How AI Can Make You a Better Negotiator: A Step-by-Step Guide

Earlier this year, Jennifer Barnes received an email from a client in financial distress, asking to renegotiate their contract. As the founder and CEO of Optima Office, an outsourced HR and business services company based in San Diego, this was not the first time she’d received a message like this. She’s been in business since 2018, growing her 100‑employee company to around $18 million in revenue and earning a place on the Inc. 5000. There isn’t much she hasn’t seen. From experience, Barnes knew negotiating was going to burn the better part of an hour. First, she’d have to read the whole exchange. Then she’d think about how to respond. After that, she’d have to spend a lot of time writing and editing the response. She’d have to be diplomatic and keep her own emotions in check, she says: “Clients can be really unreasonable when they’re very low on funds.” This time, however, instead of working through it on her own, Barnes popped the email into her paid version of the AI chatbot Claude and asked it for a three‑point summary of the client’s demands. She then uploaded a brief synopsis of her perspective on the situation, did a light edit and hit send. Total time to craft the message that solved the problem? Five minutes. Negotiating is much of the work of growing a company. Whether it’s with clients, suppliers, investors, joint venture partners, contractors, or employees, as an entrepreneur it can feel like you’re constantly either preparing, actually doing, or managing the results of a negotiation. All of that is intellectually and emotionally demanding, says Emily DeJeu, professor at the Tepper Business School at Carnegie Mellon University, who teaches classes on negotiation. “Even in our textual exchanges, negotiation is happening as much with our guts as with our brains.” But with the advent of AI, using your own brain unassisted has become a bit passé. If sensitive, time‑consuming tasks like negotiating can be even partially off‑loaded without inadvertently blowing up your company, well, that’s pretty compelling. On the other hand, a recent MIT report found that 95 percent of companies are getting literally zero return on their generative AI investment. But it doesn’t have to be that way. By deploying today’s AI tools to prepare for negotiation—with a keen understanding of their current limits—you can leverage them to your advantage right now. In this Premium article you will learn: A step-by-step guide for incorporating AI into the negotiation process Best practices for combining human intuition with artificial intelligence How many hours a week you can expect to save by using AI When an hour takes five minutes For growing companies, there’s a wide array of AI tools from business-function-specific programs like Salesforce’s Einstein to generally available large language models like ChatGPT or Perplexity. All of these AI tools can analyze data and generate cogent text or other forms of output. Between the time savings and the added bonus of strictly controlling her tone, which might have had a sarcastic edge, Barnes says she quickly found herself relying on Claude for her frequent negotiation tasks: to research, prepare, and learn from prior wins. “It saves me about eight hours a week,” she says. “It’s like having another executive on the team.” Of course, that extra executive is sometimes fallible. “It makes mistakes. Don’t get me wrong,” she says. Generative AI systems are known to hallucinate, or produce inaccurate and even fabricated results. But AI seems just as confident when it’s wrong as when it’s right. That’s why Barnes says she would “absolutely not” allow an AI to send a message on her behalf without reviewing it first. When I asked Claude for a comment it agreed: “People getting real value are using me as a tool they control, not as a replacement for judgment. The moment anyone treats me as a peer negotiator rather than a research assistant, things get questionable.” Machine processing power versus human nuance Even if AI never made a mistake, there are serious questions about how well machines can accomplish the extremely human task of negotiating a complicated deal, says DeJeu, who is also hosting a conference on how businesses can use generative AI later this year. Artificial intelligence lacks the ability to read human emotion, which is often cited by the negotiators she’s trained as an advantage. DeJeu, however, disagrees. “Emotion has a distinct, powerful role to play in persuasion,” she argues. “Negotiation is one of the most human‑touch-necessary communication scenarios. It’s nothing but nuance.” Today’s tools, she says, aren’t capable of the key basic task of accurately reading a room. DeJeu acknowledges that not every negotiation is that deep. Not every supplier contract needs an analysis of subtle body language. And she certainly sees many benefits of using an AI tool to research and synthesize information ahead of a negotiation. “It can make you a little more nimble,” she says. DeJeu specifically finds using voice‑enabled AI for rehearsing negotiations to be beneficial. She suggests preparing 10 minutes for every 10 seconds of talking time in a negotiation. It’s hard to imagine a human critique partner enduring that without diminishing returns, but AI is tireless. Agents of the Future Of course, AI tools are rapidly evolving. Building on LLMs are the more eye‑catching AI‑powered agents—also known as agentic AI—which are capable of self‑direction. “AI agents act with autonomy and authority to find and negotiate deals with suppliers at scale,” explains Kaspar Korjus, CEO of Pactum AI. If technology continues its progress, AI agents will eventually handle every step of negotiation, from first contact to final contract and delivery. While going totally hands‑off is not an available option for most small to midsize companies today, corporate giants have been working on this for a while. For example, way back in 2021, Walmart worked with Pactum AI to create a pilot to handle certain supplier negotiations with AI chatbots. That led to a wider deployment in 2022—which you may recall is the year when ChatGPT first launched its public version. Now that ChatGPT has more than warmed up the general audience—the latest estimates for this one platform alone are 700 million users worldwide—agentic AI will only become more common. Nearly three‑quarters (72 percent) of chief procurement officers surveyed by Gartner say that AI tools like these are their top technology priority over the next five years. However, the next five years are not the next five minutes. “It’s still early days—we really don’t see any process that is fully agentic,” says Sesh Iyer, North America chair of BCG X, the tech build-and-design unit of Boston Consulting Group. For one thing, agentic AIs are still flummoxed by unexpected things, and that can make them take strange, if not brazen, shortcuts. For example, in a Carnegie Mellon study of a simulated company, researchers found that when an AI agent couldn’t find a particular person it needed to contact to complete a task, it just renamed another user. Overall, the top‑performing AI agent successfully completed only 24 percent of its tasks. But make no mistake—the tech is evolving fast, says Iyer: “We always overestimate what new technology will do in the short term and underestimate what it will do in the long term.” A practical playbook To avoid these problems of estimation in either direction, Iyer suggests starting with what you have right now. It’s easy enough to incorporate AI into negotiation prep with the tech your business probably already uses. Test it out with background research, brainstorming arguments and counterarguments, and use the voice function for rehearsal. But even at the most basic level of AI usage, it’s best to check in with your legal and IT security teams, since there are heavy privacy implications for both. When you’re using LLMs to their fullest for negotiation, you’re “allowing an incredible amount of access to information, including emails and alendars,” says Cameron Powell, co-founder of DeepLaw, a legal consultancy that uses AI tools for negotiation on behalf of its clients. Sharing this information can raise questions about confidentiality, liability, and intellectual property. When AI has proved its mettle and security to your satisfaction, the next step is using it to conduct deep analysis of your current contracts, sales, and negotiation processes. This could mean using AI to review your less-used suppliers that might be costing you more than they’re worth. You could also use AI to create side-by-side comparisons of your competitors or to provide a deep analysis of your current contracts to see what advantages you may be leaving on the table. AI can help manage tasks that are too time‑consuming or unwieldy to otherwise manage closely. Eventually, you can move to testing semi‑autonomous AI agents on repetitive or less nuanced negotiating tasks. Wherever you are in the process of integrating this new tool, Iyer suggests moving deliberately, and with a sharp eye toward integrating AI into your and your employees’ workflows. That MIT report that found little return on generative AI investment attributed much of the problem to enthusiastic focus on the gee-whiz technology itself, at the expense of truly considering how to make the best use of it today. “Focus on things that truly matter to your business,” urges Iyer. “Don’t try to do a thousand things at once.” BY ALISON J. STEIN