Negotiation is a Relationship not a Transaction

Mar 28, 2022 1 Min Read
speech bubble formed by paper to represent communication in negotiation
Source:Image by Volodymyr Hryshchenko on Unsplash
Negotiation is an Art

Respect and empathy for the person sitting on the other side of the table is key if a negotiation is to be a success.

The world is becoming increasingly polarized as the disruption wrought by the financial crisis and the pandemic pushes people into opposing camps. Yet if we are going to solve our most pressing problems – the climate emergency, gaping inequality and social unrest – we are going to have to learn to listen to the other side. Negotiating tactics provide us with a toolkit to start a constructive dialogue and resolve conflict – whether you may be dealing with a customer complaint, a tricky supplier, or a hostile takeover bid. 

Read More: Is Narcissistic Leadership Killing Your Culture of Collaboration?

The first step is to view negotiation as a relationship not a transaction. Many organizational and political leaders don’t take the time to build a relationship first, instead moving to the bargaining phase too soon. This is a mistake. By respecting the other party’s motivations and opinions and showing empathy, you have a good foundation for dialogue. What made Mikhail Gorbachev, the former president of the Soviet Union, and former US President Ronald Reagan successful, was their ability to build a bond, respect each other and find the common goal for the concessions for nuclear disarmament.

This applies to the corporate world, too. One reason for the success of the 2006 merger of The Walt Disney Company and the computer animation studio Pixar was the tone set in early negotiations. Despite being the stronger party, Disney’s people listened to their counterparts at Pixar, accepting its employment conditions, which helped retain talent, while Disney CEO Bob Iger also reportedly asked Pixar employees how to improve Disney. Over the next decade, Pixar added significant value to Disney by helping improve computer-generated animations for the whole group.

It’s important to move away from a win-lose model of negotiation and seek a mutual gains approach. Be open and curious about what you can learn from the other side. By adopting a positive mindset and establishing trust, you can override the brain’s natural urge to search for negativity. A CEO at a big pharmaceutical company urged his staff to start viewing the Food and Drugs Administration as partners rather than the enemy, by acknowledging that the regulator might know more about their medicines than the company itself. Good disagreement often leads to better results by establishing a shared problem-solving relationship.


Haier Headquarters in Qingdao, China

Haier, the Chinese multinational home appliances group, has managed to innovate and take advantage of the Internet of Things by viewing its partners as idea-laden co-creators rather than just vendors. Central to this is Haier’s willingness to share the value created, rather than limit the fees paid to suppliers. The group purposefully grows the partnership for the benefit of all involved, rather than maximizing the profit gained by the most powerful partner, enabling Haier to build healthier ecosystems and in turn giving it a competitive advantage. 

Take time to listen to the pain points that are motivating your counterpart’s behavior and blocking any move towards concessions. Be willing to talk about the losses – past, present, and anticipated – that may be influencing how you and your counterpart respond. These can include betrayal, ostracization, humiliation and lack of respect. Former German Chancellor Angela Merkel, a rational scientist by training, famously called out Russian President Vladimir Putin after he intimidated her during negotiations in 2007. Aware that Merkel had been afraid of dogs since childhood, Putin allowed his black Labrador to enter the room. Later, Merkel revealed a deep insight of her counterpart’s character. “I understand why he has to do this – to prove he’s a man,” she told reporters. “He’s afraid of his own weakness. Russia has nothing, no successful politics or economy. All they have is this.”  

Once you have understood the pain points and responded with empathy and respect, you have the foundations for shared problem-solving.

Related: The Search for Leadership and Empathy in Times of Crisis


Steps to Successful Negotiation

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George Kohlrieser is a Professor of Leadership and Organizational Behavior at International Institute for Management Development (IMD), a former hostage negotiator, and author of the award-winning bestseller Hostage at the Table: How Leaders Can Overcome Conflict, Influence Others and Raise Performance. His other book is Care to Dare: Unleashing Astonishing Potential through Secure Base Leadership.

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