What Makes A Negotiation “Fair”?

Negotiators need to bring fairness into every negotiation
Negotiators need to bring fairness into every negotiation
Image Credit: Julie Jablonski

When we enter into a negotiation, it is our goal to use our negotiation styles and negotiating techniques reach an agreement with the other side. Although we may never say it, we expect that agreement to be fair for both sides: nobody is going to be taking advantage of anyone else. However, as the negotiation moves along, we may start to have some doubts. We may start to wonder if the other side is treating us fairly. In fact, we may wonder if this is really a fair negotiation. How can we tell?

What Makes A Negotiation Fair?

So in order to take a look at what makes a negotiation fair, imagine the situation in which you and your business partner agree to sell your company. You end up getting an offer that you feel is good for both of you, so now you face the task of splitting up the rewards. How do you ensure that there is fairness in this negotiation? Let’s create some background for this deal. 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 their extra time. For your partner, 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 during a negotiation: 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). Psychologists have found that people commonly choose among these fairness norms based on their self-serving desire for more. That is, and it not nice to say this, our greed determines how we define fairness in a given negotiation situation. In this 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 Can We Create Fairness in Negotiation While Maintaining a Status Quo

Studies have shown that professional arbitrators rely on a fourth fairness norm: maintaining the status quo. Many negotiators resolve a conflict by resisting radical change. A good example of this is your annual raise, it is probably a percentage increase from last year’s salary – we can call this the status quo. However, what if last year’s salary wasn’t fair, to begin with? Then the organization that you are negotiating a new salary with 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.

What All Of This Means For You

When we enter into a principled negotiation, our focus is generally on what we are going to be able to get out of it. However, there might be something else that we need to be aware of: fairness. Ultimately, the deal that we reach with the other side is going to have to be implemented by both parties. As a negotiator it is important that both sides come away from the negotiations feeling that the deal that was agreed to was fair.

One of the things that negotiators need to understand is that everyone looks at fairness in a different way. The people who study such things have identified three different types of fairness: equality (in this case, a 50-50 split of profits), equity (a split in proportion to input), and need. Researchers have taken this one step further and believe that they have found another type of fairness: maintaining the status quo. This means that the negotiator tries to resist change.

The important thing for negotiators is to understand that fairness is a part of every negotiation that we are involved in. We need to understand the different types of fairness that there is and determine which one will work the best for the negotiation that we are currently involved in. If we can bring fairness into our next negotiation, then we have a better chance of reaching a deal that will meet everyone’s needs and will be implemented by both sides.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How can you get the other side to work with you to bring fairness into your next negotiaton?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.
P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

When we are preparing for our next negotiation, we will try to take everything that we’re going to be up against into account. What this means is that we’ll study the issues, research who will be on the other side, and we may even check out the location for the negotiation. However, there is one additional thing that we may overlook – any self-fulfilling prophecies that we may be bringing to the table. If we aren’t careful, these can work against us just as much as the other side will be.