Choosing a Negotiation Style

As you’re entering your negotiation, think through the importance of the relationship and the importance of the outcome, then be deliberate about the negotiating style you choose.

You should be deliberate when you enter a negotiation in choosing a specific style of negotiating. The way I encourage people to look at choosing a style is first understand the importance of the relationship. That relationship can have low importance, so somebody you’re just meeting for the first time and you won’t have an on-going relationship with them, or high importance, this is a strategic long-term relationship. The second thing you have to look at is the importance of the outcome of that specific negotiation, from low importance, there’s not a lot of value on the table, to high importance, this means a lot of money for your organization or it’s a high risk outcome.

And what you end up with is a two by two matrix with four different negotiating strategies:

Splitting the pie

In the lower left, the first strategy we put out is splitting the pie. This style means you have a low value of the relationship, you’re not going to see this person in the future and the relationship doesn’t really matter. You also have a low importance of the outcome. It’s not a big deal if you win in the negotiation. For example, if you’re a buying a souvenir from a street vendor when you’re on vacation, you should just look at that from the standpoint of you won’t see this person again and it’s not a big deal if you get the best deal on your souvenir. So what the strategy says is split the pie, just find the middle point where both of you are happy and move on with your vacation. Haggling takes time and energy and effort, just split the pie.

Serving the pie

In the lower right, you have a much higher importance of the relationship, but the outcome is still low in terms of its importance. We call this style serving the pie. You want to maintain the relationship. For example, if it’s a situation where you’re negotiating over payment terms and you want to get paid in 30 days and the customer wants to pay you in 60. This isn’t a big point economically and you could ruin the relationship if you fight very hard over this point, so in that situation, serve the pie. Give your negotiating partner what they want in the interest of maintaining or even strengthening that relationship.

Take the pie

In the upper left, the style to use is take the pie. So the relationship has very low value, but the importance of the outcome is very high. In this situation, you want to extract as much value as you can and you’re not worried about the ongoing relationship. For example, if you’re out buying a car, that’s a high-dollar purchase, and you’re probably not going to see that car sales rep again in the future. So here you should try and take the pie and get as much value as you can out of that particular negotiation and not worry about the relationship.

Expand the pie

The last quadrant in the upper right, the style is expand the pie. The relationship is very valuable and you want to maintain and strength it and the value that’s on the table, the importance of the outcome is very high, so what you should try to do is create new opportunities for both of you where both of you can get more value from that partnership. For example, if you’re purchasing a large IT system from a strategic vendor, you don’t want to ruin that longterm relationship because they’re going to give you ongoing support for the system. So find ways that you can add new features and give more value to your negotiating partner in exchange for them making some more concessions for you. If you can put more revenue in their pocket, perhaps you can get a lower total price.

As you’re entering your negotiation, think through the importance of the relationship and the importance of the outcome, then be deliberate around the negotiating style you choose. This could have huge implications for how much value you get out of that particular situation as well as how important and how strong those future relationships are going to be.

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