I had the opportunity to meet Linda Ginzel, a Clinical Professor of Managerial Psychology at the University of Chicago Booth School of Business. Linda specialized in leadership development, organization behavior and negotiation skills; and was in New York City to lead a session on negotiation for One Day University.

At a very fundamental level, it’s been said that we are negotiating any time two or more people divide resources or solve a problem – and most negotiations contain aspects of both competition and cooperation. Professor Ginzel explained that while people tend to default into a competitive position during the negotiation, the most economically desirable situation is to first “enlarge the pie” by creating joint gains, and that is accomplished by cooperation.

Professor Ginzel’s talk on negotiation was an eye-opener, and was anchored around an actual negotiation exercise that involved the approximate 300 attendees pairing off into groups of two. Each pairing consisted of an “A” and a “B” participant, each of whom had their own point schedule for negotiating a hypothetical annual corporate meeting that involved five issues for agreement: destination, accommodations, number of scheduled speakers, length of stay and season. Each issue had five options (for example, there were five different destination options: Los Angeles, New Orleans, Atlanta, Santa Fe, Orlando), and each option was worth different points for each of the two participant (Los Angeles might be worth 4,000 points for person “A” and 0 points for person “B”), and while you knew the point assignments for your options, the information was not shared with the other party.

The intended objective was to reach an agreement with your negotiation partner on the five issues (while keeping the point schedule confidential). If each person could not come up with at least 2,000 points, it was assumed that an outside party would be hired (if this were a real-world exercise) to do the negotiation.

Within about fifteen minutes each side reached agreement on the five issues and were then able to compare their negotiated points. Typically, each person negotiated generally between 3,000 and 6,000 points.

Here’s the interesting part, Professor Ginzel asked each two-person pairing to add their points together – which was a way of quantifying the total value of the negotiated deal. As in the example above, pairings typically totaled approximately 9,000 points, though some teams were considerably lower and others higher. In fact, there were some pairings whose totals were around 13,000 points – meaning they created considerably more overall value. Those pairings cooperatively enlarged the overall pie through dialogue, by avoiding sequentially moving down the list of five issues (“Let’s settle the city first.”) and by exploring ways to create value. The 300 attendees were mostly seasoned executives; nonetheless, the large room was buzzing with the newly learned insights as to creating value. Everybody knew the exercise was to reach agreement on the five issues. Yet judging by the clamor and discussion following the results, it’s safe to say the vast majority of people never even thought about maximizing the total valuation while they were negotiating.

Here then are the six essential negotiation skills to increase effectiveness.

1. Prepare, prepare, prepare
Solid preparation is key. Gather as much information as you can about yourself and your counterparty. Identify issues, prioritize interests and discuss best and worst case scenarios. Identify a list of questions to research.

2. Focus on interests not positions
Build trust, share and assess priorities. Ask lots of questions about interests and listen carefully. Provide information, avoid unilateral concessions and ask for reciprocity. Once we are willing and able to share information strategically with the goal of understanding underlying interests, we can make mutually beneficial tradeoffs rather than splitting the difference. Use compromise as a last resort, not as a goal.

3. Look for trade-offs to create value
Recognize that with many issues, joint gains are possible. Identify them. Differences are a good thing in negotiations. Avoid sequential bargaining and single-issue offers; Keep all issues on the table for flexibility (perhaps use packaging options to help determine what’s important to the other party). When we find the relative differences, we can trade on these differences. To find integrative outcomes, think like a trader –not a traitor!

4. Enlarge the pie before dividing
While we have a bias toward competition, most negotiations in life are mixed motive: they involve both competition (value claiming) and cooperation (value creating). Think creatively about putting new issues on the table; add side issues that benefit both parties. First, be cooperative to create value, and then competitive to claim value. You don’t want to end up with a big slice of a small pie.

5. Adapt your strategy to your counterparty’s style
Be aware that different problem solving modes are available to you: competition, collaboration, accommodation, cooperation, compromise and avoidance. Rather than relying on your default conflict resolution approach, practice being flexible and expand your repertoire. Remember to switch strategies when lacking progress.

6. Practice conditional cooperation
Be nice, but be clear that you will reciprocate competition with competition. Be forgiving (reciprocate cooperation). Don’t be envious (don’t compare your success relative to other players). Be clear (don’t be too clever). Remember that tactics for creating value, such as revealing information and clearly communicating interests may leave you open to competitive behavior from the other party.

Wanting to learn more, I asked Professor Ginzel how often the opportunity exists in the real-world to increase the overall value of a deal. She explained that unless it is a one-shot single-item negotiation, there typically is the opportunity to enlarge the pie for both parties. An example might be negotiating a new job, wherein the position description may describe a Director of Engineering, but the company may be fully amenable to the more senior title of VP of Engineering – and that would cost them no additional compensation and may actually elevate the perceived level of the position – thereby being an example of “creating value”. Professor Ginzel explained that by adding issues that are valued differently by both parties, you increase the opportunity to make mutually beneficial trade (remember to “think like a trader”). In addition to things like job title, Professor Ginzel suggested other issues for consideration, such as: vacation time, moving expenses, tuition reimbursement, six month review, working from home, etc.

Given the scenario above, I asked Professor Ginzel if it was advisable to provide a general explanation to the other party at the start of the negotiation as to how you’re looking to increase the overall pie. My concern was that without an explanation of why it may be in everybody’s best interest to keep all issues on the table for flexibility, and explaining the concept of “increasing the pie” – the employer making the job offer may get the impression that the candidate is unable to commit to even the most basic elements of the offer – and thereby will be perceived as “flaky” or “difficult”. Her answer made great sense to me, as she said that she wouldn’t feel the need to explain the strategy directly, and that doing so might in itself be perceived as “flaky” or “difficult”. Recalling the quote from Emerson, “Your actions speak so loudly, I can not hear what you are saying.”, Professor Ginzel said she would allow her behavior during the negotiation (i.e., asking questions, understanding interests, thinking creatively, using reciprocity, etc.) to communicate her intention of being cooperative and flexible.

Professor Ginzel sees herself first and foremost as a teacher, and certainly enough, the
session and subsequent conversations with her were educational and real eye-opener. Yet, I wondered how this “value creation” business squares in the real rough and tumble world of business. We’ve heard the folklore of businessmen being seemingly praised for their lopsided
negotiation practices, wherein it wasn’t enough to close the deal, but that the winning party actually wanted the other party to lose. Professor Ginzel explained, “Creating value is more of a common practice than popular stories about tough negotiators would have you believe. Remember that the definition of a successful negotiation in real life is repeat business and a good reputation (which helps you get that repeat business). If someone feels he/she has lost a negotiation, both parties have lost because of the reputation effect.”

So, what are your thoughts on negotiation a fair deal for all parties? What other considerations might you add? Please add your thoughts below!

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Tom loves building meaningful businesses and technology (with people who care). Reach him on Twitter @thomastriumph or tomtriumph.com.