Address irrationality and emotion in a negotiation

For yellow ping pong balls with sad to smiley faces painted on them

Think about collaboration, dispute and conflict resolution, and negotiations. Have you been in a negotiation with someone and they seem to be entirely irrational? I mean what could they be thinking, right? Why would they promote such an irrational approach and suggestion? Emotions can take over and overtake us. The questions are what should you do and how should you address these types of situations. Keep in mind you are unique and so is everyone else.

 

An example

 

In a case where I was a mediator between two parties on the valuation of a business the clients had a formal position based on appraisals and set up expectations and interests. This case had been in court for years with still no end in sight. The parties were millions of dollars apart. Meeting with each of the parties (client and attorney; followed by client, attorney, and expert; followed by expert; followed by both sides with clients, attorneys and experts: followed by with attorneys only; and finalized with attorneys and clients) I gained additional insight. I want to share this with you so you can learn and apply this technique too.

Interests

One party wanted a lower value to have to pay out less. The other party wanted a specific pay out over a longer time frame and thought the business was worth a lot more. A premeditation meeting with the one wanting a lower value indicated what they saw as their Best Alternative to a Negotiated Agreement (BATNA) for a specific dollar amount. It was an absolute maximum cash payout of 50% of the Fair Market Value (FMV) to the other party. The one that wanted a higher payout actually wanted to paid not in a cash payout, but a payout over a long period of time. Exploring both of their interests it appeared to me that the present value of a payout over a long period of time had a possibility to work and an equivalency to a current present value payout to resolve the issue. I accepted the mediation.

Expert appraisers

Each had their own expert business valuation appraisal by a qualified appraiser. Upon a review of the facts and methodologies provided, one of the appraisers had made a major mistake that pointed the valuation towards, but not all the way to the other party’s appraisal value. Upon a further exploration of the facts in the case additional facts and insights were provided. Each of the appraisers offering their interpretation of these more detailed facts allowed the two appraisers to reach a range within a few hundred thousand dollars of each other. It seemed a solution was within reach.

Additional insights

A follow up mediation with the parties and their attorneys without the experts revealed additional insight. If there was closure one party was concerned there would be no interaction with the other party going forward. That was a major issue. One party really wanted closure, wanted to move on and did not want to interact with the other party going forward. Once this was disclosed, it became apparent that the first party felt that if there was closure on this case that would be the end of any interactions going forward. They had entirely different interests on what would happen after closure. Knowing this what could be done?

 

Explore feelings and needs

 

We often don’t really understand the differences between feelings and needs, but these are different. It is important to know the difference and the implications. Here are two lists from the Center for Nonviolent Communication on feelings and needs. Note the differences. Note that the party that did not want to let go also wanted a higher value. This party was seemingly feeling apprehensive, frustrated, worried, angry, and contempt for a final resolution. This party had needs for a future connection, to be understood, and had a sense of wanting both respect and equality. This party did not want to be left out in the future. When this became clearer to the other party the other party realized this was about a lot more than the money. The other party initially saw this as a logical financial transaction and wanted closure. This new information changed the dynamics.

Closure was an issue. There could be limited interactions going forward. They could still agree to be civil to each other. This allowed each of them to move on. Understanding feeling and needs goes a long way towards issue resolution. Understanding emotion was and is key to issue resolution.

 

Here are three important steps to understanding emotion

 

We have been taught to be rationale and to downplay our emotions. However, since we are 98% emotional and 2% rationale, this really does not make a lot of sense.

First, label our own emotions. Since we don’t do this that often, exploring the list above can be helpful. Identifying your emotions first helps.

Second, identify the intensity of your emotions. Try labeling them on a scale of 1 to 10 with 1 very low and 10 as intense as it gets.

Third, write them down. For some reason from neuroscience, simply writing them down makes a big difference. We don’t fully understand why, but it does. Practice these three steps.

Now look beyond yourself at the other party.

 

Consider the other party

 

Do your best to try and describe what you see as the feelings and needs of the other party. When that was done in this case, the first party had an ah ha moment. By exploring their own emotions first, and the intensity of their emotions this provided a new perspective. Then considering these by the other party the first party was able to change a mindset and be able to provide a plausible solution to address the feelings and needs of the other party. By considering the feelings and needs of the other party it was possible to change a mindset. The other party was not demonized. Rather the feelings and needs of the other party were considered in the decision making. This led towards closure.

 

Results

 

This resulted in the parties being able to develop an approach that they both could live with.

It brought closure.

It saved the one party over $100,000 by being sensitive to the other party.

It reduced emotional pain, stress, and toil to both parties.

Both parties could move on and be civil with one another.

 

Conclusion

 

Consider this example. Bringing on board a skilled mediator in this area early could have saved years of frustration, toil, mental anguish, and resources. Rather than feeding the pain and frustration with additional court costs, attorneys fees, and expert fees, consider going deeper. Explore your and their feelings and needs. If you have been at it a long time, you are at impasse and things seem to be at their bleakest, give serious thought to bringing on a mediator skilled in the area in question. You can still keep the litigation going in parallel. Mediation often works, but in the event that it did not, at least both parties would understand the other party better going into court.

A skilled mediator with experience in the area in question can help. A skilled mediator with the right expertise can offer real insights to allow the parties to come to an agreement that both can live with going forward.

 

About the author

 

Mike is a mediator, a professional speaker, and an author. Is conflict blocking your results? Do you want to overcome conflicts and be more collaborative with others? Mike can help. You may contact Mike directly at mg@mikegreg.com and at (651) 633-5311. Mike has written 12 books including his latest book, The Collaboration Effect: Overcoming Your Conflicts, and The Servant Manager, Business Valuations and the IRS, and Peaceful Resolutions that you may find helpful. [Michael Gregory, ASA, CVA, NSA, MBA, Qualified Mediator with the Minnesota Supreme Court]