:

The Harvard Negotiation Project seeks to improve the theory and practice of conflict resolution and negotiation using real-world conflict intervention, theory building, and education and training.

The Harvard Negotiation Project was created in 1979 and was one of the founding organizations of the Program on Negotiation consortium. The work of faculty, staff, and students associated with the Harvard Negotiation Project routinely moves back and forth between the worlds of theory and practice to develop ideas that practitioners find useful and scholars sound.

As the world’s first teaching and research center dedicated to negotiation, its founders are among the true pioneers in the field. As part of their commitment to helping other teachers, the Harvard Negotiation Project staff have developed a wealth of negotiation exercises, teaching notes, videotaped demonstrations, and interactive video and electronic lessons and made them available through the Program on Negotiation and Harvard Business School Publishing.

Along with the many classes and teaching materials, the Harvard Negotiation Project is famous for its development of “principled negotiation” as described in Roger Fisher, William Ury, and Bruce Patton’s groundbreaking work, Getting to YES: Negotiating Agreement Without Giving In.

Getting to YES has helped negotiators claim value and create value at the bargaining table ever since its first publication in 1981 and continues to do so today. Getting to YES has shown negotiators how to create value for mutual benefit and avoid acrimonious disputes at the bargaining table and, in doing so, has changed the negotiation landscape.

PG immediately started using these principles in negotiations he was involved with as a rural attorney. They worked very well and his clients benefitted.

PG apologizes for wandering deep into Yarn Country, but he was triggered by the OP.