Negotiation and Conflict Resolution - Every Negotiator Has Two Kinds of Interests

Negotiation is often viewed as a process centered on achieving tangible outcomes — securing a contract, resolving a dispute, or establishing terms for collaboration. However, an effective negotiation goes beyond the immediate goals and the substantive issues at hand. Every negotiator has two kinds of interests that must be balanced: substance and relationship. Understanding the interplay between these two dimensions is crucial to achieving both immediate and long-term success in negotiation.

In this article, we will explore the distinction between substantive interests (the "what") and relationship interests (the "who"), and how balancing these two elements leads to better negotiation outcomes.

Substance: The Tangible Outcomes

At the core of every negotiation lies the substantive interest — the specific goals, objectives, or outcomes the parties seek to achieve. Substantive interests typically involve the terms of the deal, the resolution of a conflict, or the conditions of an agreement. They are the measurable and concrete elements that drive the negotiation process.

Examples of Substantive Interests:

• Price and Cost: The monetary value of a product or service, a central focus in commercial negotiations.
• Terms and Conditions: The specific provisions that outline responsibilities, deadlines, or deliverables.
• Legal Settlements: In legal negotiations, the substantive interest could be resolving a dispute through compensation or another form of remedy.
• Operational Decisions: In organizational settings, negotiations may center around resources, budget allocations, or strategic priorities.

In short, substantive interests represent the "what" of a negotiation — the tangible objectives each party seeks to secure.

Relationship: The Long-Term Dynamics

While substantive outcomes are critical, the relationship between the negotiating parties often plays an equally important role. Relationship interests are the emotional, psychological, and relational elements that define how parties interact during and after the negotiation. These interests involve trust, respect, communication, and the desire for ongoing collaboration.

Examples of Relationship Interests:

• Trust: Establishing or maintaining trust is often crucial, especially in negotiations involving long-term partnerships or repeat interactions.
• Reputation: Negotiators are mindful of how the outcome will reflect on their personal or organizational reputation. Damaging a relationship can have ripple effects on future dealings.
• Respect and Fairness: Ensuring that both sides feel respected and treated fairly can prevent lingering resentment, even if the substantive outcome is not ideal.
• Communication and Cooperation: In many negotiations, the relationship interest includes fostering open and effective communication, which is crucial for joint problem-solving and collaboration.

Relationship interests represent the "who" — how the parties engage with one another, both during and after the negotiation process.

Balancing Substance and Relationship

The challenge in negotiation lies in balancing substantive and relationship interests. Focusing solely on substantive outcomes can lead to agreements that damage relationships, making future cooperation difficult or impossible. Conversely, placing too much emphasis on the relationship at the expense of substantive gains can result in a weak deal that fails to meet the negotiator's core objectives.

The Dangers of an Unbalanced Approach:

• Focusing Only on Substance: A negotiator who prioritizes winning the best deal without regard for the relationship may achieve short-term gains but at the cost of long-term partnerships. If one party feels exploited, disrespected, or ignored, future negotiations may become adversarial or fall apart entirely.
• Focusing Only on Relationship: On the other hand, a negotiator who is overly concerned with maintaining harmony may make excessive concessions, resulting in a deal that doesn’t fully meet their needs. While the relationship may remain intact, the negotiator risks achieving less than they could have.

Effective negotiators understand that substance and relationship are interdependent. A positive relationship fosters better communication, trust, and problem-solving, which, in turn, leads to better substantive outcomes. At the same time, securing a fair substantive agreement can strengthen the relationship by building trust and mutual respect.

Examples of Balancing Interests in Real-World Negotiations

• Business Partnerships: When negotiating a business partnership, substantive interests may include the terms of profit-sharing or responsibilities for project delivery. However, the long-term success of the partnership depends heavily on the relationship: Are both parties satisfied with the agreement? Do they trust each other to uphold their commitments? How will the negotiation shape their future collaborations?
• Contract Negotiations with Suppliers: In supply chain negotiations, the focus may be on the price of goods or services, delivery schedules, and quality control. However, the relationship with the supplier is critical to ensure that both parties work together smoothly over time. If a company drives too hard on price and erodes the supplier’s profit margins, it may damage the relationship, leading to poor service or the loss of a reliable supplier.
• Employment Negotiations: When negotiating a job offer, salary, benefits, and working conditions are the substantive interests. But the relationship with the future employer is equally important. How the negotiation is handled can set the tone for the working relationship. If the negotiation process is contentious or if the new employee feels undervalued, it can harm morale and productivity once they start the job.

Strategies for Balancing Substance and Relationship

a. Separate People from the Problem

In integrative negotiation, one key strategy is to separate the people from the problem. This means addressing the substantive issue without letting personal emotions or relationships interfere. A negotiator should focus on finding a solution to the problem, not attacking the other party or damaging the relationship.

b. Focus on Interests, Not Positions

Another essential strategy is to focus on underlying interests rather than rigid positions. By identifying the true needs of both parties, negotiators can find creative solutions that address both substantive and relational concerns. This approach prevents one side from feeling like they are simply giving in, and it helps build long-term trust.

c. Build Trust Through Transparency

Transparency fosters trust and collaboration. By openly sharing goals and being clear about your intentions, you create an environment of mutual respect. This leads to better cooperation on substantive issues and stronger relationships moving forward.

d. Frame the Negotiation as a Collaborative Process

Instead of viewing negotiation as a zero-sum game, frame it as a collaborative process. By working together to solve a shared problem, both parties can achieve their substantive goals while building a relationship based on respect and partnership.

Conclusion

Successful negotiation requires more than just securing a favorable deal. It involves navigating the dual challenges of achieving substantive gains while preserving and enhancing the relationship between the parties involved. Recognizing that every negotiation has both substantive interests and relationship interests is key to creating agreements that not only deliver value in the short term but also foster long-term collaboration, trust, and mutual respect.

Balancing these two types of interests allows negotiators to create sustainable solutions that serve both their immediate needs and their future relationships, leading to more durable and mutually beneficial outcomes. A negotiator who understands this dynamic will be able to navigate complex negotiations with confidence, securing deals that are not only successful in the moment but also set the foundation for lasting partnerships.