Imagine that you and your business partner agree to sell your company. You end up getting an offer that pleases you both, so now you face the enviable task of splitting up the rewards. How do you ensure that there is fairness in negotiation?
Some background: Your partner put twice as many hours into the firm’s start-up as you did, while you worked fulltime elsewhere to support your family. Your partner, who is independently wealthy, was compensated nominally for her extra time.
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Fairness in Negotiation: Be Wary of Gains at Your Counterpart’s Expense?
For her, the profit from the sale would be a nice bonus. For you, it would be a much-needed windfall.
Researchers have identified three fairness norms that people frequently invoke: equality (in this case, a 50-50 split of profits), equity (a split in proportion to input, which would favor your partner), and need (a split that favors you and your family).
Psychologist David Messick has found that people commonly choose among these fairness norms based on their self-serving desire for more. That is, our greed determines how we define fairness in a given negotiation situation.
When splitting up the business, you might be tempted to give extra consideration to your family’s needs and overlook your partner’s investment of time and energy. Your partner, of course, is likely to view the situation in the opposite light. You may both end up being insulted and wronged.
How to Create Fairness in Negotiation While Maintaining a Status Quo
Recently, Max Bazerman, Straus Professor at Harvard Business School and Program on Negotiation faculty member, found that professional arbitrators relied on a fourth fairness norm: maintaining the status quo. Many organizations resolve a conflict by resisting radical change.
Your annual raise, for instance, is probably a percentage increase from last year’s salary – the status quo. What if last year’s salary wasn’t fair, to begin with? Then the organization has simply institutionalized a pay inequity.
In any negotiation, you should strive to bring fairness considerations to the surface, so that everyone will understand one another’s needs and wants.
How do you create fairness in negotiation? Share your experiences with our readers in the comments section below.
Claim your FREE copy: Negotiation Skills
Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
Related Negotiation Article: Ethics in Negotiation: How to Avoid Deception in Employment Negotiations – One of the more common hurdles negotiators face when bargaining for salary is the tendency to strive for the highest value, no matter the cost. In this article, deceptive bargaining strategies are examined and tactics for overcoming deception at the bargaining table are offered.
How a Short-Term Focus Contributes to Disasters in Business Negotiations – Don’t focus on the here and now at the expense of future prospects at the bargaining table and beyond. Not only should a long-term focus inform a negotiator’s strategy, but it should also be the basis upon which solid business relationships are built. When discussing ethics and fairness in negotiation, a long-term outlook has immediate benefits for business negotiators seeking to establish successful bargaining relationships or maintaining current business negotiated agreements.
Put simplistically your negotiations are striving to find the point of agreement between the extremes of Zero sum and Relationship.