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A to Z of negotiation - I is for Interests

Understanding interests is the key principle of the collaborative negotiation method set out in Getting to Yes. I’ve been biding my time through A to H of the alphabet, waiting to get to this central idea.

Interests are the needs, hopes, fears and concerns of the parties. What are the parties looking to achieve (or avoid) as an outcome of the negotiation? When we think of interests, we are thinking about the party’s motivation.

It’s important to distinguish between an interest and a position.

A position is what someone wants. An interest is why they want it. This difference is perhaps best illustrated by an example.

Imagine you are heading in to a negotiation with an existing customer. To make things simple, let’s assume that the deal is done other than agreeing on what the payment terms will be. You go into the negotiation with a requirement that payment terms must be 14 days. This is a position, not an interest. The interests behind the position may be things like:

  • I need to offer consistent terms to all customers

  • I want to minimise my interest costs

  • I want to demonstrate to my boss that I can achieve favourable outcomes for the company

  • I've sold the company and want to minimise receivables at settlement date to avoid adjustments.

It is important to know the interests behind a position because it adds flexibility to the possible outcomes. As long as you know the interests you can meet, you can be flexible on how to meet them.

For example, I may agree to 30 rather than 14 day terms but require a confidentiality clause or offer longer terms only for orders over a minimum amount. Or, I may offer a discount for payment within the 14 days so I can meet my settlement obligations.

When preparing for a negotiation it is important to consider your own interests. If you have an outcome in mind, why is this outcome important, what does it achieve for you?

You will also need to consider the other side’s interests. What might they be seeking to achieve? If you can't offer them a deal that gets at least some of their key interests, you are unlikely to get a deal across the line. And the more of their interests you meet, the more likely you are to have a sustainable, productive deal.

The interests you consider should include both tangible and intangible interests. A tangible interest could be something like a profit margin or a deadline. Intangible interests may include things like protecting reputation or wanting simplicity in implementation.

It is also worthwhile considering different time frames. Some interests may be short term while others may impact over a longer timeframe.

By thinking about interests as broadly as possible, you open up the greatest scope for creating solutions that expand the amount of value to be claimed by both sides. Whether it’s your own interests or the other parties, think beyond the obvious interests to some of the more intangible interests or perhaps longer term interests.

For more information about how to negotiate effectively, or for assistance with your next negotiation, contact us for a confidential, no-obligation discussion.

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