Interest: the Measure of Negotiation
Interests: The Measure o f Negotiation D a v i d A. L a x arid J a m e s K. Sebenius People negotiate to further their interests.
And negotiation advisers urge attention to interests–often solemnly, as if the suggestion were original and surprising. Yet Socrates’ admonition to ” K n o w Thyself” surety scoops any late twentieth century advice of this sort. So, academic compulsiveness aside, w h y write an article o n interests or, more to the point, w h y read one?
The answer, in part, is that negotiators often focus o n interests, but conceive of them too narrowly. We will argue for a more expansive conception o f negotiator’s interests. Moreover, interests often conflict, and simply listing them without understanding the tradeoffs among them is a bit like writing out a recipe without including the proportions. In addition to determining interests, negotiators need ways to assess the relative importance o f those various interests.
We will try to clarify the logic of assessing tradeoffs. As hard as it may be to sort out one’s o w n interests, understanding h o w others see theirs–their subjective scheme of values as perceived through their peculiar psychological filters–can be extraordinarily difficult. Obviously, suggesting a stretch “in the other person’s shoes” is g o o d advice; equally obviously, it is only a starting point. In this article we will try to go further. An Expansive Conception o f a Negotiator’s Interests
In evaluating the interests at stake, a typical negotiator might focus on commodities that can be bought and sold or on concrete terms that can be written into a contract or treaty. And, negotiators definitely have such interests: the crippled plaintiff desperately wants compensation; a sales manager cares intensely about prices, profit margins, return on investment, and personal compensation; managers may derive value from seeing their particular product sweep the market or furthering some vision of the public interest.
T h r o u g h o u t this article, we assume that negotiators want to do welt for themselves. Of course, “doing well” is only measured with respect to the things they care about, whether out of direct self-interest or concern for the welfare of others. Thus, doing ” b e t t e r ” in a negotiation need not imply pressing for more m o n e y or a bigger share; rather, it means advancing the totality o f one’s interests, which may include m o n e y and other tangibles as well as D a v i d A. L a x is Assistant Professor at the Harvard Business School, 301 Morgan Hall, Boston, Mass. 2163, and is the author of “Optimal Search in Negotiation Analysis” (/ournal o f Conflict Resolution, fall 1985). J a m e s K. S e b e n i u s , o n leave as Associate Professor at the K e n n e d y School o f G o v e r n m e n t at Harvard, is associated with Peterson Jacobs, a m e r c h a n t bank in N e w York, a n d is the author o f Negotiating the Law o f lhe Sea: Les~ons in the Art a n d Science o f Reaching Agreement (Cambridge, Mass. : Harvard University Press, 1984). Lax a n d Sebenius are the coauthors o f the forthcoming booR, The Manger as Negotiator (New York: T h e Free Press). 748-4526/86/0100-0073505,00/0© 1986PlenumPublishingCorporation Negotiation Journal January 1986 73 fairness, the well-being of one’s counterparts, and the collegiality of the process. For instance, furthering Robert’s interests m a y m e a n taking less m o n e y to obtain a fair settlement by a friendly process; b y the same token, Helen m a y want only to publicly humiliate her counterpart and extract from him the very biggest check. It is especially c o m m o n in business negotiations, however, to assume that interests extend only to the b o t t o m line.
Yet imagine holding rigidly to this assumption w h e n negotiating with the n u m b e r two executive of a technical products c o m p a n y from the u p p e r half of the Fortune 500. He echoed his firm’s philosophy w h e n he stated: Our most important goal is to do a good job. We don’t have a specific growth target, but what we want to do is make a contribution. Not just a “me too” thing, but to develop technically superior products. Another goal is to earn our way, to grow from our own resources. A third goal is to make this an interesting and satisfactory place to work. The fourth goal … there must be a fourth goal.
I mentioned it also in a speech at [a nearby university]. Oh yes, the fourth goal is to make a profit. (Donaldson and Lorsch, 1984, p. 85) Negotiators’ interests can go b e y o n d the obvious and tangible. Take for example the almost universal quest for social approval or the simple pleasure one derives from being treated with respect, even in a one-time encounter. A stockbroker m a y want to build a relationship with a customer because of the future business it m a y bring; or a plaintiff, anxious at the thought of a trial, m a y be willing to take a reduced settlement to avoid c o u r t r o o m trauma.
Negotiators have g o o d reasons to be c o n c e r n e d with their reputations. A person w h o is widely k n o w n never to recede from a position m a y rarely be called on for concessions. Fisher and Ury (1981) argue that a negotiator should seek to be k n o w n for reaching agreements only b y means of “objective” principles; once achieved, a m o n g other effects, such a “principled” reputation m a y reduce the need to haggle. Beyond concerns about reputation, relationship, and process, negotiators often care about subtle aspects of precedent.
For example, L u t h e r – – a p r o d u c t manager in a fast-growing medical devices f i r m – – c o n f r o n t e d his colleague Francoise for the second time with a vigorous d e m a n d for priority use of the firm’s advertising d e p a r t m e n t – – e v e n though Francoise had informally ” r e s e r v e d ” this block of the ad department’s time for her people. After analyzing her interests in this u n e x p e c t e d negotiation, Francoise balked at a few seemingly reasonable settlements that Luther suggested. Why?
Francoise sought to avoid two undesirable precedents: first, in the substance of the issue (her division needed to count absolutely on future ad department reservations); and second, in the procedure set for raising a whole range of similar matters (she wanted to bolster the use of established policies). Concern with b o t h types of precedent abounds in organizations and elsewhere. Strategic interests are often at stake for managers. By this, we refer to the alignment of a particular decision with the manager’s long-term personal or institutional strategy.
Suppose that a p r o m p t investment in the capacity to manage mutual funds appears likely to have high short-term potential for a firm w h o s e long-term plan has b e e n to develop expertise in real estate invest- ‘)’4 Lax and Sebe*lius The Measure of Negotiation merits. Would a k e y manager’s proposal n o w to devote substantial energy to mutual funds research and investment be wise? Recourse to strategic rather than short-term financial analysis may unravel the firm’s best interests in this case. Through actions in one negotiation, a manager may have an interest in reducing the cost of later encounters and in affecting their outcomes.
A manager m a y thus strive to create in subordinates the impression that explicit bargaining is impossible and that c o m m a n d s must be obeyed. Perhaps the backand-forth process has b e c o m e too costly and inefficient for the task at hand. In such cases, paradoxically, a prime managerial interest in routine dealings may actually be to drive out future overt bargaining. It is exceedingly ironic that a powerful interest to be achieved through a determined pattern of negotiation may be to establish an impregnable image o f rigid hierarchy, potent command, and iron c o n t r o l – – t h a t brooks no conscious negotiation.
Especially in early encounters, say, between a freshly hired vice president and others in the firm, the n e w officer may regard the establishment of a favorable pattern of others automatic deference to “suggestions” as of central interest. Or the n e w officer m a y strongly weigh the effects on his or her perceived track record or esteem as an expert so that others m a y be more likely to s h o w deference in the future.
Comparing obvious, ” b o t t o m line” interests with “others”–reputation, precedent, relationships and the like–a very detailed study of corporate resource allocation in a muttidivisionat chemical c o m p a n y noted: These are the dimensions a manager takes into account when he makes his decisions. In some instances they far outweigh the importance of the substantive issues in his assessment of decision-making priorities. It is worth pausing to emphasize this point. There is a very strong tendency in financial or decision-making treatments of capital budgeting to regard the personal status of managers as noise, % source of bias. . ~. Theoreticians do not consider the problem a rational manager faces as he considers committing himself to a project over time. He has made other commitments in the past, other projects are competing for funds and engineering at the division level, and other managers are competing for the jobs he seers. At the same time those same managers are his peers and friends. Whatever he does, he is rkore than likely going to have to live with those same men for a decade or more. While only some proiects are technicalIy or economicaliy independent, all are organizationally interdependent. (Bower, 1972, p. 02) It is not always easy to k n o w h o w to evaluate interests; sometimes they may derive from interactions too complex to understand directly. In such cases, carefully chosen proxy interests” may help. For example, the President of the United States cannot possibly predict the effects o f any particular negotiated o u t c o m e o n all of his substantive interests over the course of his term or beyond. Taking account of this, Richard Neustadt, in his classic bargaining manual, Presidential Power (1980), counsels him to evaluate his dealings in terms of three particular interests.
The first is obvious: his interest in the substance of the immediate issue. Second, however, the President’s professional reputation can heavily affect the reactions of important Washingtonians to his later concerns and actions. The President needs the resources and cooperation of these WashingNegotiation Journal January 1986 75 I I Illl I I II II II II tonians to carry out his programs. Thus, b e y o n d the substance of the issue, Neustadt suggests, the effect of the current negotiation o n the
President’s professional reputation a m o n g Washingtonians should be a p r o x y interest reflecting, in part, his ability to get the Washingtonians to act in accord with his subsequent desires. Third, Neustadt argues that the President should evaluate the effect of his actions o n his poputar prestige. High prestige reflects the strength o f his mandate and influences Washingtonians. It is, in part, a p r o x y interest; actions that enhance his public prestige i m p r o v e his chances favorably to influence subsequent o u t c o m e s of direct concern, A President m a y also value popular prestige for its o w n sake.
As negotiator, the President m a y well have to trade these interests off against each other; for example, he m a y yield s o m e w h a t on his substantive interest in the immediate issue to enhance his reputation and prestige elsewhere. In m a n y positions less c o m p i e x than that of the President, negotiators’ interests are difficult to enumerate because the link b e t w e e n actions and eventual o u t c o m e s is hazy. In such cases, a negotiator m a y benefit b y finding simplified p r o x y interests that predict outcomes either directly or indirectly, by predicting the negotiator’s subsequent influence on outcomes of concern.
In short, interests include anything that the negotiator cares about, any concerns that are e v o k e d b y the issues discussed. Clarifying interests, however, can sometimes be difficult. We have often found that two distinctions can help. Two Helpful Distinctions Interests, Issues and Positions Negotiators seek to reach agreement on specific positions on a specific set of issues. For example, a potential e m p l o y e e m a y initially d e m a n d $36,000 (the position) for salary (the issue).
The job seeker’s underlying interests m a y be in financial security, enhanced lifestyle, organizational status, and advanced career prospects. Or, the desire of a Midwestern utility c o m p a n y to build a d a m m a y collide with farmers’ needs for water and environmentalists’ concern for the d o w n s t r e a m habitat of endangered w h o o p i n g cranes. Increased e c o n o m i c return, irrigated crops, and preserved species are the relevant interests; they conflict o v e r the issue of the d a m ‘ s construction, positions on which are p r o and con.
Negotiators often assume that issues directly express underlying interests. O f course, m a n y different sets o f issues m a y reflect the same interests: a country might seek to serve its interest in mineral d e v e l o p m e n t through negotiations o v e r issues as varied as simple royalty concessions, joint ventures, or service contracts. Conceivably, the country’s interest could be equally satisfied b y different terms on each of these alternative issues. The issue at hand, however, m a y be only a p r o x y for imperfectly related interests.
For example, the United States in the Paris Peace talks m a y have insisted on a r o u n d table and the North Vietnamese a rectangular one. The relevant compromise w o u l d hardly have b e e n oval. The real interests were far from the rectangular versus r o u n d issue. Many negotiators retard creativity by failing to distinguish the issues under discussion from their underlying interests. W h e n the issues under discussion poorly match the interests at stake, modifications of the issues some76 Lax” and Sebenius The Measure o f Nc%q~otiat/on times enable all parties to satisfy their interests better.
For example, recall the conflict between the Midwestern utility company, the farmers, and the environmentalists. After several years of costly and embittering litigation, the parties came to a resoIutiOn by a shift to issues that matched their underlying interests in a more fruitful manner. By moving from positions (“yes” and ” n o ” ) o n the issue o f the dam’s construction to discussions about the nature o f downstream water guarantees, the amount o f a trust fund to protect the w h o o p i n g crane habitat, and the size o f the dam, the parties reached an agreement that left all of them better off.
Negotiators w h o mistakenly see their interests as perfectly aligned with their positions on issues may be less likely to shift issues creatively. T h e y might even suspiciously oppose proposals to modify the issues. Indeed, in attempting to protect their perceived interests, such negotiators may dig their heels in hard to avoid budging from their desired positions. In the ” d a m versus no dam” conflict, positions could have hardened to a point where the grim determinaton of each side to prevail over the o t h e r – – w h a t e v e r the cost – – w o u l d have ruled out any real search for preferable options.
At a minimum, such rigid dealings can be frustrating and time-consuming: impasses or p o o r agreements often result. The prevalence o f hard-fought, time-consuming, unimaginative “positional” negotiations led Fisher and Ury (1981, p. 11) to propose a general rule: “Focus on interests, not positions. ” While we think that negotiators should always keep the distinction clearly in mind, focusing exclusively on interests may not always be wise. When parties have deep and conflicting ideological differences, for example, satisfactory agreements o n “smaller” issues may only be possible if ideological concerns do not arise.
In such cases, the negotiations should focus on the issues or on a much narrower set of interests-not the full set of underlying interests. Two hostile but neighboring countries embroiled in tribal, religious, or ideological conflict may be best off handling a sewage problem o n their c o m m o n border by only dealing with this m o r e limited issue. Or leftist guerilla leaders, each with an underlying interest in ruling the country, might unite on the issue of overthrowing the rightist dictator; an agreement that attempted to reconcile their underlying interests would likely be more difficult to achieve.
Moreover, a negotiator may choose to *bcus on an issue that, for legal or other reasons, provides greater leverage than do discussions o f underlying interests. The nature-loving group that has an abiding interest in preventing development may develop a sudden attachmerit to the issue of wetlands protection if the Wetlands Preservation Act provides the strongest grounds for negotiating with and deterring developers. At times, a tenacious focus on positions may yield desirable resutts.
With a group of landowners, the CEO of a major mining company had negotiated the general outlines o f a contract along with a few critical particulars. Then the CEO turned the rest of the negotiations over to a c o m p a n y lawyer to finish in short o r d e r – – b e f o r e a hard-to-obtain environmental permit expired. One provision that the second group of negotiators inherited had not been extensively debated before. Yet, its tentative resolution, while barely acceptable to the landowners, clearly would confer great benefits o n the company.
T h o u g h the landowners’ representatives sought to focus o n “interests” and “fairness” in order to undo the provision, the company’s lawyer made a Negotiationjournal Jatluary 1980 77 I II I I’ powerful c o m m i t m e n t to it and turned a completely deaf ear to all argument, urging instead that they get o n with ” u n r e s o l v e d ” matters. T h o u g h this tactic risked negative repercussions on the other issues, the lawyer’s firm c o m m i t m e n t to a position was an effective means of claiming value in this instance.
Thus interests should be distinguished from issues and positions. 1 Focusing on interests can help o n e develop a better understanding of mutual problems and invent creative solutions. But such a focus m a y not always be desirable when, for example, underlying interests are diametrically o p p o s e d or w h e n a focus on particular issues or positions provides leverage. Whatever the focus, however, interests measure the value of any position or agreement.
Intrinsic and Instrumental Interests It should be clear that negotiators m a y have m a n y kinds of interests: m o n e y and financial security, a particular conception of the public interest, the quality of products, enhancing a reputation as a skilled bargainer, maintaining a working relationship, precedents, and so on. However, one distinction-b e t w e e n intrinsic and instrumental interests–can provide an economical w a y to capture s o m e important qualities of interests, call negotiators’ attention to often-overlooked, sometimes subtle interests, and lead to i m p r o v e d agreements.
O n e ‘ s interest in an issue is instrumental if favorable terms on the issue are valued because of their effect on subsequent dealings. O n e ‘ s interest in an issue is intrinsic if one values favorable terms of settlement on the issue indep e n d e n t of any subsequent dealings. Thus, a divorcing parent’s interest in gaining custody of his or her child, the farmer’s interest in water rights, or a c o u n t r y ‘ s interest in secure borders can usefully be thought of as intrinsic interests. Such interests n e e d not have any obvious or agreed-upon e c o n o m i c value.
For example, Charles, a 60-year-old venture capitalist, was negotiating the dissolution of a strikingly successful technology partnership with Marie, a young, s o m e w h a t standoffish w o m a n w h o m he had brought on as a partner two years before. At first Charles bargained very hard over the financial terms because he v i e w e d them as indicating w h o had really contributed important ideas and skills to the venture’s success. W h e n Marie belatedly a c k n o w l e d g e d her genuine respect for his ideas and contributions, Charles b e c a m e m u c h less d e m a n d i n g on the financial issues.
In this instance, it h a p p e n e d that the venture capitalist also had a strong intrinsic interest in psychic gratification f r o m a c k n o w l e d g e m e n t of his role as m e n t o r and father-figure. Most issues affect b o t h intrinsic and instrumental interests. Dealings with a subordinate w h o wants to hire an assistant can arouse an intrinsic interest in the overall size of the budget as well as a concern with the perceived precedent the hiring will set in the eyes of the subordinate’s p e e r s – – a n instrumental interest.
Recognizing the distinction m a y lead to i m p r o v e d agreements; the subordinate w h o can create a justifiable device to prevent decisions about his or her staff support f r o m setting precedents m a y well receive authorization to hire a n e w assistant. One of the main reasons w e focus on the intrinsic-instrumental distinction is for the light it sheds on three often-misunderstood aspects of negotiation: interests in the process, in relationships, and in principles. “Process” Interests–Intrinsic a n d Instrumental. Analysts often assume ~ Lax and Sebenius The Measure o f Negotiation that negotiators evaluate agreements b y measuring the value obtained from the outcome. Yet, negotiators may care about the process of bargaining as wetL EVen with no prospect of further interaction, some would prefer a negotiated o u t c o m e reached b y pleasant, cooperative discussion to the same outc o m e reached by abusive, threat-. filled dealings. Others might even derive value from a strident process that gives them the satisfied feeling o f having extracted something from their opponents.
Either way, negotiators can have intrinsic interests in the character of the negotiation process itself. Beyond such intrinsic valuation, an unpleasant process can dramatically affect future dealings; the supplier w h o is berated and threatened may be unresponsive w h e n cooperation at a later point would help. Indeed, negotiators often have strong instrumental interests in building trust and confidence early in the negotiation process in order to facilitate jointly beneficial agreements. “Relationship” Interests–Intrinsic and Instrumental.
Negotiators often stress the value of their relationships; this interest sometimes achieves an almost transcendent status. For example, Fisher and Ury (1981, p. 20) say that ” e v e r y negotiator has two kinds of interests: in the substance and in the relationship. ” Many negotiators derive intrinsic value from developing or furthering a pIeasant relationship. Moreover, w h e n repeated dealings are likely, most negotiators perceive the instrumental value o f developing an effective working relationship.
After studying hundreds of managers in m a n y settings, John Kotter (1985, p. 40) sensibly concluded: Good working reiationships based on some combination of respect, admiration, perceived need, obligation, and friendship are a critical source of power in helping to get things done. Without these relationships, even the best possible idea could be rejected or resisted in an environment where diversity breeds suspicion and interdependence precludes giving orders to most of the relevant players.
Furthermore, since these relationships serve as important information channels, without them one may never be able to establish the information one needs to operate effectively. Of course, in the dissolution of a partnership or the divorce of a childless couple with few assets, the parties may find no instrumental value in furthering their relationship; that is, the parties would not be wiIling to trade substantive gains on, say, financial terms, to enhance their future dealings. In fact, a bitter divorcing couple may actually prefer a financial o u t c o m e that requires bsolutely no future contact over another that is better for both in tax terms but requires them to deal with each other in the future. Similarly, a division head with two valuable but constantly warring employees may have a keen interest in separating them organizationally to prevent any active relationship between them. And, w h e n dealing with an obnoxious salesperson w h o has c o m e to the d o o r or by the office, one’s interest in the “relationship” may mainly be to terminate it.
Interest in “Principles”–Intrinsic and Instrumental. Negotiators may discover shared norms or principles relevant to their bargaining problem. Such norms may include equal division, more complex distributive judgments, historical or ethical rationales, objective or accepted standards, as well as notions that simply seem fair or are represented as such. (Gulliver, 1979; Fisher and Ury, 1981). Acting in accord with such a norm or principle may be Negotiation Journal January 1986 79 I II II f intrinsic interest to one or more of the parties; for example, a settlement of $532–arrived at in accord with the mutually acknowledged principle that each party should be paid in proportion to time w o r k e d – – m a y be valued quite differently than the same dollar figure reached b y haggling. Of course, an acknowledged norm need not be an absolute value in a negotiation: it may be partly or fully traded off against other interests. Even w h e n n o n e of the parties derive intrinsic value from acting in accord with a particular principle, it may still guide agreement.
Principles and simple notions often serve as naturally prominent focal points for choosing one settlement within the range o f possible outcomes (Schelling, 1960). For example, equal division of a windfall may- seem so irresistibly natural to the partners in a small firm that they would scarcely consider negotiation over w h o should get more. The principles that guide agreement in the first of many related disputes may set a powerful precedent. Thus, negotiators may work hard to settle the first dispute on the basis of principles that they believe will yield favorable outcomes in subsequent disputes.
They may take a loss with respect to intrinsic interests in the first negotiation in order to satisfy their instrumental interests in the principles used to guide the agreement. In short, with many less tangible interests–such as process, relationships, or fairness–a negotiator should ask w h y they are valued. Distinguishing between their instrumental and intrinsic components can help. But even with these components sorted out, h o w can a negotiator go about assessing their “relative importance? ” More generally, what logic guides setting priorities among conflicting interests? Thinking About Tradeoffs
Listing one’s o w n interests as welt as a best guess at those of other parties is certainly useful. But difficult questions tend to arise in negotiations that force one to make sacrifices on some interests in order to gain on others: H o w much o f a trade is desirable? In buying a seller-financed house, h o w should Ralph evaluate higher purchase prices compared to lower mortgage interest rates? H o w m u c h more should a manufacturer be willing to pay for the next quality grade o f components? H o w m u c h should a sales manager trade on price for the prospects o f a better relationship?
H o w m u c h should a manager be willing to give up on substance to secure a favorable precedent? Thinking about tradeoffs is often excruciatingly difficult and badly done. Yet, whether or not negotiators choose to p o n d e r priorities, they effectively make tradeoffs by their choices and agreements in negotiation. Because we believe that negotiators benefit by be/a~g self-conscious and reflective about their interests and the tradeoffs they are willing to make, we propose several methods to illuminate tradeoffs. These methods draw primarily o n judgment about interests, not about negotiating.
The methods we consider help to convert developed substantive iudgments into forms useful for analysis and practice (e. g. , Raiffa, 1982; Keeney and Ralffa, 1976; Barclay and Peterson, 1976; or Greenhalgh and Nesiin, 1981). Finally, although these techniques have formal origins rooted in management science and technical economics, we find that their prime Value comes in their contribution to clear thinking rather than from their potential for quantification. While negotiators may often choose not to quantify their tradeoffs, they may benefit greatly by em8G Lax and Sebenil4s
The MeasL. ~re c~j Negotiation ploying the same style o f thought in comparing interests. Certain tradeoffs are easy to specify. The present value or total cost Of a loan is a well-known mathematical function o f the amount and duration o f the loan and the interest rate. Thus, beginning with a given price and interest rate for the seller-financed home, Ralph can calculate precisely the benefit of a one percent decrease in interest rate and h o w m u c h of a price increase he would be wilIing to accept before he became indifferent to the original price and interest rate.
Yet other tradeoffs may seem m u c h harder to think about, especialIy ones that involve “intangibles” like principles, anxiety about a process, or the relationship. Assembling Tradeoffs Among Seemingly Intangible Interests. Seemingly intangible trade0ffs can also be dealt with in analogous ways. For instance, consider Joan, a plaintiff crippled in a car accident w h o wishes to negotiate an out-of-court settlement with an insurance c o m p a n y that is better than her alternative o f a full court trial.
Suppose that, only taMng trial uncertainties and legal fees into account, Joan would be willing to accept a settlement o f $300,000. But this analysis leaves her uncomfortable. The trial would cause her great anxiety, and her analysis so far does not take this anxiety into account. H o w should she consider the anxiety factor in her preparation for negotiation? Perhaps she should lower her minimum requirements, but by h o w much? H o w can she even think about this? After several anxious, inconclusive struggles with this assessment, a friend asks Joan to imagine the anxiety she would feet during a trial.
The friend then asks her to imagine that a pharmacist offered to sell her a magic potion that would completely eliminate the feeling of anxiety from court proceedings. What would be the most she would pay for the potion before the trial? Would she pay $107 “That’s silly. Of course. ” Would she pay $1007 “Sure. ” $100,0007 “Certainly not, that’s one-third o f m y minimum settlement! ” What about $50,000? “Probably not. ” $1,0007 “I think so. ” $10,000? “Well, that’s a tough one. But, if push came to shove, the trial would be an awful experience. So probably yes. ” $25,000? Maybe not, but I’m not s u r e . ” . . . And so on. We want to stress our opinion that the important point in making such assessments is not quantitative precision. An absolutely precise cutoff would seem artificial. What is important is to get a sense of the order of magnitude of the value Joan places o n avoiding anxiety. Here we see that she would pay between $10,000 and $25,000 or a little more to eliminate the anxiety. Thus, she should be willing to reduce her minimum settlement requirements by that amount because a negotiated settlement would avoid the anxiety.
She should, of course, strive for more, but she can feel more comfortable knowing that her minimum requirements n o w roughly reflect her interest in avoiding trial anxiety. Similarly, Mr. Acton, the insurance c o m p a n y executive, may feel that going to trial against a plaintiff w h o evokes such sympathy witI harm his firm’s reputation. H o w should he value this reputation damage and h o w should it affect his approach to the negotiation? As described in this thumbnail sketch, in comparing the court alternative to possible negotiated agreements, the executive sees two interests at stake: m o n e y and reputation.
Acton could try to value the reputation damage directly by estimating the n u m b e r o f present and future customers he would lose and the financial loss this would Negotiation Journal January 1986 81 [ II I create. If he finds such direct assessment difficult, he could attempt, like the plaintiff, to place a monetary value o n the “intangible” interest. What is the most he would be willing to pay a public relations firm to completely undo the reputation damage? If the most he would be willing to pay is $20,000, Acton could modify his maximum acceptable settlement and take this into account w h e n negotiating with the plaintiff.
In some instances, concerns with precedent, prestige, anxiety, reputation, and similar interests loom large; negotiators focus o n them and, because such interests are difficult to weigh, feel paralyzed with respect to their choices as a negotiator. After fretting inconclusively, the negotiators may ask themselves h o w m u c h they would be willing to pay to have the prestige conferred u p o n them b y other means. They might discover that they value the prestige possibilities little relative to possible substantive gains.
Or, by similar analytical introspection, they might discover that they would be willing to pay only a small sum to avoid an undesirable precedent. In such cases, the negotiators would have learned a great deal. First, the intangible interest is a second or third order concern rather than a first order one as they originally feared; they can n o w feel freer to make concessions on the less important interest if necessary. Second, unless the choice between packages becomes close, they may need to pay little attention to this interest.
In short, much of the purpose of such assessments is more to discover the relative importance of different interests rather than to be painstakingly precise about monetary or other valuations. In other instances, interests in precedent or reputation overwhelm the possible improvements in substantive outcome. Suppose that Jeff, a lawyer working o n a highly publicized class action suit against a corporation, has an interest in his financial compensation and in the reputation he might develop by exceeding expectations for h o w favorable a settlement he can get for his clients.
Even if Jeff finds the range o f possible financial compensation paltry, he may see that his interest in enhancing his reputation and political ambitions is extremely well-served by every increment he can obtain in the settlement. Thus, he may bargain tenaciously on his client’s behalf. In this case, the n o n m o n e t a r y interest was the first order concern. In other instances, simple self-assessment may suggest that the monetary and n o n m o n e t a r y issues are roughly comparable concerns or that the monetary aspects predominate.
A More General Approach for Assessing Tradeoffs. The judgment that one “cares more about quality than price” cannot be made independently o f the range of possible values o f quality and price. That is, in the abstract, a manufacturer may say that it cares more about quality than about price. How-ever, while the total increment in technologically feasible quality may be small, the price differential necessary to achieve it may be undesirably high. Relative to the feasible range of qualities, the manufacturer actually places greater weight on price.
Similarly, the management negotiator w h o professes to care more about obtaining productivity-enhancing changes in work rules than about wages must analyze the ranges of work rules and wages that are possible outcomes from this negotiation. Wages might range from a minimum of $10 an hour to a maximum of $13 an h o u r – – a n d this increment would have a significant impact on the competitiveness of the negotiator’s firm. Yet if the increment from the worst to best possible work rules was small and would only marginally affect the firm’s competitiveness, the negotiator should give g2 Lax aT~d Sebe~ius The Measure of Negotiatio*~ reater weight or importance to wages. The tradeoff rate should result from comparing the valuation of the wage increment b e t w e e n $10 and $13 with the valuation of the benefit of m o v i n g from the worst to best w o r k r u l e s – – n o t on the judgment that the negotiator “cares m o r e ” about one or the other issue in genera1. This leads to a straightforward m e t h o d for such assessments. Like the preceding examples, the p u r p o s e of this m e t h o d is to help organize o n e ‘ s subjective judgments to get a clearer sense of the relative importance of various interests.
Again, we are c o n c e r n e d with orders of magnitude rather than precise quantification. To illustrate the central elements of this approach, w e shall w o r k through the thought process in a highly stylized, simplified example and then discuss the m o r e general lessons for thinking about tradeoffs. Assessing Lisa’s Interests Consider Lisa, a 34-year-old second level manager w h o has b e e n offered a position in another division of her firm as the supervisor of a soon-to-be created department.
She must s o o n negotiate with William, a long-time engineer w h o m o v e d into senior m a n a g e m e n t ranks seven years ago and has cautiously but steadily i m p r o v e d his division’s results. Lisa has n a r r o w e d the issues she will have to negotiate to three: the salary, vacation time, and the n u m b e r of staff for the n e w department. We will ask her to analyze her interests and then draw on her subjective judgment to assign 100 points to the issues in a w a y that reflects their relative importance to her.
To begin, she should assess the range of possibilities for each issue. Based o n a variety of discussions with Wil! iam, with others in the firm, and on the results of numerous feelers, Lisa has concluded that the salary could plausibly run from $32,000 to $40,000, the vacation from t w o to four weeks, and the staff size from 10 to 20. Suppose that her current job pays her $32,000, gives her four weeks of vacation, and assigns her a staff of 10 (See Table 1). TABLE 1 LtSA’S NEGOTiATiON: iSSUES AND RANGES Issues Range Salary Vacation $32-40,000 2-4 weeks
Staff 10-20 people Lisa should start by imagining the least appealing scenario: $32,000, two weeks o f vacation, and a staff of I0. Her next task is to assess her relative preferences on each issue. To do this, she must decide which one of the three incremental i m p r o v e m e n t s she values most. That is, w o u l d she feel best with (a) $40,000 salary but only t w o weeks vacation and 10 subordinates; (b) four weeks vacation but only $32,000 salary and 10 subordinates; or (c) 20 subordinates but only $32,000 salary and t w o weeks of vacation?
In making this evaluation, she examines her interests in m o n e y and the effects of a higher satary on her satisfaction, as well as the peace of m i n d and pleasure f r o m Negotiation Journal January 1986 83 I I IIII I I I I I II longer vacations. O*) further reflection, Lisa realizes that she must also consider her ability to do her job effectively and thus to improve her subsequent career prospects. A bigger staff could help her effectiveness directly; enhanced organizational status from a big staff and high salary may independently holster her job prospects as well as add to her effectiveness.
Suppose that after contemplating her interests in this way, Lisa decides that she prefers the salary increment to the other two increments, and, of the other two, she prefers the staff increment to the vacation possibilities. Now comes a harder part. She must allocate 100 points–importance weights–among the three increments in a way that reflects her underlying subjective feelings. Would she prefer the package with the largest salary increment but minimum vacation and staff to the package with the lowest salary but maximum staff and vacation?
If so, she should allocate more than 50 points to the salary increment. If she is indifferent between the two packages, she should allocate exactly 50 points to the salary increment. Lisa decides that she slightly prefers the salary increment and assigns an importance weight of 60 points to the salary increment. Now, she can either assign importance weights to the staff and vacation increments or she can think about the relative value she places on each of the possible salaries. She begins with the latter and again compares ranges.
H o w does she compare the salary increment from $32,000 to $35,000 with the increment between $35,000 and $40,000? The first increment would improve her housing and thus enhance her life in direct and important ways; the second increment although larger, would go toward luxuries and saving. She thus feels indifferent between the first, smaller increment and the second, larger increment. In other words, she gives 30 of the 60 importance points to the increment between $32,000 and $35,000 and 30 to the remaining increment.
Table 2 presents importance scores that reflect Lisa’s preferences for salary; Figure 1 show’s a plot o f them. Interpreting this assessment, Lisa would get 0 points if she receives a salary of $32,000, 30 points if she manages to receive $35,000, 60 points if she is able to get a salary of $40,000. She must n o w assign points reflecting her comparative valuations of the vacation and staff increments. Naturally, making an assessment like this can feel like comparing apples and oranges–but Lisa will end up doing it either explicitly or implicitly. TABLE 2 LISA’S ASSESSMENT OF THE VALUE OF DIFFERENT SALARIES Salary 32,000 $33,000 $34,000 $35,000 $36,000 $37,000 $38,OOO $39,000 $40,000 Importance Points Assigned 0 10 20 30 36 42 48 54 60 84 Lax and Sebenius “/’beMeasure o f Negotiatior~ BB I II FIGURE 1: L|SA’S ASSESSMENT OF THE VALUE OF DIFFERENT SALARY LEVELS iMPORTANCE POINTS 3O | 32 35 SALARY ($O00’s) 40 She can assess her ‘ valuations of the other two issues b y comparing their increments directly, or b y comparing one of the increments with her salary assessments. For example, h o w does the increment f r o m 10 to 20 subordinates c o m p a r e with the salary increment from $32,000 to $35,000?
If Lisa is indifferent, she should assign 30 importance points to the staff increment and, thus, the remaining 10 points to the vacation increment. She decides and continues in this manner, finishing the assessment b y assigning 20 of the 30 importance points to the increment b e t w e e n 10 and 15 subordinates and 10 points to the remaining increment. Lastly, she assigns eight of the t0 vacation points to getting the third w e e k of vacation and two points to the remaining week. Table 3 shows a scoring system that reflects this assessment.
From the table, a $35,000 salary, three weeks of vacation, and 15 subordinates w o u l d be valued at 58 points (30 + 8 + 20) whereas a salary of $37,500, t w o weeks o f vacation and 16 subordinates w o u l d be valued at 67 points (45 + 0 + 22). It is w o r t h noting that aI1 the scoring is relative to an arbitrarily chosen zero point. That is, the ” w o r s t ” agreement–S32,000, t w o weeks of vacation and 10 subordinates, the b o t t o m of the range for each issue–receives a score of zero. All other possible agreements are scored relative to this ” w o r s t ” agreement.
The TABLE 3 LISA’S ASSESSMENT OF THE IMPORTANCE OF SALARY, VACATION, AND STAFF SIZE Salary ($000) 32 33 34 35 36 37 38 39 40 importance Points 0 10 20 30 36 42 48 54 60 Weeks of Vacation 2 3 4 Importance Points 0 8 10 Staff Size 10 15 20 Importance Points 0 20 30 Negotiation Journal January 1986 8 5 R ‘1 I II III important comparison, though, is with Lisa’s current job which, at a salary of $32,000, four weeks of vacation, and 10 subordinates is valued at 10 points. Although any such scoring system is necessarily rough, Lisa can use it to evaluate possible agreements and to understand the tradeoffs she may have to make.
Comparing different increments can be difficult, but a few tricks can sometimes facilitate the process. For example, Lisa might construct one package of $32,000, two weeks of vacation, and 20 subordinates and another of $32,000, four weeks of vacation, and 10 subordinates. But, to compare them? Lisa might imagine that the p h o n e rings and the call eliminates one of the options. Which option would feel worse to lose? Or, suppose that a coin flip will determine the choice of packages. Is a fifty-fifty chance of losing each appropriate? Or, would she prefer sixty-forty chances favoring one of the packages?
In helping Lisa construct this scoring system, we assumed that the value of an increment on one issue did not depend on h o w other issues were resolved; thus, scoring a package simply involves adding the points obtained o n each issue. In some situations, though, the value of the outcome on one issue depends on h o w other issues are resolved. 2 For example, suppose that with a high salary Lisa would like a larger n u m b e r of subordinates. With a low salary, however, she might feel aggrieved; a larger staff would mean more responsibility for which she was not compensated.
Thus, h o w she values staff size could depend o n her salary level. Such interdependent preferences could be assessed using more elaborate techniques, but the general logic of defining and comparing increments would remain roughly analogous. Assessing William’s Interests Lisa, in addition to assessing her o w n interests, must also do the same for her negotiating counterpart and potential supervisor, William. tier preliminary investigations had fairly confidently b o u n d e d the ranges of the issues, but n o w the question becomes h o w be sees his real interests in them.
Tentative discussions with William left Lisa little doubt that he would prefer to pay less, allow shorter vacations, and get b y with as few new staff as possible. In fact, during a meeting in which he enthusiastically offered her the job “in principle,” William sketched the terms he felt were appropriate: “a bit over $30,000, a few weeks vacation, and only the staff y o u really need. ” More than a little daunted by this less than forthcoming stance, Lisa feels a strong need to develop a much deeper understanding of William’s interests.
Asking around, she discovers that William is generally not at ease with “personnel” matters and that he tends to seek out whatever firm “policy” he can find for guidance. Fortunately for Lisa, little in the firm would be directly comparable to the new department she would head. But a few discreet inquiries turn up the fact that the supervisor of the firm’s largest department mares around $39,000. Since the new department is an important endeavor, Lisa feels fairly certain that salary m o n e y will not be too tight, but that the other supervisor’s compensation will make any salary above $39,000 very uncomfortable for William to consider.
In trying to ferret out William’s feelings about vacation, Lisa discovers that he has been a hard worker, seldom taking more than a few days or a week each year. Also he has mentioned the extreme importance of dedication and long hours during the uncertain start-up of this new organizational unit. 86 L~x and Sebe~eit~s The Measure o f 3/egotiatio,z Lisa infers that the prospect of her taking e x t e n d e d vacations early on, while not at all u n c o m m o n elsewhere in the firm, would not sit at all welt with William.
Finally, o n the matter o f staffing, Lisa recalls some comments William made during a tong lunch they had together to explore the possibilities of her heading the new department. In the course of their conversation, he had mentioned two significant incidents from his career. First, he recalled extreme pressure on the engineering group some years ago to c o m e up with a new design. The group was simply too small to produce the n e e d e d results in time. Quality of work and quality of life “needlessly suffered” and, to Wiiliarn’s mind, that kind of “economizing” makes no business or personal sense.
Yet Wiltiam also recounted an agonizing experience some years later w h e n the engineering group I~ad greatly expanded. A mild e c o n o m i c downturn and the loss o f a major customer had forced him to lay off nearly a quarter o f the group’s engineers. Recalling the pain o f that experience, he n o t e d that things would have been much better if most o f those let go had never been hired in the first place; instead, others already in the department should have w o r k e d somewhat longer hours.
To Lisa, the implications o f these incidents seemed obvious: William would have little problem giving her the staff that he believed she really needed, but would be allergic to any perceived excess. Lisa could then make this assessment m u c h more precise, estimating importance weights for William. Already, however, the contours of a possible approach have begun to emerge as she considers her interests (recall Table 3) together with her insights into William’s concerns. Lisa expects to press fairly hard for a salary in the $39,000 range, perhaps conceding a few weeks o f vacation time for the last few thousand dollars.
Money, she reasons, is most valuable to her and relatively ” c h e a p ” to William; in addition, he cares a great deal about avoiding too much time off and two extra weeks of vacation are not crucial to her. From her analysis of the new department’s mission so far, Lisa has b e c o m e increasingly sure that the job can be done with 15 people, though 20 would certainly be nice. She plans to devote a great deal o f time to developing and presenting iustification o f the need for 15. We will not go further in exploring how” Wiltia_m’s interests might be m o r e formally assessed or h o w his and Lisa’s preferences could be better dovetailed. And, of course, this rough assessment of an artificially simplified set of issues only starts the process. As Lisa learns more, relative valuations may be revised, issues may be reformulated, and new options invented. For example, her interests in “salary” could be expanded to include stock options, bonuses, fringe and in-kind benefits. “Vacation” might encompass time to be taken in later years, a generous policy of accumulating unused vacation or turning it into salary, or leaves for various purposes like education. Staff” may mean direct employees of various backgrounds and levels, “loans” from other departments, consultants, temporary help, or equipment to enhance the productivity of a given n u m b e r of staff. But throughout, constant probing of each party’s interests is the sine qua n o n o f creating value by designing good negotiated agreements. G e n e r a l Lessons for A s s e s s i n g Interests The most important lessons from this kind of assessment are those that help one think more clearly about the qualitative judgments that negotiators iraNegotiation Journal January 1986 87 licitly make all the time. Such evaluations are often made with respect to nominal issues rather than directly o n underlying interests. Lisa’s interests in money, lifestyle, peace of mind, career prospects, and organizational status are not perfectly aligned with the issues of salary, vacation limits, and staff size. W h e n thinking about h o w well different packages satisfy her interests, the negotiator m a y discover reformulations that align m o r e closely with her interests. If s o m e of these ” n e w ” issues are easier to grant, they m a y form the basis for a better agreement.
During the process, the negotiator m a y learn about and change her perceptions about h o w well different positions on the issues serve her interests. As she learns, the relative importance of the increments on the issues m a y shift. If so, she should modify her assessments. In contrast to the apparent crispness of the issues, interests are often vaguer. There m a y be no apparent scale with which to measure, for example, precedent or organizational status. Yet, the same logic that is useful for making issue tradeoffs can apply to assuring the relative impact of interests.
The generic steps are as follows: • Identify the interests that m a y be at stake. • For each interest, imagine the possible packages that serve it best and worst; for example, imagine the range of precedents that might follow from the negotiation. This roughly defines the increment. ® As with Lisa’s job negotiations, the importance of each interest depends on the relative importance of its increment c o m p a r e d to those of the other interests; h o w does the gain from the worst to the best possible precedent c o m p a r e with the gain from the worst to the best possible m o n e t a r y outcome?
The currency of negotiation generally involves positions on issues but the results are measured b y h o w well underlying interests are furthered. As such, it is helpful to shuttle constantly b e t w e e n often abstract interests and m o r e specific issues, b o t h to check for consistency and to keep real concerns u p p e r m o s t in mind. Assessing the Interests of Others Finally, it goes almost without saying that negotiators should constantly assess their counterparts’ interests and preferences.
Obviously, careful listening and clear c o m m u n i c a t i o n help this process. Uninvolved third parties can render insights not suspected b y partisans w r a p p e d up in the negotiation. And s o m e negotiators find that, as part of preparing for the process, actually playing the other party’s role can offer d e e p e n e d perspectives. In various management programs at Harvard, for example, senior industrialists have been assigned the parts of environmentalists and vice versa.
To simulate arms talks, high-level U. S. military officers and diplomats have b e e n assigned to play Russian negotiators in intensive simulations. Palestinians and Israelis have had to swap places. After some initial discomfort and reluctance, the most c o m m o n reaction of participants in these exercises is surprise at h o w greatly such role-playing enhances their understanding of each side’s interests, of w h y others m a y seem intransigent, and of u n e x p e c t e d possibilities for agreement.
Beyond various ways of trying to put oneself in the other’s shoes, assessment of another’s interests m a y be i m p r o v e d b y investigating: 8~ Lax a~zd SebetHlzs The Measure o f Negotiation ® Their past behavior in related settings, both in style and substance. ® Their training and professional affiliation: engineers and financial analysts will often have quite different modes of perception and approaches to potential conflict from, say, lawyers and insurance adjusters. * Their organizational position and affiliation.
Those in the p r o d u c t i o n department will often see long, predictable manufacturing runs as the company’s dominant interest while marketers will opt for individual tailoring to customer specs and deep inventories for rapid deliveries. This is but one example of the old and wise expression ” w h e r e you stand depends on where you sit. ” * W h o m they admire, whose advice carries weight, and to w h o m they tend to defer o n the kind of issues at stake. In the end, interests are b o u n d up with psychology and culture. Some settings breed rivalry; others esteem the group.
Some people are altruists; others sociopaths. To some, ego looms large; to others, substance is all. Airport bookstore wisdom names Jungle Fighters, Appeasers, Win-Winners, and Win-Losers. Professionals diagnose personality Types A and B and victims of cathected libido. Others have developed such classes, sometimes wisely, but for n o w we stress that perceived interests matter, that perceptions are subjective. Thus, to assess interests is to probe psyches. Interests and Issues are Variable Many academic treatments of negotiation takes the issues and interests at take as unchanging over the course of the negotiation. Yet both the issues under discussion and the interests perceived to be at stake can change. The link between issues and interests is often unclear; the negotiator faced with a set of issues must figure out which of his or her interests are at stake. For example, getting a corner office might enhance prestige and status, but h o w much would this affect various dealings and decisions? Because these links are often vague and complex, perceptions of the links can be influenced or manipulated.
One may shape the “face” that an issue wears (Neustadt, 1980); presenting Food Stamps as a means to increase demand for agricultural products rather than as a welfare program may win agricultural state representatives’ support for the program. Similarly, by portraying a new project that in reality departs sharply from a firm’s past strategy as a direct extension of current projects, a subordinate may both obtain funding and avoid a review of the project’s fit with broader strategic goals. One may attempt less drastic changes in an individual’s perception of the relationship between the issue at hand and the underlying interest.
Thus, the mining c o m p a n y negotiator may attempt to persuade a small country’s Finance Minister that high royalty rates, although they appear to further the country’s interest in revenues, will actually be worse than lower royalty rates. The mining company might argue, °’once rates reach a certain level, we will invest less, other companies will be scared off, and you will end up losing in terms of your monetary interests. ” If persuaded, the country’s evaluation of h o w its interests would be satisfied by different potential agreements would change.
Certain other tactics may effectively expand or contract the interests evoked, often in ways not intended by the negotiator. “Take-it-or-leave-it” Negotiation. ]our*zal Januao, 1986 89 III I [ IF I I I I I offers, forced linkages, commitment moves, threats, and preemptive actions all have potential to elicit strong negative reactions that may overwhelm the original issues at stake. Concern for one’s reputation or self-esteem may predominate. A trade union’s motivation for strikes, for instance, may shift over time from the strictly economic to a desire for revenge.
Likewise, wars can escalate out of all proportion to the possible substantive gains for either side. The sudden Argentine occupation of the Falkland Islands in 1982 and the British response quickly came to involve weighty, irreconcilable interests such as national ” h o n o r ” and the “right” response to aggression. In many circumstances threats, commitments, and deterrent moves are effective and can be analyzed in terms of values for the immediate issues involved (Tedeschi, Schtenker, and Bonoma, 1973).
In other cases, such tactics can induce anger, loss of “face,” and aggression (Deutsch and Kraus, 1962; Rubin and Brown, 1975). That is, the tactics bring new and often unhelpful interests into the negotiation. Counter-tactics may well bring in additional interests and a spiral begins. Conflicts are more likely to escalate w h e n disputants attribute their concessions to their o w n weakness; similarly, escalation is less likely w h e n concessions can be attributed to something impersonal, such as a budgeting system, a formal procedure, or a widely accepted norm (Bacharach and Lawler, 1981).
The essence of some tactics is to add new interests. For example, one may make a commitment to a position b y invoking an interest that the other negotiator cannot satisfy and that would not otherwise be part of the process; in holding to a position, the insurance claims adjuster may invoke a strong interest in maintaining a reputation as a tough bargainer for subsequent claims negotiations. The potential house buyer w h o announces that one’s spouse would be tremendously angry if the purchase price were to exceed $150,000 adds a new interest to the negotation: the relationship between husband and wife.
Other tactics, in contrast, may eliminate interests. Flipping a coin or submitting a dispute to arbitration may remove impIications o f weakness, strength, coercion, or tactical advantage. Thus, interests can change even w h e n issues remain fixed. The reverse is also true. Because the relation between issues and interests may be unclear, negotiators may reformulate the issues. During negotiations over deep seabed mining in the Law of the Sea negotiations, for example, many of the different nations’ underlying interests remained fairly constant.
However, as the negotiations evolved, the issues changed dramatically–from whether mining should be done by private firms at all or b y an international mining entity to the nitty-gritty aspects of mining contracts for private firms and the financing mechanism for the first operation of a new international mining entity. Trying to pin d o w n the precise nature of the final issues at stake occupied a great deal o f the negotiators’ time, perhaps more than it took ultimately to resolve the issues (Sebenius, 1984). Prescriptive Summary
As a summary for analysts and practitioners, we have converted the main observations of this paper into the following prescriptive checklist: 9G Lax and Sebenius The Measure of Negotiation II I’ ‘ II ‘ll II’ A s s e s s i n g W h i c h I n t e r e s t s A r e At S t a k e • B e y o n d the obvious tangible interests that m a y be affected b y issues to be discussed, consider subtler interests in reputation, precedent, relationships, strategy, fairness, and the like. • Distinguish underlying interests from the issues under discussion and the positions taken on them. Distinguish b e t w e e n intrinsic and instrumental reasons for valuing interests, especially s o m e of the subtier ones. ® In seeking to understand other’s interests, r e m e m b e r that interests d e p e n d on perceptions, that perceptions are subjective, and thus that to assess interests is to p r o b e psyches. This process can be aided b y clear communication, the advice of third parties, role-playing, and taking into account past behavior, training, professional affiliation, and organizational position, as well as those to w h o m the other defers. , Keep in m i n d that interests and issues can change on p u r p o s e or accidentally as the parties learn, events occur, or certain tactics are employed. Assessing Tradeoffs ® Tradeoffs are as important to interests as proportions are to recipes. ® To assess tradeoffs a m o n g intangible interests, it is sometimes helpful to imagine services one could b u y otherwise to satisfy the same interests. • To assess tradeoffs a m o n g issues: – – Specify the worst and best possible o u t c o m e s o n each issue to define the possible increments. – C o m p a r e the increments b y thinking hard about underlying interests and which increments are m o s t valued. – – Break the increments into smaller pieces and similarly c o m p a r e their relative evaluation. – – Change assessments with learning about h o w different positions on the issues affect interests. – – A s s e s s interest tradeoffs using the same logic. When to Focus on Interests and When on Issues e Focus the negotiation on interests to enhance creativity and break impasses by reformulating issues to align better with underlying interests. Focus the negotiation o n positions, issues, or a n a r r o w e r set of interests w h e n underlying conflicts of ideology make agreement difficult or w h e n a restricted focus is m o r e advantageous for claiming value. Negotiation is a process of potentially opportunistic interaction in which t w o or m o r e parties with s o m e conflicting interests seek to do better b y jointly decided action than they could otherwise. The alternatives to negotiated agreement or what the parties could do alone define the threshoId o f value that any agreement must exceed.
The potential of negotiation is b o u n d e d only b y the quality of agreement that can be devised. But, for evaluating alternatives and creating agreements, interests are the measure and raw material of negotiation. Negotiation Journal January 1986 91 NOTES We w o u l d like to thank Arthur Applbaum, Mark Moore, Howard Raiffa, Lawrence Susskind, and T h o m a s Weeks for helpful and friendly c o m m e n t s . A n u m b e r of the ideas in this paper have been stimulated by the w o r k of, a n d discussions with, Roger Fisher and William Ur