What is Interest-Based Negotiation and How to Utilize it

Interest-Based Negotiation

When two parties are negotiating with one another, there are several styles and techniques that the parties may try to use to help them gain an advantage in the negotiation. One of these techniques or styles is called interest-based negotiation.

When the parties are using interest-based negotiation, they will often come to an agreement that all of the parties are content with walking away from the table with. This is because they are focusing on identifying interests and creating value for each other as they negotiate. This article will outline the technique known as interest-based negotiation, how it is used, and why it should be used.

This article aims to help parties and their representatives understand the benefits of interest-based negotiation to use it to their advantage and, in turn, the other party’s advantage as well.

What Interest-Based Negotiation is and How to Utilize It:

 Many times, negotiators rely heavily on their own positions and do not take the other party’s best interests into account. Interest-based negotiation is a way of negotiating that takes the parties’ best interests into consideration rather than focusing solely on positions. It can also be called integrative bargaining. This is a technique that seeks to identify the particular interests that the other party has, as well as one’s own interests.

By identifying these interests, the parties can create value for each other and find options that may not have been as readily available had they focused solely on their positions. There are two steps to using an integrative bargaining process in a negotiation—identifying interests and creating options.

  1. Identify Interests: Interest-based negotiation relies heavily on identifying the interests of the parties. The word interests is used frequently in negotiation strategy and tends to mean the underlying justification for a position. A position is an action that the party would like to happen, but the interest is the reason for that position. To properly use integrative bargaining, the parties must identify their own interest and the other party’s interest. For example, if one person would like to keep the lights on in a shared room, but the other one would like them off, that is their position. However, if the person would like the light off because they are trying to sleep and the other person would like it on so they can finish their work, these are the interests at the heart of the issue. 
  1. Create Options: Once the interests have been identified, the parties will need to find solutions to the issue that falls in line with the interests. By finding a way to include the interests of both parties in a solution, they end up creating value that was previously not there to be negotiated for. In the example above, maybe the person wanting the lights off could wear an eye mask until the other person is done working, or the person wanting to work could work with only some lights on or in a space where the light will not affect the other person. Both of these are options that include the interests of both parties in the solution.

To participate in integrative bargaining, the parties will need to focus on identifying the interests at play and finding solutions that include the options. This option will typically work best when both parties are working together to find solutions; however, it is possible for one of the parties to introduce the idea and even some solutions that they think may work and include the other party in further conversation.

Using this method helps can bring the parties many benefits that may not have been apparent at the beginning of the negotiation.

Why Integrative (Interest-Based) Bargaining is Important:

 Integrative bargaining is important because it is a creative way for the parties to work together to solve the issues that are in front of them, and it helps them walk away from the negotiation feeling as though they won. It usually gives everyone what they wanted coming into the negotiation and even more. Some other benefits of interest-based negotiation include the following:

  • Value: This was mentioned briefly above, but integrative bargaining will often add value to a party’s position as they seek to find a solution. Many times, the parties will come to a negotiation with a specific solution that they would like to see happen, but it is usually not attainable. However, by including interests in the negotiations, the parties are able to find value that was not part of the original part of the value, and it expands the possible outcomes.
  • Relationships: When the parties rely heavily on positional bargaining, they run the risk of ruining relationships by not negotiating an agreement or demanding a solution that ruins their position. By participating in integrative bargaining, the parties are able to work with the other party, potentially strengthening their relationship. While it is not always the case that the parties will have a great relationship after a dispute, interest-based negotiation can be helpful in encouraging the relationship to continue.
  • Win: Integrative bargaining will often produce a “win-win” result, which means neither party had to accommodate or compromise on their position but worked together to find a solution where both parties win in their minds.

These benefits, along with many others, make attempting to participate in interest-based negotiation a great goal.

Differences Between Position-Based and Interest-Based Bargaining:

Throughout this article, interest-based bargaining has been compared to position-based bargaining. Position-based negotiation is the opposite of integrative bargaining in many ways, and it is recommended less often than interest-based bargaining. Position-based negotiation focuses solely on the positions and refuses to consider anything outside of that position. Several key differences between the techniques include:

  • Focus: This is the most obvious difference, but it is the most important. Where integrative bargaining focuses on the interests of the parties, position-based negotiation focuses on the position of the parties alone. It views the negotiation as a place to win their desired position, not to find a creative solution.
  • Other Participants: Another important distinction is the way that each technique views the other party. In position-based bargaining, the other party is an adversary that must be defeated to win. In interest-based negotiation, the other party is a cooperative problem-solver whose interests matter as much as their own to the solution.
  • Spirit: In interest-based negotiation, the parties will often approach a solution with a spirit of collaboration. In position-based, the parties will approach the solution with a spirit of ambition.
  • Openness: When the parties are relying on positions, they will usually guard their underlying interests and may even use tricks or mislead the other party. Interest-based negotiators will be open and share their concerns with the other party to further encourage a creative solution.

When parties participate in a position-based negotiation, they will feel the need to do whatever is necessary to achieve their position. This is why interest-based negotiation is so important because it allows the parties to rely on and work with each other in this solution and move forward.

Conclusion:

Interest-based negotiation is the sweet spot in a negotiation where the parties are able to both get what they want and encourage the other party to do the same. It protects the interests of everyone involved and finds creative ways to add value.

This article has defined the practice, outlined how to use it, discussed the reasons it is important, and compared it to position-based negotiation. By doing so, we hope that we have helped you understand how to use integrative bargaining well in negotiations moving forward.

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