Interest-Based Negotiation

Interest-Based Negotiation is a collaborative approach that focuses on satisfying the underlying needs and concerns of all parties rather than their stated positions. This method seeks to expand available resources and create value by identifying compatible and shared interests. By separating the people from the problem and using objective criteria, interest-based negotiation produces sustainable agreements that strengthen relationships and maximize joint gains.

Conceptual Foundation

Interest-Based Negotiation emerged from several key developments in negotiation theory:

• Mary Parker Follett's early work on "integration" in the 1920s
• Walton and McKersie's distinction between distributive and integrative bargaining (1965)
• Fisher and Ury's "Getting to Yes" (1981), which popularized the focus on interests over positions
• Subsequent refinements by scholars at the Harvard Negotiation Project and other institutions

The approach is grounded in the recognition that positions (what people say they want) often obscure interests (why they want it), and that focusing on the latter creates more opportunities for mutually beneficial solutions.

Key Principles

• Focus on interests, not positions: Identify the underlying needs, desires, concerns, and fears that motivate stated demands
• Separate the people from the problem: Address relationship issues independently from substantive negotiation topics
• Invent options for mutual gain: Generate multiple possibilities before deciding on solutions
• Use objective criteria: Base decisions on fair standards and procedures rather than power or pressure
• Understand before being understood: Seek first to comprehend the other party's perspective
• Create value before claiming it: Expand available resources before determining distribution

The Position-Interest Distinction

The cornerstone of interest-based negotiation is understanding the difference between:

• Positions: Specific solutions or demands that parties state they want
• Interests: The underlying needs, desires, concerns, and fears that motivate those positions

For example, in a salary negotiation:

• Position: "I need a salary of $85,000"
• Possible interests: Financial security, recognition of value, status, competitive compensation, covering specific expenses, etc.

By focusing on interests, negotiators can often find solutions that satisfy core needs without getting stuck on specific positions.

Types of Interests

Interest-based negotiation recognizes several categories of interests:

Substantive Interests

These relate to the tangible outcomes of negotiation:

• Economic and financial concerns
• Resource allocation and distribution
• Specific terms and conditions
• Performance standards and quality requirements

Process Interests

These relate to how the negotiation and implementation occur:

• Participation in decision-making
• Transparency and information sharing
• Timing and pacing of implementation
• Communication protocols

Relationship Interests

These relate to how parties interact with each other:

• Trust and reliability
• Respect and recognition
• Future cooperation
• Reputation and image

Principle Interests

These relate to values and beliefs:

• Fairness and justice
• Ethical standards
• Precedent setting
• Consistency with organizational values

Implementation Process

1. Preparation: Identify your interests and anticipate the other party's
2. Opening: Set a collaborative tone and establish process agreements
3. Interest exploration: Ask questions to uncover underlying needs and concerns
4. Problem definition: Frame issues in terms of interests to be satisfied
5. Option generation: Brainstorm multiple solutions without immediate evaluation
6. Evaluation: Assess options based on how well they meet all parties' interests
7. Agreement crafting: Develop detailed implementation plans
8. Commitment: Secure formal approval and buy-in from all stakeholders

Value Creation Mechanisms

Interest-based negotiation creates value through several specific mechanisms:

1. Trading on Difference in Priorities

When parties value issues differently, they can exchange concessions on lower-priority items for gains on higher-priority ones.

2. Finding Shared Interests

Identifying common goals that can serve as foundations for agreement.

3. Unbundling Issues

Breaking complex problems into component parts for more flexible solutions.

4. Adding Issues

Introducing new topics to create more opportunities for trades.

5. Contingent Agreements

Creating agreements that specify different actions based on future events.

6. Bridging

Developing new options that satisfy the underlying interests behind seemingly incompatible positions.

Case Examples

Example 1: Employment Contract Negotiation

A company and job candidate use interest-based negotiation:

• Position conflict: Candidate wants $100K salary, company offers $85K
• Interest exploration:
  • Candidate's interests: Financial security, recognition, professional development, work-life balance
  • Company's interests: Budget constraints, internal equity, performance accountability, retention
• Creative solution: $90K base salary with performance bonuses, professional development budget, flexible work schedule, and accelerated review timeline
• Value created: Package addresses core interests of both parties beyond the salary position

Example 2: Business Partnership Agreement

Two companies forming a partnership use interest-based negotiation:

• Position conflict: Both want majority control and larger profit share
• Interest exploration:
  • Company A's interests: Technical direction, IP protection, predictable returns
  • Company B's interests: Market strategy, brand recognition, growth potential
• Creative solution: Equal ownership with divided decision rights (A controls technical, B controls marketing), base profit sharing with performance incentives in respective areas
• Value created: Structure leverages each company's strengths while protecting core interests

Challenges and Limitations

Interest-based negotiation faces several practical challenges:

• Information barriers: Parties may be reluctant to reveal true interests
• Trust issues: Collaborative approaches require minimum levels of trust
• Power imbalances: Stronger parties may prefer to leverage their advantage
• Time constraints: The approach often requires more upfront investment
• Cultural differences: Some contexts may not support interest-based methods
• Skill requirements: Effective implementation demands training and practice
• Truly conflicting interests: Some situations involve genuinely incompatible core needs

Best Practices

• Prepare thoroughly by identifying your interests and anticipating others'
• Ask open-ended questions to uncover underlying interests
• Listen actively and confirm understanding before responding
• Separate invention from evaluation when generating options
• Use "if...then" proposals to explore conditional concessions
• Develop a strong BATNA to maintain leverage while seeking integration
• Focus on objective standards and fair procedures
• Document not just terms but also implementation plans
• Build in mechanisms for addressing future disagreements