The Role of Emotions in Effective Negotiations

The books that I have read on the subject of negotiation generally present the simple view that a negotiation is a cold, rational transaction usually between two parties. If the “price”, (which almost always involves more than just dollars) is right as viewed by both parties, the deal gets done.

Similarly, when I was in business school, negotiation was presented as a straightforward economic analysis. If we assumed the other side was acting rationally in trying to maximize its position, the goal was to figure out how to respond in various scenarios to maximize one’s own value. Subtleties may involve finding those elements that are of more value to the other side than to you, thus breaking somewhat the idea that negotiation is strictly a zero sum game.

Anyone who has bought a car or sold a house knows that negotiations are rarely so dispassionate. “As soon as the checkbook comes out, a flood of emotions comes out too – fear, anxiety, competitiveness, anger, annoyance – all of which can influence what each side is willing to accept.”

Michael Blanding writes for “Working Knowledge” published by the Harvard Business School. In his article in the June 30, 2014 edition titled “The Role of Emotions in Effective Negotiations”, Mr. Blanding reports on research done by Andy Wasynczuk, Senior Lecturer of Business Administration at Harvard Business School, that began in the ’90s. What Wasynczuk found was that negotiators rarely act rationally. Instead, negotiators often take into account what they felt they deserved from the other side, and what they can do to save face when they didn’t get it.

In his new teaching note, Emotions in Negotiations: An Introduction, Wasynczuk and his coauthor Colleen Kaftan, trace the history, theory, and research on how emotions can affect transactions between parties.

Wasynczuk found that even newly minted Harvard MBAs feel like they are ill-equipped even for their own personal negotiations like dealing with a landlord or buying a car—let alone the business situations they will be getting into in the workplace.  So rather that deal with abstract business negotiations, Wasynczuk uses everyday examples to illustrate how negotiation skills can be improved.

Wasynczuk teaches both about what we need to do to manage our own emotions based on the other side’s behavior, and what emotions we elicit in others based on our own behavior. The key he says is that a good negotiator needs to have an explicit understanding about the emotions that each side are experiencing and to be intuitive about the process.

Wasynczuk learned these techniques while he served for 15 years as chief operating officer for the New England Patriots, where he was in charge of negotiating high-stakes player contracts involving millions of dollars.

He intuitively understood that emotions were an important factor in dealing with athletes who are generally passionate people. “The last thing I wanted to do was create an excuse for a player or agent to get angry. That would create a power struggle, which was a recipe for disaster.”

Wasynczuk learned to enter into contract talks with a smile—and to rationalize away his own anger when a deal couldn’t be struck. “If an agent was being greedy with me, they were probably being greedy with other teams as well,” he told himself. “If the other team ended up paying that money they were making a mistake.”

Take this simple exercise: Player A is given $20 and has to decide how much to share with Player B. Player B’s only decision is to decide whether or not to accept what is offered. If accepted, Player B receives the offered amount and Player A gets to keep the balance. But if declined, both players end up with nothing. Rationally, B should take any offer—even as little as $1—that’s more than nothing. And yet, whenever this experiment is performed, B consistently rejects the money unless it is at least a quarter of the total—$5.

“There is a very strong emotional response to the lack of fairness, irrespective of the right rational decision,” says Wasynczuk. “The more we understand how people behave based on emotions, the more thoughtful and appropriate we can be in how we respond to them.”

As an example, anger can be the most destructive emotion during negotiation—often causing deal making to break down as each side sacrifices its needs in order to save face. “It tends to start rising on both sides, and inevitably there is a point where it erupts,” says Wasynczuk. People will walk away knowing that they left value on the table, but they don’t care.

On the other hand, anger isn’t always a bad variable in negotiation. Deployed the right way, it can demonstrate passion and conviction that can help sway the other side to accept less. The trick is to direct the anger at the situation or problem—not the person on the other side of the table.

Research has found that entering negotiations with a positive attitude tends to lead to better outcomes—when both sides are agreeable and conciliatory, it builds a level of trust that can lead to information sharing that allows both sides to get a better deal. Yet happiness can be dangerous as well, since happy negotiators tend to accept less than they might otherwise be able to get.

No matter what emotions are present at the bargaining table, a smart negotiator first becomes aware of what they are—and then works to emphasize the positive emotions that can help the deal while downplaying the negative emotions that might scuttle a deal. This “emotional intelligence” may take the form of altering body language or tone of voice to influence the way the other person responds—or taking a break during a difficult point in negotiations in order to regain composure when anger starts flaring.

In summary, “Emotions are an expression of how people are processing information, and can give a strong signal of how the mind is internalizing the discussion.”

Emotions are powerful; not only in derailing a negotiation, but also in helping both sides come to better agreement.

Managed well, emotions “can turn a frustrating negotiation into one that is pleasant, productive, and even enjoyable.”

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