The Electronic Negotiator

March 20, 2000

Harvard Business Review, January-February 2000, p. 16-17.

Negotiations conducted over e-mail often go nowhere. Here’s what you can do to improve the odds of success.

In our increasingly wired world, more and more negotiations are taking place through e-mail rather than over the phone or in person. But how do the rules of the game change when the contact is virtual? What happens to the negotiation dynamic when there are no physical or vocal cues to guide the process? Harvard Business School professor Kathleen Valley has been studying those questions. HBR senior editor Regina Fazio Maruca recently sat down with her to find out what she’s learned.

Do people really behave differently when using e-mail?

Absolutely. For one thing, people feel less compunction to share information when they’re communicating with one another through e-mail than they do when they are face to face or even talking on the phone. The norm in face-to-face negotiation is something we call the “openness script” -your instinct is to share information. What we see as the norm in e-mail, by contrast, is something we call the “haggling script” -you hold information much closer to the chest. And when information is shared electronically, it’s much more likely to be exaggerated or altered in some way. People lie more readily when they are interacting through e-mail.

In addition, expectations of reciprocity are more rigid in electronic negotiations. Instead of focusing on reaching a solution that benefits both parties, participants fend to focus on making sure they’re not giving up more than the other party. There’s something about seeing the entire exchange documented in black and white an a computer screen that makes negotiators less flexible, less willing to get involved in the kind of give and take that’s normal in more personal communications.

How does that affect the progress of a negotiation?

With e-mail, negotiations are considerably more likely to degenerate into an unpleasant exchange. In face-to-face encounters, if the conversation gets a little nasty, someone will back down. You’ll hear, “I’m sorry, I didn’t mean it that way,” or, “I don’t think you understood what I was trying to say. Let me try to explain it a different way. What I meant was….” When the interaction is purely electronic, people are more willing to escalate conflict – to get downright rude, even. There’s a reason that flaming has become so common on the Internet.

Ultimately, the whole e-mail dynamic makes it much more difficult to reach an agreement. In a recent study comparing e-mail, telephone, and face-to-face negotiations, we found that when people meet face to face, the most frequent outcome is a mutually beneficial agreement. When people talk over the phone, the most frequent outcome is that one party takes the greater share of the profits; it’s asymmetric. With e-mail, the most common outcome is impasse. We found that more than 50% of e-mail negotiations end in impasse; only l9% end that way in face-to face negotiations.

So why negotiate through e-mail at all?

Because it can be much more efficient. You avoid having to travel, to organize meetings, to play phone tag, and all the attendant costs. And since e-mail is an asynchronous medium, you can communicate when you feel comfortable communicating; you don’t have to rush a response or a counteroffer, as you sometimes do when conversing in real time. So I’m not suggesting that electronic negotiation is necessarily bad. You just have to weigh the greater efficiency against the negative factors. Are you willing to give up some of the information exchange that comes with face-to-face and phone conversations? Will you know if someone is lying, and do you have a plan to deal with it if they are?

When do e-mail negotiations work best?

When you’ve already established rapport with the other person. When you can truthfully say, “I care about how the other party is going to leave this negotiation. In economic terms, you’d say that you have a “utility for their outcome.” There are a number of ways to build such rapport. Meet the other party face to face first, if possible, or at least have a phone conversation. Then continue the negotiation over e-mail.

If you must use e-mail as your only medium, at least spend same time up front sharing social information. What tends to happen in e-mail interactions is that people don’t make general introductions of themselves. When people meet in person, they chat a little. They drink coffee together. They make some small talk. They try to find common social ground, and that makes the ensuing negotiation proceed more smoothly. But with e-mail, there are no social norms or expectations; the tendency is to cut right to the chase. It’s worth the effort to resist that tendency, to share some personal information at the outset.

Once you do start negotiating, it’s important to watch for signs of an emerging dispute or impasse. If you ask a question and you get a response that seems defensive instead of one that offers more information, don’t respond in kind. Don’t get angry or personal. Stop typing and pick up the phone.