WHAT IS THE

DIFFERENCE BETWEEN
LEADERSHIP AND
MANAGEMENT?
FREE REPORT
SUCCESSFUL LEADERSHIP STRATEGIES
FROM HARVARD’S PROGRAM ON
NEGOTIATION
Executive Committee About the Program on Negotiation at Harvard Law School
Guhan Subramanian Widely recognized as the preeminent leader in the field of negotiation and negotiation
PON Executive Committee Chair
research, the Program on Negotiation (PON) is an interdisciplinary, multi-university
Harvard Law School
Harvard Business School research center based at Harvard Law School. Offering timely executive education
programs, teaching negotiation resources, the Negotiation Journal, special community
Max Bazerman
Harvard Business School
events, and webinars, PON is a one-stop resource for both aspiring and accomplished
negotiators.
Gabriella Blum
Harvard Law School Our faculty have negotiated peace treaties, brokered multi-billion dollar deals, and
Hannah Bowles hammered out high-stakes agreements around the globe. They are prominent
Harvard Kennedy School authors, leading researchers, and distinguished professors—many of whom have
Nicole Bryant
originated the negotiation strategies used by many of the world’s most successful
Program on Negotiation at leaders…and they teach at PON’s renowned programs:
Harvard Law School
• Negotiation and Leadership • Negotiation Essentials Online
Jared Curhan
Massachusetts Institute of Technology
• Harvard Negotiation Master Class • PON Expert (PONx)
Sloan School of Management
Learn more or register at pon.harvard.edu/executive-education/
Sheila Heen
Harvard Law School

Alain Lempereur
Brandeis University

Deepak Malhotra
Harvard Law School

Brian Mandell
Harvard Kennedy School
Table of Contents
Robert Mnookin
Harvard Law School
Real Leaders Negotiate
Jeswald Salacuse by Jeswald Salacuse Page 2
Tufts University Fletcher School

James Sebenius
Lessons from a “Master Negotiator”: Nelson Mandela Page 6
Harvard Business School
Build Strong Relationships in Business Negotiations Page 10
Lawrence Susskind
Harvard Law School Bruce Wasserstein and the Negotiation Game Page 14
Massachusetts Institute of Technology

When Leading Multiparty Negotiations, Break It Down Page 17

Lead the Way: Resolving In-House Disputes

by Hannah Riley Bowles Page 21

Tension at the Office? Negotiate Workplace Conflict Page 26

Copyright © 2019 by Harvard University.

This publication may not be reproduced in part
or whole without the express written permission
of the Program on Negotiation. You may not
forward this document electronically.
CONTINUE YOUR
NEGOTIATION LEARNING

ATTEND AN UPCOMING EXECUTIVE EDUCATION PROGRAM

• Negotiation and Leadership: Dealing with Difficult People and Problems. Thirty years
of thinking, compressed into three thought-provoking days. In sessions taught by our
expert faculty, you’ll broaden our understanding of negotiating concepts, acquire proven
negotiating techniques, and have the opportunity to put your learning into practice.

• Harvard Negotiation Master Class: Advanced Strategies for Experienced Negotiators.

Exclusively for Program on Negotiation alumni, this advanced program offers unprecedented
access to negotiation experts from Harvard Law School, Harvard Medical School and Harvard
Business School.

• Negotiation Essentials Online. Prepare yourself to negotiate, manage your emotions,

create and claim value, and deal with difficult conversations through real-world case
studies, simulations—with dynamic video-based lessons from PON’s renowned faculty.

• PONx. Taught by world-class faculty, PON Expert one-day programs are designed to
help you build expertise in a specific area—from managing emotions and negotiating
international deals, dealing with difficult people and the art of saying no.

ACCESS MATERIALS AND PUBLICATIONS IN THE TEACHING

NEGOTIATION RESOURCE CENTER
The Program on Negotiation’s Teaching Negotiation Resource Center features role-play
simulations, videos, books, periodicals, and case studies. Most teaching materials are
designed for use by college faculty, corporate trainers, mediators, and facilitators, as well
as individuals seeking to enhance their negotiation skills and knowledge.

To learn more, visit www.pon.harvard.edu/store/policies

PRO GR A M ON N E G O T I AT ION

Real Leaders Negotiate

Many managers view negotiation as a tool to use outside the organization

to deal with customers, suppliers, and creditors. By contrast, inside the organization,
their thinking often is, “It’s my way or the highway.” According to conventional
wisdom, managing people requires charisma, vision, and a commanding
manner—but not negotiation skills. Real leaders don’t need to negotiate.
This is a common misperception about the nature of leadership, which can
be defined as the ability to cause individuals to act willingly in desired ways for
the benefit of a group. In fact, leadership almost always involves negotiation, and
good leaders are invariably effective negotiators.
Experienced managers know that, when it comes to leading people,
authority has its limits. After all, some of the people you are supposed to
lead will inevitably be smarter, more talented, and, in some situations, more
powerful than you are. In addition, often you’re called to lead people over
whom you have no real authority, such as members of commissions, boards,
and other departments in your organization. A focus on four key aspects of
negotiation theory—interests, relationships, voice, and vision—will improve
your leadership skills.
1. Practice interest-based leadership. Why should the people you’re supposed
to lead follow you? If you believe that your charisma, your exalted office, or your
vision is reason enough, you’re in trouble. While these qualities may affect how
others relate to you, the unvarnished truth is that other people will follow you
when they judge it’s in their best interest to do so. Whether they’re acting as
individuals or team members, people almost always give first priority to their
own interests. Just as wise negotiators focus not on the other side’s positions
but rather on their interests, effective leaders seek to understand the interests of

2
PRO GR A M ON N E G O T I AT ION

those they lead and to find ways of satisfying those interests in order to achieve
organizational goals.
Leaders’ failure to comprehend fully the interests of those they lead can
have disastrous results. In 1985, Joe Foran established Dallas-based Matador
Petroleum Corporation to find and develop oil and gas deposits in the American
southwest. Through a series of shrewd acquisitions, Foran built Matador into
one of the larger privately held petroleum firms in Texas. To raise capital, he
gave investors seats on Matador’s board. With a 10% interest in Matador,
Chairman and CEO Foran remained its largest individual investor. In spring
2003, Tom Brown Inc., a publicly traded oil company based in Denver, offered
to buy Matador for $388 million. Foran opposed the offer, which he felt did
not account for Matador’s growth potential. At the board meeting to discuss
the bid, Foran was astounded when the other directors voted to approve the
sale. He realized too late that the other directors’ interests were not the same as
his own. Foran had the energy, talent, and time to build a company that would
give him financial security in his retirement, which was still many years away.
But most of the other directors were retired individuals who had been hurt by a
falling stock market and declining investment returns. Their interest was to take
the money and run—and that’s exactly what they did. Had Foran understood all
this earlier, he might have been able to structure an arrangement that would have
given the directors the cash they needed while still allowing him to keep control
of his company.
Effective leaders realize that they need to know people as individuals to truly
understand their interests. Some individuals care more about long-term career
development, for instance, than about compensation. When you understand
where employees’ true interests lie, you can then shape your messages and your
actions to meet those interests in ways that will achieve your leadership goals.
2. Negotiate relationships. Relationships are as important to leadership as
they are to negotiation. A relationship is a perceived connection that can be
psychological, economic, political, or personal; whatever its basis, wise leaders,
like skilled negotiators, work to foster a strong connection because effective
leadership depends on it. Positive relationships are important not because

3
PRO GR A M ON N E G O T I AT ION

they engender warm, fuzzy feelings, but because they engender trust—a vital
means of securing desired actions from others. Consider that any proposed
action, whether suggested by a negotiator at the bargaining table or a leader at a
strategy meeting, entails risk. People will view a course of action as less risky and
therefore more acceptable when it’s suggested by someone they trust.
Four building blocks can help you create effective working relationships
with the people you lead: (1) two-way communication, which allows information
to flow easily in both directions; (2) a strong commitment from the leader to
the interests of those he leads; (3) reliability, which the leader shows by behaving
predictably and honoring promises and commitments; and (4) respect for the
contributions that followers make to the organization.
3. Find the right leadership voice. When the poet Walt Whitman wrote
“Surely, whoever speaks to me in the right voice, him or her I shall follow,” he
conveyed the notion that persuasive communication is fundamental to effective
leadership. Whitman’s words also underscore the importance of shaping
leadership communications to meet individual concerns, interests, and styles.
When deciding how to communicate, recognize that the medium you
choose reveals something about you and your relationship with the person
you are trying to lead. Suppose that you’re a company CEO trying to persuade
your board of directors to support an acquisition. What if you sent each board
member a detailed memorandum stating the terms and consequences of the
deal? Intentionally or unintentionally, a generic memo could signal that you
take members’ support for granted, that you place little value on their opinions,
and that you, not they, are running the show. Instead, you might personally visit
each director to explain the acquisition’s importance. A face-to-face meeting
shows the individual director that her support is important and that you respect
her autonomy and judgment. What’s more, holding such one-on-one meetings
will enable you to get to know your directors’ individual interests and concerns,
structure arrangements that satisfy those interests and concerns, and still allow
you to make the acquisition that you feel is important for the company’s future.
“As chairman, I thought I had been leading the other directors in the
boardroom at our quarterly meetings,” the Texas CEO who was outvoted by

4
PRO GR A M ON N E G O T I AT ION

his board ruefully told me. “I should Negotiating a Vision

have been trying to lead them one- In 1986, the investment bank Goldman Sachs was a $38
billion business owned by more than 100 active and retired
on-one outside the boardroom a lot partners. While the partnership structure had insulated the
more frequently.” company from the vicissitudes of the stock market and given
the company a strong culture of teamwork, it had some
4. Negotiate a vision for the significant disadvantages, particularly an unstable capital base
organization. Organizations, large and and an inability to grow by making acquisitions with stock.
small, look to their leaders to establish Because of these factors, the firm’s nine-person management
committee recommended that Goldman Sachs become a
an organizational vision. Popular corporation and sell its shares to the public. Over a weekend
commentary on corporate leadership in December 1986, all the partners met to consider this new
vision. Rather than presenting a fait accompli, Goldman’s
presupposes that a company’s vision comes
leadership stayed faithful to the firm’s ingrained teamwork
from its CEO and that, without a strong culture during the two-day retreat. The partners debated
CEO, the company has no vision. But that’s the proposal at length and with high emotion, but the
meeting ended with no decision. Goldman Sachs remained
not the case. Members located throughout a partnership.
an organization have plenty of thoughts Ten years later, the partners once again considered a proposal
about what the organization is and should to make Goldman Sachs a publicly traded corporation. This
time, a special committee prepared an exhaustively detailed
be. Thus, the challenge of setting a group’s proposal for an IPO, and the firm leaders actively lobbied
course lies in forging a single vision partners to support it. Once again, a weekend partnership
meeting was held to consider the firm’s future. It became clear
out of the multiplicity of visions held
to the executive committee that the partners did not want to
by the group’s members. The process of sell the firm, so the IPO proposal was withdrawn.
articulating a vision is one of negotiation— In 1998, the firm’s leadership established a subcommittee
to set strategy in a rapidly changing global financial
in particular, multilateral negotiation,
environment. Ultimately, the committee recommended a
which relies on coalition building. five-year program of aggressive growth that included going
Like a skilled diplomat, a leader, public, and the firm’s two cochairmen then engaged in one-
on-one conversations with nearly all the firm’s 190 partners
whether a corporate CEO or a department to persuade them to accept the recommendation. Then in
head, creates a common vision by building June 1998, the partners convened for yet another weekend
retreat. This time, they voted to sell the firm’s shares to the
a coalition among its members to support public. After 12 years of talks, the firm’s leadership finally
that vision. Building a coalition in support succeeded in negotiating a multilateral vision to carry
Goldman Sachs into the 21st century.
of an organizational vision demands a
skilled use of the negotiation principles
I’ve outlined, including understanding members’ interests, creating effective
working relationships, and communicating in the right voice and medium. It
is a labor-intensive, time-consuming process that requires you to connect with

5
PRO GR A M ON N E G O T I AT ION

all key players. As the sidebar “Negotiating a Vision” explains, Goldman Sachs,
the venerable investment-banking partnership, required more than a decade of
discussions, carefully orchestrated by firm leaders, to negotiate its transformation
into a publicly traded corporation.
By Jeswald Salacuse, Tufts University.
First published in the May 2006 issue of Negotiation Briefings.

Lessons from a “Master Negotiator”: Nelson Mandela

Some people learn to negotiate on the job, in a classroom, or in a therapist’s

office. In Nelson Mandela’s case, “prison taught him to be a master negotiator,”
writes Bill Keller in his New York Times obituary of the legendary activist-
turned-president, who died on December 5, 2013.
Soon after his arrival at South Africa’s brutal Robben Island prison for
a life sentence, Mandela “assumed a kind of command,” Keller writes. He
befriended many of his white captors, whom he introduced to visitors as “my
guard of honor.” He tried to persuade younger political inmates to analyze their
opponents’ strengths rather than plunging headlong into conflict. And during
his 27 years of imprisonment, Mandela deeply absorbed the value of patience,
discipline, and empathy.
Mandela may have honed many of his negotiation skills in prison, but
he was a natural-born dealmaker. Those of us in less-challenging realms than
apartheid-era South Africa can learn from his beliefs, decisions, and actions.
A hard-line position. In the late 1940s, Mandela became active in the
African National Congress (ANC), a well-established South African political
organization dedicated to securing full citizenship for blacks. As he rose
through the ranks and gained influence, Mandela began to question the ANC’s
reliance on peaceful protest to make headway. Without vetting his views with
ANC leadership, he publicly spoke out in favor of armed resistance, only to be
censured for diverging with the organization’s policy.
Decades later, Mandela took a similar approach when making a much more
fateful break with the ANC’s party line. In 1985, 23 years into his imprisonment,

6
PRO GR A M ON N E G O T I AT ION

numerous signs—including international pressure, a devastating trade boycott,

and growing violence between protestors and the police—indicated that the
apartheid regime was weakening.
The ANC held the stance that it would not negotiate with the South
African government. Mandela himself had personally rejected the possibility
of negotiation in numerous public statements, once saying, “Only free men can
negotiate.” Meanwhile, the government also took a hard line against negotiation
with the ANC, believing that to do so would signal weakness.
Both sides insisted they would not negotiate unless each made significant
concessions, a “classic problem in prolonged conflicts,” writes Program on
Negotiation chair Robert Mnookin in his book Bargaining with the Devil: When
to Negotiate, When to Fight (Simon & Schuster, 2010). When each side demands
that the other relinquish significant bargaining power before talks even begin,
negotiation is unlikely, and conflict calcifies.
Moving ahead of the flock. Given the entrenched stalemate, it was remarkable
that Mandela decided to try to launch negotiations between the ANC and the
government. Even more strikingly, he had no authority to speak on behalf of the
ANC, which was run as a collective.
Believing that his fellow ANC leaders would disagree with his decision,
Mandela covertly sent a letter to South Africa’s minister of justice, Kobie Coetsee,
in which he offered to meet secretly to discuss the possibility of negotiations.
Coetsee eventually agreed, and the two men launched clandestine talks that laid
the groundwork for a democratic, post-apartheid South Africa.
“There are times when a leader must move out ahead of the flock,” Mandela
wrote of his bold decision in his autobiography, Long Walk to Freedom (Little,
Brown, 1994), and “go off in a new direction, confident that he is leading people
the right way.”
For most of us, secretly moving forward with a negotiation against
the wishes of our superiors and colleagues would be a risky, even foolish
move. Business negotiators typically must secure buy-in from others in
their organization before breaking from past practice. For such contexts,
Mandela, who was raised by a prominent tribal chief, offers another useful

7
PRO GR A M ON N E G O T I AT ION

shepherding metaphor. As a result of the long hours he spent in childhood

listening to the consensus-building conversations of the tribal council,
Mandela observed that the chief “stays behind the flock, letting the most
nimble go ahead, whereupon the others follow, not realizing they are being
led from behind.”
The quote suggests the value of lobbying others in support of your cause,
then letting them make your argument to reluctant parties. This is the type of
“mapping backward” strategy that David A. Lax and James K. Sebenius elaborate
on in their book 3-D Negotiation: Powerful Tools to Change the Game in Your
Most Important Deals (Harvard Business School Press, 2006). More broadly,
Mandela’s stealth overtures remind us that those who see clearly what others
cannot may have a responsibility to use their powers of persuasion to win over
naysayers—and to act without them when necessary.
“Hating clouds the mind.” One noteworthy quality of Mandela’s was his
ability to negotiate calmly with his enemies at the same time that he was
absorbed in a passionate, all-consuming struggle against them.
Asked by Keller in 2007 to explain how he kept his hatred of the regime that
had oppressed him and his people in check, Mandela replied, “Hating clouds the
mind. It gets in the way of strategy. Leaders cannot afford to hate.”
Even as Mandela largely succeeded in regulating his own emotions, his keen
sense of empathy enabled him to identify ways to capitalize on the emotions of
his counterparts and adversaries.
To take one example, after being elected president of South Africa in 1994,
Mandela faced the task of ending violent conflict in the country’s large Zulu
nation between the ANC and the Inkatha Freedom Party, led by Mangosuthu
Buthelezi. Unlike other ANC members, who demonized Buthelezi, Mandela
welcomed him into his new government, a decision that helped to end the
violence, writes Keller in the Times.
In an interview, Mandela explained that his peace-building efforts in
the Zulu nation were based on a simple insight: Buthelezi, though raised as a
member of the Zulu family, was tortured by the fact that he was a nephew rather
than a direct successor to the king. By choosing “to love him into acquiescence,”

8
PRO GR A M ON N E G O T I AT ION

writes Keller, Mandela assuaged Buthelezi’s deep-seated insecurities and won

his trust and cooperation in the process.
As described in this issue’s cover story, emotional intelligence is likely
to be a valuable skill for negotiators, allowing us to accurately read our
counterparts’ emotions, manage our own feelings, and successfully mediate
conflict. To cultivate these skills, spend time listening to and observing your
fellow negotiators, making note of their insecurities and grievances. Doing so
should enable you to address their core concerns, which could have the effect
of softening their position on the issues that matter most to you.
Action over ideology. As illustrated by his eventual willingness to negotiate
with the apartheid government, Mandela was at heart a pragmatist rather than
an ideologue.
“He was not a theoretician, but he was a doer,” a longtime colleague of
Mandela’s, Joe Matthews, said of him in an interview with the television show
Frontline. “He was a man who did things, and he was always ready to volunteer
to be the first to do any dangerous or difficult thing.”
This tendency toward action led Mandela to contradict himself at times, as
when he steered the ANC away from nonviolence in favor of armed insurrection
in the wake of a police massacre of peaceful demonstrators in 1961. He explained
later that his nonviolence rhetoric had been “not a moral principle but a strategy;
there is no moral goodness in using an ineffective weapon.”
Mandela’s decision to initiate negotiations with the South African government
from prison may serve as the most prominent example of his willingness to change
his positions in the service of his greater goals. As Mnookin explains in Bargaining
with the Devil, negotiators sometimes face the difficult decision of whether to
engage with a person or organization they consider to be morally repugnant.
Typically, we choose not to negotiate in such situations, or we allow a dispute to
escalate into litigation. Demonizing the other side, we believe we will be tainted by
association or that the other party will inevitably take advantage of us.
Not negotiating with an enemy on moral grounds can be a legitimate
decision. But because our moral judgments tend to be based on intuition, not
reason, they can be dangerous traps. When we take a hard-line stance without

9
PRO GR A M ON N E G O T I AT ION

thoroughly analyzing the likely costs and benefits of negotiating, we risk allowing
our principles to get in the way of the greater good. Wise negotiators follow
Mandela’s example and rationally consider whether or not to negotiate.
First published in the March 2014 issue of Negotiation Briefings.

Build Strong Relationships in Business Negotiations

While a student at Stanford University in the mid-2000s, Kevin Systrom

met Facebook founder and CEO Mark Zuckerberg at gatherings on campus.
Though Systrom declined Zuckerberg’s proposal that he drop out of school and take
a job with Facebook, the two men kept in touch by phone in the years following.
After Systrom launched photo-sharing app Instagram in October 2010, Zuckerberg
had him over for dinner at his Palo Alto, California, home a few times to discuss
“philosophy,” according to Vanity Fair. Zuckerberg wanted to keep an eye on the
potential competitor, and, at some point, he says, “it occurred to me we could be
one company.”
In April 2012, after Systrom turned down a $500 million offer from Twitter,
Zuckerberg invited Systrom over to his home for a long conversation about how
Facebook could help take tiny Instagram, which then had only 13 employees, to
the next level.
“This never had the feeling of negotiation, because we kind of wanted to
work together,” Zuckerberg told Vanity Fair. The discussions quickly led to
a $1 billion offer from Facebook and a promise from Zuckerberg to allow
Instagram to maintain its independence.
Systrom met with his business partner, Mike Krieger, to review the offer.
“I really like Mark, and I really like his company,” Systrom told Krieger. “And I
really like what Facebook is trying to achieve.” The pair decided to sell. The entire
negotiation had lasted three days.
Forming relationships with the leaders of companies he might want to
target is a pattern for Zuckerberg. In 2012, the Facebook chief cultivated a
friendship with WhatsApp founder Jan Koum over the course of hikes and
dinners. Like Systrom, Koum overcame his initial skepticism about a Facebook

10
PRO GR A M ON N E G O T I AT ION

acquisition after finding that he and Zuckerberg shared similar views on a host of
technology- and business-related issues. In February 2014, Koum agreed to sell
his company to Facebook for a staggering $19 billion.
It may not be difficult to form trusting relationships in negotiations where
one party is offering the other a huge pile of cash. But Zuckerberg’s strategy
of patient relationship building still serves as a model worth emulating for
business negotiators.
Forging close bonds typically helps negotiators reach better deals, work
together effectively over time, and manage conflict. As the anecdotes about
Zuckerberg show, time and patience are critical to forming strong relationships.
Here we present some of the challenges to relationship building in negotiation
and offer advice to help you address them.
Overcome partisan perceptions. When meeting a new counterpart, we may
consciously seek a lasting relationship with him or her, but an unconscious
bias may get in the way: partisan perceptions, or the tendency to see our own
side as more intelligent, skilled, reasonable, and moral than the other side. Our
partisan perceptions can cause us to expect the worst from our counterparts,
especially those we don’t know well. They also can become self-fulfilling
prophecies, leading us to act in ways that trigger and exacerbate the same
behaviors we’ve condemned, write David A. Lax and James K. Sebenius in
their book 3-D Negotiation: Powerful Tools to Change the Game in Your Most
Important Deals (Harvard Business School Press, 2006). Obviously, that’s not a
recipe for a strong relationship.
How can you lay the groundwork for a deep-rooted bond? Consider this
anecdote from 3-D Negotiation. Late on a Friday afternoon, a senior partner in
a law firm called a talented young associate into his office. The partner asked the
associate to represent the plaintiff in upcoming settlement negotiations and, if
necessary, a possible trial.
The young lawyer worked all weekend to prepare a compelling plaintiff ’s
brief. After reviewing the work on Monday morning, the partner praised the
associate highly. Then he revealed that the firm would actually be representing
the defendant in the case, not the plaintiff. “Now that you completely understand

11
PRO GR A M ON N E G O T I AT ION

the other side’s viewpoint,” the senior lawyer told the associate, “we need you
to prepare our side.” With this “trick,” the senior lawyer prepared his younger
colleague to understand the other party and its interests, a critical step in
overcoming partisan perceptions.
You might try adapting the senior lawyer’s trick to your own negotiation
preparation. That is, consider writing up (or having your team write up) a
detailed “brief ” for both (or all) sides in an upcoming negotiation. You may find
that the brief prepared for your counterpart is underdeveloped and simplistic
compared with the brief written for your own side. If so, go back to the drawing
board until you feel you have explored the nuances of the other side’s perspective
as fully as possible. You might also enlist disinterested third parties to assist you
in sorting out your counterpart’s point of view.
Do ask, do tell. Doing deals and forming relationships are not mutually
exclusive goals, writes Jeswald W. Salacuse in his book Negotiating Life: Secrets for
Everyday Diplomacy and Deal Making (Palgrave Macmillan, 2013). Negotiators
must be keenly aware that the way in which they negotiate will affect their
relationship with their counterpart. For example, if you are looking to take time
off from work, how you negotiate that leave will affect your relationship with
your boss, for better or worse.
Notably, some people are more concerned about the relationship
dimensions of negotiations than others. In a survey of negotiators in 12 different
countries, Salacuse found that people were more or less evenly split between
whether they viewed the primary goal of negotiating to be a contract or a
relationship. However, cultural and career differences played a role: Negotiators
from India were far more relationship-oriented than those from Spain, for
example, and lawyers (perhaps not surprisingly) were more contract-focused
than managers and marketers. Such differences hint at the importance of trying
to assess the degree to which an individual counterpart is focused on building a
strong relationship.
Some negotiators rarely take time to get to know their counterparts, whether
due to impatience or a sense that they would be wasting the other party’s
time. That’s usually a mistake, writes Salacuse in Negotiating Life. Relationship

12
PRO GR A M ON N E G O T I AT ION

building—and effective negotiation—require the kind of mutual knowledge

that can come only from asking questions and sharing information. That means
taking time to explore not only the other party’s interests and motives through
questioning but also who she is as a person.
Years ago, during tense negotiations with the United States, Israeli
Prime Minister Golda Meir expressed deep sympathy toward one of the U.S.
negotiators, whose wife had recently died. Meir mentioned the pain she had felt
upon the death of one of her family members. The brief conversation between
the two negotiators established a relationship that dramatically improved the
tenor of the negotiation, according to Salacuse. As this example illustrates, asking
and telling sends an important message to the other side: You are interesting,
important, and valued.
Confronting conflict. Relationships typically become all the more important
after a business transaction has been completed. “Once the contract is signed,
we put it in the drawer,” executives have told Salacuse repeatedly. “After that,
what matters most is the relationship between us and our partner, and we are
negotiating that relationship all the time.”
A significant aspect of negotiating ongoing relationships is negotiating
conflict. Inevitably, problems arise in the life of a contract: Parties might realize
that they neglected to stipulate a key term, leading to differing perceptions of
what’s fair, or one side may come to believe that the other is failing to live up to
the agreement, for example.
As described in the cover story of this issue, negotiating dispute-prevention
clauses in advance can go a long way toward helping you manage conflict
productively when it arises. Learning how to discuss areas of conflict, rather
than simply sweeping them under the rug, can be just as important. In their
book Difficult Conversations: How to Discuss What Matters Most (Penguin,
2010), Douglas Stone, Bruce Patton, and Sheila Heen explain that every tough
conversation is made up of three different conversations: the “What happened?”
conversation, the “feelings” conversation, and the “identity” conversation.
Keep these three overlapping conversations in mind the next time you are
working to get a relationship back on track:

13
PRO GR A M ON N E G O T I AT ION

1. The “What happened?” conversation. When disagreements arise between

parties in a business relationship, each side is likely to blame the other. But
arguing about who’s to blame prevents us from finding out what actually
happened. So probe to learn what the other person’s intention was, then share
your own version of the story. Instead of choosing which story is “right,” embrace
them both.
2. The “feelings” conversation. It’s tempting to focus exclusively on solving a
problem and ignore the underlying emotions. But when left unaddressed, negative
emotions tend to deepen conflict by blocking our ability to listen. Acknowledging
your range of complex feelings can promote mutual understanding.
3. The “identity” conversation. Conflict can shake our sense of identity to
the core, causing us to question our competence and worth. It may help to
think about which personal hot buttons the conflict is pushing, such as a fear of
rejection or a sense of inadequacy. Looking beyond black-and-white identities
(“I’m such a pushover”), consider the nuances of your self-image, recognize that
everyone makes mistakes, and acknowledge your contributions to the problem.
First published in the July 2014 issue of Negotiation Briefings.

Bruce Wasserstein and the negotiation game

Not many people can claim to have created an entirely new profession, but
that’s what the late Bruce Wasserstein is credited with doing. Wasserstein, who
died on October 15, 2009, at age 61, pioneered the art of corporate dealmaking,
and he did so with a skill that few can hope to match.
A graduate of Harvard Business School and Harvard Law School,
Wasserstein built the mergers-and-acquisitions (M&A) practice at First
Boston Corporation in the 1980s with Joseph Perella. The two men went on
to form their own firm, and Wasserstein became a pivotal player in the 1980s
M&A frenzy. In 1989, he made a name for himself while advising buyout
house Kohlberg Kravis Roberts & Company on its acquisition of RJR Nabisco.
Wasserstein became known for outfoxing competitors with clever deal terms
and for goading clients to bid high for choice targets.

14
PRO GR A M ON N E G O T I AT ION

The crowning deal of Wasserstein’s career was his conversion of staid

investment bank Lazard from a dysfunctional family-owned firm into a publicly
traded company. After being handpicked by Lazard’s chairman, Michel David-
Weill, to run the company, Wasserstein negotiated near-total control of the firm
and engineered a restructuring and initial public offering that ultimately forced
out the man who had hired him.
The immovable object. Founded as a dry-goods store in 1848, Lazard
became legendary in the latter half of the 20th century as “a group of important
people, giving important people advice,” in the words of one company leader
quoted by the New York Times. But by the late 1990s, the venerable house was
faltering, limited to offering merger and investment counseling while newly
consolidated rivals such as Merrill Lynch added loans and other perks to deliver
one-stop banking.
David-Weill, a descendant of the firm’s original founders, made Lazard’s
financial matters worse by doling out lavish payments to partners and to a
shadowy group of nonworking stockholders known as the “capitalists”—
primarily retired partners and partners’ descendants. Though he’d promised to
appoint his successor by 2005, David-Weill stalled, playing internal candidates
against one another until they defected, taking clients with them.
The unstoppable force. Hoping to turn the firm’s fortunes around, the Lazard
chairman identified an outside candidate who seemed perfect for the job: Bruce
Wasserstein. After all, when he co-founded Wasserstein Perella, he had announced
to the Wall Street Journal his intention to make it “the Lazard of the 1990s.”
In January 2002, after negotiating for almost total control over the firm,
Wasserstein signed on as Lazard’s CEO for five years. David-Weill, still chairman,
held on to just one source of power: the right to veto any proposed initial public
offering (IPO).
Wasserstein wasted no time improving Lazard’s infrastructure and luring
high-profile deal makers from rival firms, paying them handsomely with
revenues siphoned away from David-Weill’s capitalists.
In 2004, Wasserstein unveiled his plan to transfer majority ownership from
the capitalists to the working partners through an IPO. Howls of protest from

15
PRO GR A M ON N E G O T I AT ION

David-Weill and his cronies ultimately gave way to a deal: they would leave
Lazard for $1.6 billion.
A new era for Lazard. Initially, the New York Times called the May 5, 2005,
Lazard IPO an “unmitigated fiasco—for everybody but Mr. Wasserstein and
Lazard.” On the first day of trading, chief underwriter Goldman Sachs lost
$15 million propping up the stock, while Wasserstein walked away with almost
$300 million, and the capitalists and David-Weill got their promised billion-
dollar buyout.
Quickly, though, Wasserstein and Lazard won over admirers. Company
stock and core businesses began thriving. Most notably, the once-turbulent
firm is “very quiet,” an insider told the Financial Times. “There is no sense of
infighting.” By getting rid of Michel David-Weill, Wasserstein made sure of that.
A game of chess. The maneuver encapsulated Wasserstein’s view of
negotiation as a chess game rather than a battle of wills. Instead of waiting to
engage David-Weill directly on the job, Wasserstein negotiated in advance for
the tools he needed to carry out his vision. He showed that through careful
planning, negotiators can often sidestep the personality clashes that would
otherwise short-circuit talks.
Perhaps somewhat surprisingly for the master of the hostile takeover, when
Wasserstein received the Program on Negotiation’s Great Negotiator award in
2007, he stressed the value of listening closely to one’s counterpart to uncover
hidden interests. He noted that an active listener resembles an optometrist asking
a patient about different lenses during an eye exam—constantly questioning until
the focus is sharp.
But, referencing his negotiation with David-Weill, Wasserstein revealed a
stance more in keeping with his formidable reputation: “Sometimes reason and
compromise and cooperation are a very good thing, and sometimes you have to
say no, it doesn’t make any sense.”

Lessons from a Wall Street titan:

■ Look forward, reason back. The employment terms that Wasserstein
negotiated in 2001 set the stage for an IPO.

16
PRO GR A M ON N E G O T I AT ION

■ Build coalitions through incentives. The new CEO created momentum for
change by recruiting star partners via lucrative long-term contracts.
■ Weaken deal spoilers. By slashing the capitalists’ payoffs, Wasserstein
made his $1.6 billion buyout offer more tempting.
Adapted from articles printed in the October 2007 and January 2010 issues of Negotiation Briefings.

When Leading Multiparty Negotiations, Break It Down

Imagine leading negotiations involving representatives from most

of the world’s nations on a contentious topic such as sustainable development.
Where would you start? How would you proceed when conflict emerged?
How would you know when it was time to wrap things up?
These are some of the questions that Ambassador Tommy Koh has faced
over the course of his 50-year diplomatic career, during which he has led
international conferences, mediated global disputes, and negotiated on behalf
of the United Nations and his home country of Singapore.
On April 10, 2014, the Program on Negotiation welcomed Ambassador Koh
to the Harvard campus to present him with its 2014 Great Negotiator Award.
Over the course of panel discussions led by Harvard Business School professor
James K. Sebenius, Program on Negotiation Managing Director Susan Hackley,
and Harvard Kennedy School professor Nicholas Burns, Koh offered insights
that will benefit any negotiator involved in managing complex talks.
According to Koh, the chair of an international conference must be both
“a choreographer and the conductor of an orchestra.” In addition to negotiating
the specifics, a conference chair must choreograph an effective structure for the
conference and then evaluate and conduct the players, he explained. He then
offered several vivid anecdotes as illustration.
When consensus is good enough. Arriving in Rio de Janeiro to chair the
United Nations Earth Summit in June 1992, Ambassador Koh felt “desperate,”
he said. He and his team had just one week to negotiate consensus on principles
of sustainable development for the 21st century among 178 countries. Koh was

17
PRO GR A M ON N E G O T I AT ION

armed with a draft agreement three years in the making, but it included 300
paragraphs of disputed language in brackets.
To make the Earth Summit more manageable, Koh laid down two ground
rules, he explained at one of the Great Negotiator panels. First, no unbracketed
(agreed-upon) language could be reopened for discussion. Second, any proposal
to improve the language of bracketed (disputed) text would have to be approved
unanimously by the conference.
To Koh’s shock, the lead representative from Saudi Arabia took the floor and
asked for the entire chapter on atmosphere to be deleted from the draft, saying
that the chapter was a “mistake.”
With the Saudis filibustering, Koh realized he would have to “outflank” his
adversary. He met individually with members of OPEC, the international oil
cartel of which Saudi Arabia is a founding member, and asked for their support.
The OPEC nations agreed with Koh that a chapter on atmosphere was justified.
Next, Koh approached Arab countries that were receiving aid from Saudi
Arabia. “If you feel that you have to speak in support of the Saudi opinion,” he
said to them, “please do so, but please be very brief and make your argument as
weak as possible.”
Then, following an entire night of Saudi filibustering, Koh announced on
the conference floor that the Saudis had made their position clear, but that as
chair, he was ruling that sufficient consensus existed to adopt the chapter on
atmosphere. Koh asked the Saudi delegation if they wanted to object to his
ruling. They declined, and the chapter stood as written.
“Consensus is not unanimity,” Koh said at the Program on Negotiation
event. “If somebody is just being difficult, doesn’t have a reasonable case, has no
support whatsoever, I think it is incumbent upon you as the chair not to allow
one delegation to hijack the process.”
When one party in a multiparty negotiation refuses to budge, continued
negotiation may be a waste of time. Instead, consider following Koh’s lead and
targeting other parties who are at risk of being swayed by the deal blocker. Work
on winning over those parties with the goal of building a strong coalition. If
you’re effective, the deal blocker will face a choice between getting on board and
being left behind.

18
PRO GR A M ON N E G O T I AT ION

Break the negotiation down to size. In 1978,

as part of the Third United Nations Conference
In Ukraine, a “missed opportunity”
for negotiation
on the Law of the Sea, Ambassador Koh In 1993, following the breakup of the Soviet Union,
was tasked with negotiating agreement on Tommy Koh led a U.N. mission to negotiate peace
between the Russian Federation and the Baltic nations
the financial terms of contracts to mine the of Estonia, Latvia, and Lithuania. Lessons from that
ocean floor. Rifts had developed on the issue experience, he said, could help to explain the current
crisis in Ukraine and how it might have been defused.
between various coalitions, such as developed
At that time, with his nation weak and economically
and developing nations, and coastal and
devastated, Russian president Boris Yeltsin was willing
landlocked nations. to cooperate in settling disputes with the Baltic nations
Koh described how he broke down to curry favor with the West. Consequently, Koh said
he was able to help close the gap between the two
the unwieldy negotiation, which involved sides. But he cautioned the Estonians, Latvians, and
about 1,000 delegates from 150 nations, to Lithuanians that “this window will close” when Russia
inevitably became strong again.
a manageable size, a process he has called
Koh specifically called on the Baltic states, which
“miniaturization.” He explained that it was had suffered greatly during Soviet occupation, to
important to include all the nations in initial “forgive the sins of Stalin” and treat the many Russian
pensioners and families living within their borders
discussions, as many of them needed to be with fairness and respect. Otherwise, he believed, the
educated about the issues at stake, the technical Russian doctrine of “near abroad,” which it uses to
assert its rights over former Soviet republics, could
terms to be discussed, and the parameters of
create problems for the Baltics in the future.
an agreement. Years later, in 2014, with Russia stronger and no
Once everyone had been brought up longer leaning toward the West, President Vladimir
Putin cited persecution of ethnic Russians in another
to speed, Koh convened a smaller group of
former Soviet republic—Ukraine—as justification for
decision makers. To avoid the appearance of invading Crimea. Koh expressed regret that the United
playing favorites, he used a clever strategy: Nations did not step in to organize negotiations on the
future of Ukraine before the protests in Kiev reached a
I invented a new group called the Group crisis point. The failure of the international community
of Financial Experts, and I picked a meeting to try to facilitate such negotiations was a “missed
opportunity,” according to Koh.
room that could accommodate a maximum
of 40 people. It was open-ended. … Anybody
could come, but … calling it the Group of Financial Experts was somewhat
intimidating. So a lot of my colleagues felt that they didn’t qualify to join this
group. I didn’t try to dissuade them that they did.
As Koh had hoped, only about 30 to 40 representatives felt confident enough
in their abilities to join the Group of Financial Experts. This proved to be the
ideal size to make further headway.

19
PRO GR A M ON N E G O T I AT ION

When this group was close to a deal, Koh said he “took a great risk”: He
formed an even smaller negotiating group. He chose just one person to represent
the developed world and three from the developing world: one from Asia, one
from Africa, and one from Latin America.
The group surprised conference leaders by reaching a highly creative
agreement. The success led to Koh’s being elected president of the entire Law
of the Sea conference, which in 1982 produced an ocean treaty that has been
ratified by 165 countries.
As his diplomatic career progressed, Koh came to view miniaturization as
a risky process. Negotiators who are excluded may reject the final agreement,
not necessarily because they disagree with its substance but because the process
appears undemocratic and lacking in transparency, he said.
For miniaturization to be effective, he cautioned, leaders must choose
“men and women of standing in their respective groups” who have the power
to convince their group to ratify the final agreement. “If you choose badly,”
Koh said, “you will be rebuffed.”
Adopting a “tough heart.” On the Program on Negotiation panel,
Ambassador Koh said he was so “softhearted” that he had never fired an
employee during his 50-year diplomatic career. Yet when chairing international
conferences, Koh felt a strong sense of responsibility to replace people who were
not succeeding, whether due to a lack of knowledge, indecision, controversy, or
some other problem.
During preparations for the Earth Summit in 1990, a committee formed
to draft the summit’s Declaration of Principles. Upon receiving conflicting
proposals from the conference’s various delegations, the committee’s chair, the
environmental minister of Czechoslovakia, Bedřich Moldan—a scientist with
little diplomatic experience—personally drafted a compromise text rather than
negotiating agreement with the various parties. To his surprise and dismay, the
Group of 77, a coalition of developing nations, rejected Moldan’s draft on the
grounds that it was biased in favor of developed countries—a characterization
that Koh called “more perception than reality.” The Group of 77 then announced
that it would no longer negotiate under Moldan’s chairmanship.

20
PRO GR A M ON N E G O T I AT ION

With Koh standing by Moldan, the committee chose India and Norway to
lead their informal negotiations, which eventually reached an impasse. Koh, with
Moldan’s blessing, agreed to take over the talks on two conditions. First, he asked
India and Norway to produce a single negotiating text within 24 hours. Second,
he instructed them to narrow the negotiations down to eight countries from
the developing world and eight from the developed world. India and Norway
agreed. The smaller group finished negotiating within 24 hours, producing a final
agreement that was not dramatically different from Moldan’s.
Why did Koh succeed where Moldan had failed? First, Koh adopted a more
open process that relied on negotiation rather than unilateral decision making.
Second, Koh believes that because he was from a developing nation, the Group
of 77 viewed him as more sensitive than Moldan to their aspirations to develop
economically yet sustainably. “I think being seen as a man from the south was
psychologically helpful,” Koh said.
The story illustrates the importance of creating both the reality and the
perception of neutrality when negotiating consensus among multiple parties.
First published in the August 2014 issue of Negotiation Briefings.

Lead the Way: Resolving In-House Disputes

You enter your new position as CEO of a fast-growing technology firm

with enthusiasm. As you articulate an organizational vision, you create
product-centered work groups for the purpose of speeding delivery of new
products to market.
Soon you realize that the very divisional loyalties that helped build the
company are stifling cross-functional work. Some groups have resorted to turf
wars. And while most of your company’s board is sold on your change initiative,
certain stalwarts are questioning whether it’s all smoke and no fire. You’re facing
a leadership challenge: uniting the company while maintaining the board’s
support for your vision.
As you think strategically about how to convert conflict into productivity,
you can gain special insights from alternative dispute resolution, or ADR.

21
PRO GR A M ON N E G O T I AT ION

Although leaders like to think of themselves as negotiators, they rarely recognize

themselves as mediators and arbitrators, observes Howard Raiffa, the Frank
Plumpton Ramsey Professor of Managerial Economics Emeritus at Harvard
University. Yet the more strategically you approach conflict, the better equipped
you’ll be to use it as an opportunity for organizational growth and change. This
article describes several common ADR techniques and show you how to tailor
them to a variety of leadership objectives.
Three dispute-resolution techniques. Here are the three most common ADR
techniques and some tips on applying them to conflicts in your workplace.
1. Mediation. Typically, mediators are neutral third parties who help
conflicting parties reach a voluntary agreement. The goal of mediation is to build
consensus around a mutually beneficial solution.
Rather than imposing this solution, mediators encourage parties to explore
the interests and concerns that underlie their positions. Returning to our
opening scenario, you obviously have no authority to impose an agreement
among your board members regarding your change initiative. As a mediator,
however, you may be able to guide the board’s deliberations by consulting with
individual members. Mediators often facilitate joint problem solving by helping
parties draft proposals and counterproposals. Taking the lead on identifying
points of agreement may be particularly beneficial when disputants mistrust
one another.
Private meetings can set the groundwork for group summits of all
disputants. Summits can maximize information sharing and foster creative
solutions while also providing a forum for public commitments—a powerful
influence tool, according to Nobel Laureate Thomas Schelling of the University
of Maryland. After all, once parties publicly proclaim their positions, they
increase the personal costs of backing away later.
2. Arbitration. Arbitrators—or organizational leaders playing the part of
arbitrators—listen to each side of the conflict and then unilaterally decide and
announce a binding outcome. Imagine that the technicians and marketing
professionals in one of your company’s work groups disagreed about whether
certain software should be updated. Following an arbitration approach, you

22
PRO GR A M ON N E G O T I AT ION

would hear out each side and then decide yourself whether the technicians
should invest time in the effort.
Clearly, arbitration has the advantage of giving you control over the
outcome of disputes. Because leaders have a stake in how in-house conflicts are
resolved, having control may sometimes be more important to you than helping
parties work out issues on their own. Note, however, that arbitration motivates
disputants to present information strategically to win their cases—and thus may
reduce the quality and quantity of information available to you, the arbitrator.
3. Med-arb. When managing conflict among subordinates, you have the
authority to impose solutions. Yet long-term success may rest on your ability
to help others work together to resolve issues. This paradox suggests that a
hybrid ADR approach may be ideal for tackling workplace conflict: mediation-
arbitration, or med-arb. In med-arb, the third party begins by acting as a
mediator who helps disputants cooperate on a solution; if mediation fails, the
third party shifts to the role of arbitrator and imposes a solution.
How might you apply a med-arb strategy to the workgroup conflict between
technicians and marketers? Initially, you’d encourage them to brainstorm
proposals themselves. Suppose they reach agreement on some but not all the
issues involved. You’d then step in and settle the remaining points of conflict.
While still retaining your ability to impose a decision, med-arb taps the
strength of mediation to enhance information sharing, promote creative problem
solving, and engender ownership of the outcome. Dispute-resolution scholars
such as Stephen B. Goldberg and Jeanne Brett of Northwestern University have
shown that the more control parties perceive themselves to have over a decision-
making process, the fairer they view the process and the more willing they are to
accept and abide by the solution.
Match the process with your objectives. When deciding how to manage
workplace conflicts, consider the various strengths and weaknesses of the three
ADR processes. Here are six common leadership objectives with some suggested
dispute-resolution strategies.
Objective #1: Finding lasting solutions to problems. Suppose that members of
a work team complain that others in their group are slow to respond to e-mail

23
PRO GR A M ON N E G O T I AT ION

and phone messages. If the unresponsive members believe their responsibility is

to attend to other priorities, such apparent attitude problems could reflect deeper
organizational issues. Mediation might encourage members to take responsibility
for generating lasting solutions.
Because you ultimately retain the authority to impose a decision, your
attempt at mediation might actually be more akin to med-arb. Employees
anticipating a managerial directive may behave as if they’re entering a trial rather
than a problem-solving process. If so, emphasize that you expect everyone to
take responsibility for the outcome.
Objective #2: Increasing perceived fairness. When you intervene in
organizational conflicts, you inevitably have ongoing relationships to manage
and a personal stake in how problems are resolved. If you believe that disputants
will question your impartiality due to past alliances, decisions, or practices—or
if you yourself are concerned about your ability to be fair—factor these concerns
into the ADR process you choose.
In interviews with managers about their experiences intervening in disputes,
Blair Sheppard, current CEO of Duke Corporate Education, a not-for-profit
specializing in executive-education programs; John Minton, CEO of Havatar
Associates, a management consulting firm; and David Saunders, the dean of
faculty management at the University of Calgary, found that managers who were
especially concerned about fairness were likely to exert control in the early stages
of the dispute-resolution process.
Unfortunately, this managerial impulse toward a process that resembles
arbitration runs counter to the advice of numerous experts. To maximize
perceived fairness, Brett, Goldberg, and other ADR scholars advise using
mediation or med-arb strategies.
Objective #3: Maximizing value. When using mediation rather than
arbitration techniques, you gain a stronger opportunity to work with your
employees to develop creative, value-generating solutions to their disputes.
Professional mediators tend to be better equipped than arbitrators to elicit
information about the interests and perceptions that underlie parties’ positions.
How can you learn to think like a mediator? Howard Raiffa advises leaders
to act as “contract embellishers,” using the privileged information gained in

24
PRO GR A M ON N E G O T I AT ION

private meetings to improve proposals for agreement in ways that enhance the
value gained by all.
Objective #4: Minimizing time costs. Mediation facilitates more creative
problem solving and engenders greater ownership of the agreement than
arbitration, but it is likely to take more time than an arbitration process. As
a result, you’ll have to weigh the benefits of mediation against time factors.
Conflict that flares in the face of an impending deadline may be best resolved—
if only in the short run—by an arbitration approach in which you hear out all
sides and impose a decision.
Objective #5: Establishing policy or precedent. Some conflicts raise
implications that should be elevated to the level of policy, note Frank Sander,
professor emeritus of Harvard Law School, and Stephen Goldberg. Suppose
that within the cross-functional work group described earlier, the technicians
updated the software in record time, but it was slow to market due to a
distribution problem. Now team members are fighting over how to divvy up
credit and blame.
You might be tempted to try a mediation strategy to help the parties
work out their own problems, but that might not be the best choice. This team’s
idiosyncratic solution might set an undesirable precedent for other teams
approaching similar problems, and the question of how to align compensation
with work goals is a strategic one that probably should be addressed at the
organizational level.
When a conflict raises questions of policy or precedent, your best approach
may be to hear out all sides and then reach a decision, arbitration-style.
Objective #6: Redressing an ethical violation or power imbalance. Mediation
may be the wrong approach for conflicts that raise possible ethical violations,
according to Sander and Goldberg. They also note that mediation may be
inappropriate when disempowered parties cannot adequately represent
themselves or advocate for their interests. Suppose that a manager was verbally
abusive to a junior technician, and you brought the two employees together with
the intention of helping them iron out their differences. Fearful for her career,
the technician would be unlikely to participate fully in the problem-solving

25
PRO GR A M ON N E G O T I AT ION

process. A mediation approach might simply replicate the abusive relationship.

Furthermore, abusive behavior warrants an organizational response.
When unethical behavior or inequities must be redressed, you may
need to censure offenses publicly and categorically rather than working out
private solutions.
By Hannah Riley Bowles, Harvard Kennedy School.
First published in the April 2007 issue of Negotiation Briefings.

Tension at the Office? Negotiate Workplace Conflict

As chief investment officer at JPMorgan Chase, Ina Drew earned the
respect of her peers; subordinates; and, most notably, her boss, bank CEO Jamie
Dimon. Upon being appointed head of the bank in 2005, Dimon put Drew in
charge of the chief investment office (CIO), which manages the bank’s overall risks
and many billions in highly liquid securities.
During morning conference calls in the midst of the 2008 financial crisis,
the New York Times reports, Drew would grill the traders in her office about
their positions and the risks they would face in the day ahead. While other
banks suffered huge losses, Drew helped her company navigate the choppy waters
relatively unscathed.
But in 2010, Drew contracted Lyme disease and was frequently absent from
the office. The lack of a leader caused “long-simmering internal divisions and
clashing egos” to surface in her unit, according to the Times.
In 2011, Achilles Macris, head of the CIO’s London office, dropped caps on
risk control that had required traders to exit positions when their losses topped
$20 million, according to the Wall Street Journal.
As Macris expanded trades in London, his counterpart in New York, Althea
Duersten, raised objections. But she was “routinely shouted down” by Macris,
former traders told the Times. The tension between Macris and Duersten left
traders feeling nervous and distracted.
On April 6, 2012, the Wall Street Journal ran an article on a rogue CIO trader
in the London office who was reportedly putting the bank at risk with his massive

26
PRO GR A M ON N E G O T I AT ION

bets. The article prompted Dimon to take a closer look at the CIO’s books and
notice the mounting losses—up to $100 million daily.
On May 10, Dimon publicly disclosed $2 billion in losses (now estimated to be
at least $3 billion), setting off a storm of criticism and scrutiny of JPMorgan Chase.
In the resulting scandal, Drew was fired, and the stellar reputations of Dimon and
his bank were tarnished.
When we think of negotiation, we tend to picture a formal, painstaking
dealmaking process with individuals or a team from outside our organizations.
Yet every workday, we engage in seemingly small but significant negotiations
with our coworkers over issues such as project assignments, departmental
funding, and vacation requests.
If a serious conflict arises from one of these negotiations, it becomes difficult
for us to stay focused on our jobs, and the organization can suffer. Here are
several targeted negotiation strategies to help you address dysfunctional conflict
in the workplace, both as an employee and as a manager.

Reappraise anger.
The morning conference calls Ms. Drew had presided over devolved into
shouting matches between her deputies in New York and London, the traders said.
—New York Times
Negotiation researchers have found that anger can trigger several harmful
cognitive biases, including overconfidence, unrealistic optimism, and aggression.
In one study, negotiators who were angry at each other were less successful at
both claiming and creating value than were negotiators who viewed each other
positively. Anger can also cause people to become more tolerant of risk, which
could partially explain the JP Morgan Chase London CIO’s increasingly reckless
trades and the decision to loosen risk-control measures. And, obviously, anger
distracts workers from their tasks and fosters a tense, competitive workplace.
You might conclude that negotiators should try to tamp down angry feelings
whenever they arise. Yet anger can be a useful emotion to feel and express.
Anger insulates us from indecision and overanalysis, and displays of anger
communicate to others how seriously we take the issue at stake.

27
PRO GR A M ON N E G O T I AT ION

Even if we could suppress angry feelings, this wouldn’t necessarily be a

wise strategy. In one negotiation study, James Gross of Stanford University, Jane
Richards of the University of Texas at Austin, and Oliver John of the University
of California at Berkeley compared the relative costs of two forms of emotional
regulation: 1) suppression, or attempts to tamp down our emotions, and 2)
reappraisal, or attempts to control our emotions by changing how we think about
a given situation. In this study, relative to those who engaged in reappraisal,
participants who suppressed their emotions had impaired cognitive processing,
and their counterparts liked them less.
How can you successfully reappraise feelings such as anger? Consider when
you may be subject to strong emotional experiences and reappraise the situation
beforehand, suggests Stanford University professor Margaret A. Neale. As an
example, before a conference call with a coworker you’ve been butting heads
with, think about what the other party might say that would cause you to react
emotionally. If you anticipate a threat, consider what the threat might suggest
about what the other side values, says Neale. This type of reappraisal may help
you head off an emotional reaction and build bridges with your coworker.

Respond to challenging moves.

“The strife distracted everyone because no one could push back,” said one
trader in the office who insisted on anonymity. … “I think everything spiraled
because of the personality issues.”
—New York Times
As the New York and London CIO offices at JPMorgan Chase negotiated
trades and risk, they also implicitly negotiated many other issues, including
power, relationships, and performance.
Whenever negotiators are bargaining over concrete issues such as price, they
are simultaneously conducting a parallel negotiation regarding the terms of their
relationship, write Deborah M. Kolb and Judith Williams in their book Everyday
Negotiation: Navigating the Hidden Agendas in Bargaining (Jossey-Bass, 2003).
This “shadow negotiation” takes place under the surface, and it explains why
discussions of concrete, seemingly rational matters can lead to angry outbursts,
hurt feelings, and simmering conflict.

28
PRO GR A M ON N E G O T I AT ION

Negotiators make several “moves” to

question each other’s legitimacy and assert
Banking on an honest accounting
JPMorgan Chase CEO Jamie Dimon has a reputation as
their own power, note Kolb and Williams. A an exacting boss. During Monday-morning operating
negotiator may challenge your competence or committee meetings, the Wall Street Journal reports,
Dimon routinely grills the heads of the bank’s various
expertise—for example, by saying you don’t businesses about problems in their units, asking about
have the experience to perform a particular everything from the performance of client investments
to mobile phone charges. One business head reportedly
task. Someone might demean your ideas in a
compared the ordeal to a “full-body scan.”
way that it makes it difficult for you to respond, Yet Dimon gradually paid less attention to the CIO’s
perhaps by saying, “You can’t be serious!” And trading activities because of his confidence in its head,
Ina Drew, and the hefty profits her unit generated. When
a coworker might criticize your style with a line
Dimon asked her about the Journal’s article on high-
such as “Stop being so sensitive.” By challenging, risk trades in the CIO’s London office, Drew assured
demeaning, and criticizing you, the other party him and the rest of the bank’s operating committee
that the trading strategy was financially sound. Based
(whether consciously or not) may be attempting on Drew’s assessment, Dimon publicly called reports of
to provoke you into an emotional response that the CIO’s trades a “complete tempest in a teapot.”

will shift the balance of power. Dimon soon realized his mistake in taking Drew’s
opinion at face value, as CIO losses began to appear on
How can you defend yourself against such the books. The crisis illustrates the need for managers
moves without being accused of overreacting? to hold their employees accountable—even when
discussions and negotiations occur in perfect harmony.
Kolb and Williams suggest several responses,
which they call “turns”:
■ Interrupt the move by taking a break, which should give everyone time
to gain control of their emotions, in addition to halting momentum that is going
against you.
■ Try naming the move; that is, let your coworker know that you recognize
it as a power play. If someone says, “You can’t be serious!” in response to one of
your ideas, you might respond, “Actually, I’m quite serious. Instead of cutting me
off, how about if you give me a chance to clarify my plan?”
■ Correct the move, substituting the other side’s negative remarks with a
more positive interpretation of your behavior. If a coworker incorrectly blames
you for a decision that went wrong, rather than lashing out, provide him or your
boss with hard evidence of the facts.
■ Divert the move by shifting the focus away from the implications of the
move and back to the issue at hand. To the person who criticizes you as overly

29
PRO GR A M ON N E G O T I AT ION

sensitive, you could say, “I think it’d be best if we avoid personal judgments and
concentrate on the proposal.”
Kolb and Williams’s moves-and-turns framework serves as a reminder of the
hidden personal dynamics that underlie everyday negotiations, including those
among coworkers, and helps you respond to them as productively as possible.

Mediate a resolution.
Drew returned from sick leave, but she relocated to an executive office removed
from the trading floor and took a more hands-off approach to managing her team.
—New York Times
When conflict among employees is disrupting morale, it’s time for managers
to intervene. Techniques that professional mediators use can help to resolve
workplace strife, writes Tufts University professor Jeswald Salacuse in his book
Leading Leaders: How to Manage Smart, Talented, Rich, and Powerful People
(Amacom, 2006).
In mediation, the disputants work together to reach a resolution that is
satisfactory to both sides. The collaborative nature of mediation increases the
odds that the parties will abide by any agreement they reach. The mediator’s
role is to assist disputants in crafting a resolution by encouraging them to share
information about their interests and explore creative solutions.
It isn’t realistic for managers to take on the mantle of an impartial mediator.
Because they have an interest in furthering the organization’s goals and
restoring harmony, managers must balance their own opinions and allegiances
when mediating disputes. But they can adapt mediation skills with the goal of
furthering the organization as a whole.
In 2011, New York’s Metropolitan Opera peacefully reached a new contract
with the union representing its choristers, dancers, stage manager, and staff
directors by bringing in Joseph Volpe, the opera’s retired general manager, as its
lead negotiator. Although Volpe represented management, his history as a union
member—he had started as a carpenter at the Met and worked his way up the
organization—allowed him to promote compromise across the two groups and
serve as a de facto mediator. Undoubtedly, Volpe’s experience as both employee

30
PRO GR A M ON N E G O T I AT ION

and manager allowed him to understand both sides’ interests and bridge divides
between them.
If listening closely and encouraging problem solving doesn’t bring employees
together, managers have other tools at their disposal. For example, leaders can
leverage punishment and rewards to resolve employee conflicts, writes Salacuse.
If two unit heads have been openly fighting over an account, you could threaten
to penalize them or their departments—say, by giving the account to a third
unit or by decreasing their funding—to motivate them to negotiate a resolution.
Alternatively, you could reward disputants for setting aside their differences,
whether with praise, additional funding, or some other valued resource.

Create accountability.
“The big lesson I learned: Don’t get complacent despite a successful track
record,” Mr. Dimon said in an interview. … “No one or no unit can get a free pass.”
—Wall Street Journal
In the early years of her tenure as CIO chief at JPMorgan Chase, Ina Drew
is reported to have been a detail-oriented boss who quizzed her traders carefully
about their decisions and the risks they were taking, according to the Wall Street
Journal. Only after she was on sick leave did destructive conflict flare up between
the New York and London offices.
It’s no surprise that interoffice negotiations turned tense when employees
were no longer held accountable for their decisions. Making employees
accountable for their decisions helps them control their emotions and engage
in more systematic thinking, Jennifer Lerner of the Harvard Kennedy School
and Philip Tetlock of the University of California at Berkeley have found in their
research. For accountability to be effective, employees should be held responsible
not only for their outcomes but also for the processes they follow.
First published in the August 2012 issue of Negotiation Briefings.

31
CONTINUE YOUR NEGOTIATION LEARNING

ATTEND AN UPCOMING EXECUTIVE EDUCATION PROGRAM

Negotiation and Leadership: Dealing with Difficult People and Problems
Designed to accelerate your negotiation capabilities, this three-day offering examines core decision-making
challenges, analyzes complex negotiation scenarios, and provides a range of competitive and cooperative
negotiation strategies. You will emerge well prepared to achieve better outcomes at the bargaining table, every
time.
With In-Depth, Bonus One-Day Sessions
Groundbreaking ideas, global insights, and innovative strategies—all taught by the experts who literally wrote
the book on them.

Harvard Negotiation Master Class: Advanced Strategies for Experienced Negotiators

The Harvard Negotiation Master Class features small-group, faculty-led consultations; customized feedback;
and unprecedented access to negotiation experts from Harvard Law School and Harvard Business School.

Negotiation Essentials Online

Prepare yourself to negotiate, manage your emotions, create and claim value, and deal with difficult
conversations through real-world case studies, simulations—with dynamic video-based lessons from PON’s
renowned faculty.

PON Expert (PONx)

Taught by world-class faculty, PON Expert one-day programs are designed to help you build expertise in a
specific area—from managing emotions and negotiating international deals, dealing with difficult people and
the art of saying no.

EDUCATE YOURSELF AND OTHERS ON KEY NEGOTIATION TOPICS

Access teaching materials and publications in the Teaching Negotiation Resource Center, including role-play
simulations, videos, books, periodicals, and case studies. Most materials are designed for use by college faculty,
corporate trainers, mediators, and facilitators, as well as individuals who seek to enhance their negotiation
skills and knowledge.

READ THE NEGOTIATION JOURNAL

This quarterly publication is committed to the development of better strategies for resolving differences through
the give-and-take process of negotiation. Negotiation Journal’s eclectic, multidisciplinary approach reinforces its
reputation as an invaluable international resource for anyone interested in the practice and analysis of negotiation,
mediation, and conflict resolution.

www.pon.harvard.edu