Adapted from “Take the Long View,” by Kimberly A. Wade-Benzoni (professor, Duke University), first published in the Negotiation newsletter, April 2006.
Negotiators often overlook the long-term consequences of various issues on the table. Amid the pressures to meet short-term financial targets, it’s difficult to remember that the effects of managerial decisions may be felt years, even decades hence.
Thousands of companies and state and local governments have promised millions of employees generous medical benefits upon retirement, yet few organizations keep track of these ever-spiraling costs. Those that do face hard choices, as we have seen in the battles that have recently sprung up in Wisconsin and elsewhere over collective bargaining rights for public employees.
When you sit down at the bargaining table, remind yourself of any long-term organizational issues at stake—and remember that these may affect people who are not seated at the table. After all, the consequences of your decisions may not fully materialize until a much later date. These decisions often have a strong financial component. If state and local governments cannot follow through on unrealistic pension promises, for instance, their credit ratings may suffer, making it more difficult for them to sell bonds or otherwise borrow money.
On the flip side, long-term thinking can put your organization ahead of the competition. In 1992, Japanese automaker Toyota announced plans to begin developing technology with the lowest vehicle emissions possible. In 1995, Toyota revealed the Prius, a hybrid concept car that could convert the kinetic energy generated from braking into an additional power source, thus reducing fuel consumption and pollution. While the investment was costly in the short term, Toyota reaped the benefits: the Prius, which debuted in the United States in 2000, soon became the leading hybrid car on the U.S. automobile market. As gasoline prices skyrocketed, consumer demand exceeded supply. In 2004, interested buyers waited six months or more for a chance to buy a Prius. In fact, some dealers were able to resell used Priuses above the new-car price to drivers eager to get off the waiting list.
Meanwhile, for decades, American automobile manufacturers passed on opportunities to invest in developing hybrid technology. The costs of this shortsightedness are becoming increasingly evident as U.S. automakers struggle to survive.
