Business negotiation research has shed light on an important aspect of integrative bargaining strategies and techniques – namely, the idea of negotiation ethics and fairness when negotiating. 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 full-time 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.
What is fair in this case?
Bargaining research has identified three fairness norms that negotiators frequently invoke: equality (in this case, a 50-50 split of the 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’ll probably both end up feeling insulted and wronged.
Harvard Business School and Program on Negotiation at Harvard Law School professor Max Bazerman has 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 past inequity.
In negotiations, you should strive to bring fairness considerations to the surface, so that everyone will understand one another’s needs and wants.
What are your methods to ensure fairness during negotiations? Share your approach in the comments.
Adapted from “Being Fair and Getting What You Want,” first published in the Negotiation newsletter.