Think More About Your Relationship Than the Win
By Yvonne Milosevic
Do you usually think of negotiating as a “winner-takes-all” pursuit? The Wharton School’s Maurice Schweitzer believes we need to reevaluate that approach. In a paper co-written with professor Einav Hart of George Mason University, he argues for a better way to think about negotiations. Instead of trying to drive a hard bargain, we should consider the long-term relationship at stake.
“The way people think about negotiations is often narrow and often wrong,” Schweitzer explained in a recent Knowledge at Wharton podcast interview. “So much of the value that gets created happens after the negotiation ends.” Thus, the recipe for a successful negotiation should focus on creating mutual gain.
Negotiations Without the Squeeze
To illustrate this point, Schweitzer talks about two everyday situations where negotiations might occur. First, consider the scenario where a hiring manager is negotiating a job offer. If the back-and-forth results in an accepted offer with a bare-minimum salary and meager benefits package, you could say that the employer came out ahead. But to what end? Will the new hire feel valued and driven to do their best work?
Next, think about the type of negotiation that occurs when hiring a babysitter. Or a caretaker for an aging parent. In these instances, the post-negotiation relationship is critical. “Sometimes we’re better off not negotiating because by negotiating, we’re creating some sense of conflict and reframing our relationship as if we have opposing interests,” Schweitzer explains.
When it comes to negotiations, the key is to ask how much the relationship matters, he says. “What we found is if you harm the relationship through the negotiation process, you end up with a lower economic outcome, even if the salary or the deal terms might be favorable.”
In a one-off negotiation with no lingering relationship afterward, hardnosed bargaining may work just fine. But sometimes, being generous in the negotiation—such as when trying to attract top talent to your company—may be the best card you can play. In other situations, not negotiating at all might produce the most favorable outcome. Ultimately, negotiators have many options in their toolkit and should choose the right approach for the long-term goal.
We’ll leave you today with this classic quote about negotiations and greed from American industrialist J. Paul Getty:
“You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.”