Management & Leadership · Foundations
Negotiation A discussion between two or more sides aimed at reaching an agreement, where each side has some interests it shares with the other and some it opposes. Full entry → is a discussion aimed at reaching an agreement — the back-and-forth that happens when two sides share some interests and oppose others. It shows up when salaries are offered, contracts are signed, conflicts are settled, and purchases are made. Skilled negotiators prepare a target and a Walk-away point The least favorable deal you will accept before choosing your alternative instead. Full entry →, look past positions to the interests underneath, and aim for a deal both sides can live with.
Everyone negotiates something, most days: a start date, a price, a deadline, a share of the work. The stakes are rarely huge on any single day, but they compound — people who negotiate well keep more of what matters to them and, just as important, keep the relationships the deal depends on. Academically, negotiation is a named management competency: the U.S. Office of Personnel Management lists influencing and negotiating among the skills expected of senior federal leaders. Practically, the same preparation works at a salary talk or a farmers' market stall. And the mindset carries forward: knowing what you need and what the other side needs is a skill for life, not just for contracts.
Negotiation is a discussion aimed at reaching an agreement. The definition this lesson uses comes from the Program on Negotiation at Harvard Law School, which quotes Roger Fisher, William Ury, and Bruce Patton's Getting to Yes: negotiation is back-and-forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed. Corporate Finance Institute (CFI) agrees in plainer words: negotiation is a dialogue between two or more parties with the intention of reaching a mutually beneficial outcome or resolving a conflict. Two features of these definitions matter. First, negotiation is a discussion: people talk, trade, and adjust rather than command. Second, it is aimed at an agreement: both sides intend to end with a deal, not just with a lecture. The phrase some interests shared and others opposed is the heart of it — if every Interest The underlying need, worry, or goal that a position is meant to protect or satisfy. Full entry → were shared, there would be nothing to negotiate, and if none were shared, there would be no reason to talk.
Negotiation is everywhere people have to share something scarce: time, money, tasks, or rights. Salaries: a job offer is a starting point, not a final answer — an applicant and a hiring manager discuss pay and start dates until both accept the terms. Contracts: a bakery and a delivery company do not just sign the printed agreement; they talk through rates, routes, and late-delivery penalties first. Conflicts: when two departments both need the same conference room, someone has to negotiate the schedule rather than let the argument fester. Purchases: the sticker price on a used car is an invitation to talk, and buyer and seller go back and forth until they find a number both can accept. In every one of these, the pattern is the same: sides with partly shared and partly opposed interests talk until they reach an agreement.
In any negotiation, each side says what it wants; that is its Position What a side says it wants in a negotiation — its stated demand, such as a specific price or a delivery date. Full entry →. The underlying need the demand serves is its interest. Getting to Yes teaches negotiators to explore the interests underneath stated positions, because positions collide while interests can often both be satisfied. Original example: Sasha and Jordan share an apartment. Sasha insists the bedroom window stay open all night — her position. Jordan insists it stay shut — his position. The interests underneath: Sasha cannot sleep in a stuffy room, and Jordan is kept awake by street noise and pollen. Once the positions are set aside, the fix is easy: keep the window closed but run a fan in Sasha's corner and move her bed away from the wall. Both needs are met, even though the positions looked opposite. The lesson: when a negotiation stalls on demands, ask what each demand is really protecting.
CFI sorts negotiations into two broad kinds. Distributive negotiation Bargaining over a fixed amount of value, where any gain for one side is a loss for the other. Full entry → is hard bargaining over a fixed amount: any gain for one side is a loss for the other, like two food trucks competing for the single last parking spot at a festival — one parks, the other does not. Integrative negotiation Bargaining that looks for ways to create additional value so both sides can come out ahead. Full entry → looks for ways to create value so that both sides can come out ahead; CFI describes it as aiming for a win-win situation. Same festival, different approach: the two trucks agree to share the spot on alternate hours and split the crowd's business. The first kind divides a fixed pie; the second tries to grow the pie. Most real negotiations contain both flavors, and noticing which one you are in — or could move toward — is a large part of negotiating skill.
CFI's advice is to assess what you are seeking and what the other party is seeking before the talk begins. Add one more number: your walk-away, the point below which you take your alternative instead. That number comes from your BATNA Best alternative to a negotiated agreement; the fallback you can take if talks fail, and the floor beneath your walk-away point. Full entry →, which Fisher, Ury, and Patton define as your best alternative to a negotiated agreement — not a price but the course of action you would fall back on if no deal is reached. Getting to Yes in fact warns against committing to a rigid bottom line and urges negotiators to build a strong BATNA instead, which the Program on Negotiation calls the negotiator's greatest source of power. Before negotiating, figure out your target (the outcome you are aiming for), your walk-away (the point below which you take your alternative instead), and what the other side needs (so you know what they can give). Job hunters who keep following other leads and buyers who talk to a seller's competitors are improving their alternatives, which quietly strengthens their hand.
Negotiations need no elaborate ritual. A plain four-step flow — open, explore, propose, agree — carries most of them, and it echoes the general process CFI describes: discussion, clarification, negotiating an outcome, and agreement. Open: start the conversation and set a cooperative tone. Explore: ask questions and learn what each side actually needs. Propose: offer a concrete deal, and be ready to adjust it. Agree: confirm the terms clearly enough that both sides know what they committed to. Skipping a step — proposing before exploring, or agreeing without confirming — is where deals go wrong.
The best deal is one both sides can live with. CFI warns that a negotiator who only cares about winning creates hostility and is less likely to keep the outcome, and the U.S. Office of Personnel Management defines the negotiating competency, in part, as building consensus through give and take. A deal that crushes one side tends to unravel later — the resentful party stops honoring it, and everyone loses. A durable agreement is not the one that maximized your take; it is the one that leaves both sides able to say yes and mean it.
Eli explains
Explain it like I’m 10
Negotiation is talking to find a deal you can both accept. You do it more than you think: agreeing on a price, a deadline, or who cooks dinner is all negotiation. The key move is to look underneath the demands. Your position is what you say you want; your interest is why you want it. Two people who argue over positions often find they actually need the same thing. And before you talk, know your walk-away: what you will do if no deal happens. That knowledge is quiet power. The goal is not to crush the other side; a deal they cannot live with tends to collapse later. Aim for an agreement both of you can keep.
Think of a pizza. In a distributive negotiation, there is one pizza and you are arguing over the slices: every slice you take is a slice they lose. In an integrative negotiation, you look for ways to make the deal better for both — order a bigger pizza, or agree on toppings you both like. The first splits a fixed pie; the second grows it.
A pizza has one price and one size, so growing the pie is easy to picture. Real negotiations are messier: value is subjective, information is incomplete, and the relationship matters as much as the slices. Sometimes the pie genuinely cannot grow — budgets and deadlines are real limits — and then you are back to dividing it fairly. And unlike a pizza order, people carry emotions and history into the room, so the numbers are never the whole story.
Maya runs a small catering business and needs a used delivery van. Her target is $8,000; her walk-away is $9,500, because above that she will keep using her old van and borrow her cousin's van — her BATNA. Before meeting the seller, she learns he is moving abroad in three weeks and must sell fast, and that his interest is a quick, sure sale, not top dollar. Her position is eight thousand; his is ten thousand. Instead of haggling the gap, she explores: he needs speed, she needs a working van with a clean title. They agree at $8,600 with payment in full that week and a mechanic's inspection the same day — she stays under her walk-away, and he gets the fast, certain sale he needs. Both sides can live with the deal, which is the test of a good one.
Negotiation is the give-and-take of reaching an agreement: prepare a target and a walk-away, look for the interests beneath the positions, and aim for a deal both sides can live with.
3 questions here, of 5 in this lesson’s practice set. Answers stay hidden until you check.
Digging in on your position — my price or nothing — and treating the other side's demand as the enemy.
A position is just the surface. Ask what need your demand and their demand are each protecting; interests can often both be satisfied.
Treating every negotiation as a fixed pie, assuming your gain must be their loss.
Check for integrative moves first — different priorities can create value for both sides. If the pie is truly fixed, then divide it, but know you are in a distributive negotiation.
Walking in without a walk-away point, then accepting a bad deal out of fear of losing the conversation.
Name your BATNA before you start. Knowing your fallback tells you when to accept and when to walk.
Celebrating a one-sided win and calling the negotiation over.
A deal the other side cannot live with tends to fall apart later — they stop honoring it, and the win evaporates. Aim for terms both sides can keep.
A position is what a side says it wants; the interest is the underlying need the demand protects. Two opposite positions — window open versus window shut — can sit on top of interests that are both satisfiable.
Distributive bargaining divides a fixed pie, so one side's gain is the other's loss; integrative bargaining tries to grow the pie so both sides can win. Real negotiations often mix the two.
Negotiation is the give-and-take of reaching an agreement between sides with partly shared and partly opposed interests; conflict resolution is the broader field of settling disagreements peacefully, of which negotiation is one tool (covered in its own lesson).
EliExplains lessons are original prose written from the open, credible references above. See Copyright & Licensing.
Researched 2026-08-22
Educational content only. It is not medical, legal or professional advice. Found an error? Tell us.
