NewsTaking Negotiations from War-Zone to War-Room

September 13, 2015

The Philosophy of Bargaining



I have written extensively about negotiation over the past decade; for property and most commercial transactions, I generally recommend pre-negotiation, where possible.

There are people for whom negotiating is an innate ability, as natural as breathing, walking and communicating. But for others, this is simply not the case. People who struggle with the act of negotiating will try to follow the rules; they will research, they test the other party, they will try to interpret the responses and draw logical conclusions. And they will most likely fail. They will fail because they see the negotiation as an unpredictable, moving hurdle; unpredictable because it depends on the most undependable of subjects – human nature.

But what if I was to tell you that the secret to successful negotiation lies in the inevitable predictability of human nature? Understanding yourself and your needs clearly is the first step; the next step is to stop thinking of the other party to the negotiation as your opponent or your opposite. An opponent wants to take something from you, to win by depriving you of winning. In this way, a negotiation, although often likened to a game or a competition, is actually neither. In a competition, parties compete for the same prize. A negotiation is, in fact, the opposite to a competition. It is about two – or sometimes more – parties each looking to achieve the same end goal, albeit on differing terms. For example, when buyers and sellers negotiate on a property, they have a common goal; the buyer wants to buy the property and the seller wants to sell the same property. Similarly when negotiating divorce settlements, generally both parties want the divorce (if they do not, no amount if skilled negotiation will settle the situation) so the perceived hurdle is simply that, a perception. By shifting the mindset to understand that both parties are seeking to achieve the same goal, terms came be broken down to assess when genuine conflict arises.  

Over the course of a career in negotiating, I know from experience that parties come to the table expecting a fight, they build up in their minds what the other party’s objections might be, they prepare for battle. When both parties approach a negotiation in that mindset, huge energy goes into stripping back the layers of misplaced perceptions and reactions to those misperceptions to get the parties to an authentic starting point. Experienced negotiators will know to do this quickly and without assigning blame or enraging the party they represent against the other party. But this situation could be avoided altogether by each party understanding the basic philosophy of bargaining.

Sixteenth Century Philosopher, Adam Smith, held that man is an animal that makes bargains. This underrated Scotsman is probably the most important economist since Aristotle. He understood the human need to prioritise self-interest. He assumed that human nature is motivated in part by benevolence and, in part, by self-interest. But self-interest in the context of bargaining is the stronger trait found among humans. The simplest way to describe his philosophy is by the following bargaining statement: “The best way for you to get what you want is for you to give me what I want”. He understood that to strike a bargain, there need not be a winner and a loser. Simply put, understanding what the other party wants is the quickest route to getting what you want. It is about appealing not to the other party’s humanity, but rather to their self-interest. The very act of bargaining led to the evolution of humanity from self-sufficiency to trading, it facilitated the division of labour. People, acting in self-interest, require goods and services from others. Accordingly, the parties must agree to an exchange in a way that benefits both parties equally; equal but not the same, as detailed in his tome The Wealth of Nations. 

So, how does that help with negotiations today? It’s quite simple, take away all the negative, loaded meaning of the word ‘negotiation’, recognise the needs of the other party and distinguish their needs from your own. By doing so, it becomes easier to accommodate the other party without compromising your own position. As both parties will have different needs, and each will assign different priorities to those needs, but knowing and understanding the seller, the buyer can put forward proposals to directly address the self-interest of the seller, without damaging his own position as buyer. By viewing the negotiation not as an adversarial challenge, but rather as an issue that needs both party co-operation to resolve, the negotiation is elevated from war-zone to war-room.

Carol Tallon