There are often times in business where you may feel a need to negotiate. For example, you may want to negotiate the terms of a contract. Other times you are forced to negotiate. An example would be selling your business, which you have co-owned with a friend for the past several years. While it may be easy to negotiate with people we are not as familiar with, the ethics and fairness of negotiation definitely come into play when we are dealing with our friends and family. Through this blog post, we will attempt to highlight the best way to perform an ethical and fair negotiation.
We will use the example of selling your co-owned business to demonstrate negotiation ethics. You and Julie have co-owned a business for several years, but Julie put in most of the work. She worked twice as many hours as you, but she was compensated nominally for the extra amount of time she spent on the business. You spent most of your time working at a full-time job elsewhere. When the business is sold, the extra money will be a good bonus for Julie and much-needed extra cash for you and your family. So, how should you split the business?
There has been an abundant amount of research on negotiation in the past couple of years and researches have found three fairness norms that negotiators typically invoke:
- Equality: This would mean splitting the profits in half, or a 50/50 profit from the sale of the business.
- Equity: A split determined by looking at whoever put in the most amount of work.
- Need: A split that looks at the partner and their needs to determine who deserves the larger portion of the money.
As human beings, it is common for us to think of ourselves and our loved ones before we consider other people’s needs. In the hypothetical presented above, you may argue that you need the money more than Julie. However, Julie can argue by saying she put in the most amount of time and effort into building the business. Psychologist David Messick finds we we define our needs and justify our positions based on our personal needs. There is a high chance that both of you will be dissatisfied at the end of the day. Therefore,there is a need for another method to negotiate.
A fourth fairness norm used mostly by arbitrators has been Maintaining the Status Quo. This norm says that many businesses and organizations resolve conflict by resisting change. Despite the norm you choose to use during your negotiation, we recommend that you strive to be ethical and fair.
Source referenced: Harvard Law Program on Negotiation