Imagine that you and your business partner agree to sell your company. You get an offer that pleases you both, so now you face the enviable task of splitting up the rewards.
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.
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 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.
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 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.