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Principled Negotiation — Explained + Examples

What is Principled Negotiation?

Principled negotiation is a negotiation method that focuses on finding fair solutions that benefit both parties. Instead of arguing over who wins or loses, it encourages parties involved to understand each other’s needs and work together to reach an agreement. 

It was developed by Roger Fisher and William Ury through the Harvard Negotiation Project and was popularized in 1981 through their book Getting to Yes. Principled negotiation helps negotiators to focus on shared interests, consider different solutions, and use facts and fair standards to make decisions. 

This method treats both parties as a collaborative problem solvers working against a shared problem rather than opponents making compromises. The goal of principled negotiation is to reach an agreement that meets both sides' needs while maintaining a good working relationship.

Principled Negotiation vs Positional Bargaining

Principled negotiation and positional bargaining are two different approaches to reach an agreement. Principled negotiation focuses on understanding both parties’ needs and finding fair solutions, while positional bargaining focuses on defending each party’s demands and negotiating until both sides reach a compromise.

In positional bargaining, each party starts with a preferred outcome and tries to convince the other side to accept it. This can sometimes lead to disagreements, repeated counteroffers, and compromises that leave one or both parties dissatisfied. In contrast, principled negotiation encourages both parties to  look beyond their initial demands, consider different solutions, and use objective standards to reach an agreement.

For example, a buyer wants to pay $800 for a product, while the supplier asks for $1,000. Through positional bargaining, both parties may argue over the price until one agrees to meet the other halfway. In the worst-case scenario, one party may walk away without reaching an agreement, leaving both parties without a deal. However, with principled negotiation, they discuss their needs and explore other options, such as ordering larger quantities, adjusting payment terms, or agreeing on a longer contract in exchange for a discount, anything that can work for both sides.  

The main difference is that positional bargaining focuses on defending demands, while principled negotiation focuses on solving problems. Although both approaches can lead to an agreement, principled negotiation helps both parties achieve a fair outcome while protecting their relationship.

The Four Principles of Principled Negotiation

Principled negotiation is built around four core principles. Each one helps negotiators address disagreements more constructively and find solutions based on the actual needs of the parties involved. 

1. Separate the people from the problem

The core idea of the first principle is to address the issue without turning it into a personal conflict. 

During any negotiation, people may have different opinions, needs, and expectations especially when discussing money, deadlines, performances, or quality standards that can affect business operations. These differences can sometimes lead to disagreements and misunderstandings.

In addition, when one party feels attacked or criticized, that's when discussion can become personal, making it harder for both sides to reach an agreement. 

To avoid this, instead of blaming the other party or making personal judgement of the situation, both negotiators should focus on understanding what went wrong and find ways to resolve the problem together. This involves listening to each other’s concerns, and explaining each side’s needs rationally.

By keeping personal feelings separate from the issues, both parties can discuss disagreements more objectively and work toward a mutually acceptable solution.

2. Focus on interests, not position

The second principle focuses on understanding why each party wants what it is asking for. A position is what someone demands while an interest is the reason they want it. 

When negotiators focus only on positions, they may assume that one party must lose for the other party to succeed. Doing so, negotiators, may be stuck on defending competing demands instead of exploring possible solutions.

By identifying the interests behind each position, you can discover opportunities to address both parties' priorities.

3. Invent options for mutual gain 

The third core principle is to develop several possible solutions before deciding which agreement to pursue.

Most negotiators often settle on the first acceptable proposal both parties can live with. While it saves time and effort, deciding early can cause both parties to overlook alternative options that provide greater value.

But in principled negotiation, negotiators are encouraged to brainstorm several possible options before choosing the best choice. That extra effort upfront usually saves time later, because the final deal addresses both sides' interests better and is less likely to be reopened. 

4. Insist on using objective criteria 

The fourth principle encourages negotiators to evaluate proposals using facts and fair standards rather than personal opinions, pressure, or bargaining power.

When both parties disagree about what is fair or reasonable, objective criteria provide a common basis for making decisions. Instead of relying on personal preferences or trying to convince the other party through pressure, negotiators can use reliable evidence to support their proposals and reach a fair agreement.

Depending on the situation, objective criteria may include market prices, industry benchmarks, quotations from other suppliers, historical contract data, technical specifications, or assessments from independent experts. These standards help both parties understand why a proposal is reasonable and make decisions based on facts rather than assumptions.

Boeing and SPEEA: A Real-World Example of Principled Negotiation

In 2026, Boeing and the Society of Professional Engineering Employees in Aerospace (SPEEA), a union representing approximately 17,000 engineers, scientists, and technical employees, negotiated a new four-year employment contract. The discussions covered wages, benefits, and working conditions, but reaching an agreement proved difficult.

In August, SPEEA members rejected Boeing’s initial offer. Although the proposal included wage increases, employees wanted more predictable pay and had concerns about trust in management. With a potential strike looming, both sides needed to find a way forward.

Rather than ending the negotiations, both parties continued working toward an agreement. SPEEA gathered feedback from its members, and Boeing later presented a revised offer with larger guaranteed wage increases and changes to other contract terms. On October 1, members of both SPEEA bargaining units approved the revised offers, averting a potential strike.

This case shows how principled negotiation can help parties work through disagreements and reach an agreement.

1. Separate the People from the Problem

During the negotiations, the disagreement involved more than wages and benefits. Trust between Boeing's management and its employees had deteriorated over the years. Employees raised concerns about jobs moving out of state or overseas, safety and quality taking a back seat to production schedules, and engineering decisions being overruled or ignored.

These concerns made the negotiations more difficult because employees needed to feel that management was taking their concerns seriously, not just offering higher wages. Even an attractive contract could struggle to gain support if employees did not trust the people presenting it.

Despite the rejection of its initial offer, Boeing continued negotiating with SPEEA. Both sides returned to the table to work through the contract issues, and Boeing later said its revised offer reflected feedback from employees and the union's negotiating teams.

2. Focus on Interests, Not Positions

At first, the disagreement appeared to be about the size of the wage increase. However, simply offering more money was not enough to address employees' concerns. The real issue was how the pay increases were structured.

Boeing's initial offer tied much of the guaranteed wage increase to inflation, capped at 3%, with additional increases based on performance. Employees wanted more predictable earnings, particularly given their concerns about management’s decisions and the future of their jobs.

To better understand their priorities, SPEEA gathered feedback from its members. The results highlighted the importance of substantial, guaranteed wage increases and larger wage pools in the following years.

Boeing's revised offer addressed these concerns by providing a guaranteed 10% wage increase immediately, followed by another guaranteed 4% increase in March 2027. For 2028, 2029, and 2030, the agreement included annual wage pools of 6%, with every employee guaranteed an individual increase of at least 4%. The remaining 2% could be distributed based on performance.

This arrangement gave employees more predictable wage increases while allowing Boeing to retain a performance-based component in the later years of the contract.

3. Invent Options for Mutual Gain

Instead of negotiating only over salary increases, Boeing and SPEEA considered several parts of the employment package. The negotiations covered benefits, retirement contributions, paid leave, remote work, overtime limits, and career development.

The revised offer included an increase in the employee incentive plan target to 7% and raised Boeing's automatic 401(k) contribution from 3% to 4% for more than 7,500 workers under 40. It also included changes to virtual-work arrangements, reduced mandatory overtime limits, and provisions for communicating Boeing's future workforce needs to help employees plan their careers.

For example, the quarterly cap on mandatory overtime was reduced from 144 hours to 96 hours for engineers and 112 hours for technicians. These changes addressed concerns beyond salary, including workload and work-life balance.

By considering different aspects of the employment relationship, the parties had more terms to discuss than wages alone. The broader package gave employees additional benefits to evaluate while helping Boeing work toward an agreement that covered multiple workplace concerns and also offered them a way to avoid a potential strike and maintain workforce stability.

4. Insist on Using Objective Criteria

Both sides needed clear information to evaluate the proposed contract. At the beginning of negotiations, the teams reviewed SPEEA's member survey to help identify priorities. Later, Boeing and SPEEA presented figures showing how the proposed wage increases would affect employees' compensation.

Boeing estimated that average base salaries would rise from $152,000 to $208,000 for professional-unit employees and from $119,000 to $163,000 for technical-unit employees. Boeing stated that these figures were $11,000 and $8,000 higher, respectively, than under its initial proposal.

SPEEA calculated an average pay increase of 32% over four years, compared with 26.5% in the rejected offer, with a guaranteed minimum increase of 26%.

These figures gave employees a clearer way to compare the original and revised offers. Rather than relying on general promises of better compensation, they could examine the projected salary changes and the minimum increases included in the contract.

The initial offer's inflation-based formula, capped at 3%, had also contributed to employees' concerns about future pay. The revised offer set out specific wage increases and guarantees, making the proposed terms easier to understand and evaluate.

The revised agreement addressed several employee concerns, including more predictable wage increases and changes to benefits and working conditions. However, approving the contract was only one step toward improving the relationship between Boeing and its employees. Rebuilding trust remained important for future negotiations.

The case shows how understanding each side's concerns, exploring different solutions, and using clear information can help move a difficult negotiation toward an agreement.

Why BATNA Matters in Principled Negotiation 

Even when the goal is to find a solution that works for both parties, an agreement is not always possible. That is why every negotiator should consider what happens if the negotiation fails.

This is where BATNA comes in. BATNA stands for Best Alternative to a Negotiated Agreement. It is the best backup plan if both parties cannot reach an agreement.

In procurement, a BATNA might involve working with another supplier, buying a different product, postponing a purchase, or handling a service internally instead of hiring an outside provider.

Knowing the BATNA helps negotiators decide whether a deal on the table is worth accepting or whether another option would be better.

For example, a supplier wants to increase prices beyond what an organization can afford. Before the negotiation, the procurement team has already evaluated two alternative suppliers and found one that can meet the organization's requirements at a competitive price.

Having this alternative means the organization does not have to accept the price increase simply because the current supplier insists on it. The procurement team can continue negotiating, compare the available offers, or switch suppliers if the current deal is no longer suitable.

However, BATNA is different from a target price or walk-away point. A target price is the price a negotiator aims to achieve, while a walk-away point is the limit beyond which deal is no longer acceptable. BATNA, on the other hand, is the alternative available if no agreement is reached.

A strong BATNA gives an organization more flexibility because it reduces dependence on a single supplier. However, each option still needs careful evaluation. Factors such as price, quality, reliability, risks, and the time and effort required to switch suppliers all matter.

Overall, reaching an agreement should not come at the expense of a good deal. If the proposed terms fail to meet the organization's needs and an alternative offers a better overall outcome, walking away may be the smarter decision.

When Should You Use Principled Negotiation?

Principled negotiation is especially useful when both parties need to resolve disagreements while maintaining a good working relationship.

In procurement, this approach can be applied in several situations:

• Supplier price negotiations: Use market prices and cost data to assess proposed price increases and explore other ways to reach an acceptable deal.
• Contract disputes: Focus on the issue rather than personal disagreements, and use evidence and agreed contract terms to find a solution.
• Long-term supplier relationships: Understand what matters to both parties and develop agreements that support their business needs.
• Internal stakeholder negotiations: Resolve disagreements over budgets, specifications, deadlines, or resources by understanding each department's priorities.
• Complex negotiations: Consider different combinations of price, quality, delivery schedules, risk, and service levels instead of focusing on just one issue.

However, principled negotiation does not guarantee that both parties will cooperate. The other party may have different goals, refuse to share important information, or lack the authority to approve an agreement.

In these situations, it is important to set clear limits, verify claims whenever possible, and consider the BATNA when necessary. Willingness to cooperate does not mean abandoning business needs. The goal always is to find a fair and practical solution while protecting the organization’s interests.

Conclusion

Principled negotiation helps you approach disagreements differently. Instead of focusing on who gets what, you look at what matters to each side, explore possible solutions, and use facts to find an agreement that works for everyone. In procurement, this approach can help you negotiate better supplier contracts, resolve disputes, and maintain good working relationships without compromising your organization's needs.

The Boeing–SPEEA case also shows why understanding concerns beyond the initial demands can make a difference when working toward an agreement. However, reaching an agreement should not be your only goal. You also need to know when a proposed deal no longer serves your organization’s interests. That is where your BATNA comes in, giving you an alternative if negotiations fail.

Ultimately, successful negotiation isn't just about reaching a deal. It's about finding a solution that makes sense for both sides.

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