Negotiation, Mediation, and Arbitration

The term negotiation conjures up a variety of images in people's minds, most notably deal making and dispute resolution. Indeed, individuals negotiate job assignments, supplier contracts, joint ventures, and the resolution of conflict in the workplace. Whether applied to crafting deals or resolving disputes, negotiation refers to a joint decision-making process in which two or more parties, whose interests conflict, attempt to reach an agreement. When negotiations become difficult or impossible, and when the costs of disagreement are high, others often intervene. These third parties typically act as mediators or arbitrators as they assist negotiators in reaching agreement.

Negotiation, mediation, and arbitration are therefore distinct but related processes. An important difference among them, however, is in the degree of control individuals have over the process (i.e., how they come to agreement) and over the outcome (i.e., what agreement they reach). In negotiation, parties generally have a high degree of control over both process and outcome. For example, job candidates and recruiters work together through discussion and exchange of offers in an attempt to craft an agreement that is mutually acceptable.

When third parties become involved, however, negotiators (or disputants) relinquish some control for the sake of reaching agreement. In mediation, they give up control over the process, and in arbitration they give up control over the outcome. In other words, mediators work with the parties to help them develop and endorse an agreement, whereas arbitrators listen to the parties and impose a decision.

The study of negotiation and third-party processes has a long and somewhat fragmented history. In part, this complicated past arises from differences in the nature of the processes themselves and their objectives, as well as differences in their intellectual traditions. Not surprisingly, each has its distinct challenges; together, though, they promote processes designed to help individuals with diverse preferences work together to enhance individual and organizational effectiveness.