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Good Outcomes for Negotiating About Problems

STANFORD GRADUATE SCHOOL OF BUSINESS—The debate swirledover who should pay to reverse the threat of global warming: developing countries that are expected to cause the most damage in the future or industrialized nations that have already gotten rich on dirty industries but have since reduced emissions.

"As I listened I realized we know virtually nothing about the allocation of burdens," said Margaret Neale, John G. McCoy-Banc One Corporation Professor of Organizations and Dispute resolution and directorof two executive programs in negotiation. "It seems critical that wecome to understand how we divide up the lemons that life hands us as well as the lemonade."

Until recently, the study of negotiation was focused on splitting up"goods," or things people want, not on the distribution of"bads." Traditionally, economists have regarded the mere absence of a burden as a benefit, thereby concluding that people will behave exactly the same when negotiating either one. But other research has shown that if a proposal is presented in terms of its potential gain rather than its potential loss — a bargaining technique called framing — an opponent behaves very differently. A study by Neale, with Harris Sondak of the University of Utah and Robin Pinkley of Southern Methodist University, takes a close look at what factors influence people's willingness to accept burdens.

They based their findings on 414 MBA students who were asked to negotiate both benefits and burdens resulting from new government regulations that required the construction of a commercial landfill, public landfill, a wastewater management facility, a riverfront park, and the reclamation of wetlands. Bargaining over benefits, participants represented firms that were in the business of managing wastes and had been asked to provide construction and reclamation services for the projects. In the negotiation of burdens, players took on the role of manufacturing firms that were required to pay the construction and reclamation costs of the new facilities. Participants also engaged in scenarios where they had either a long-term relationship with their negotiating opponents or no expected future contact.

The researchers found that when it came to divvying up benefits, there was a notion of sharing the wealth. People allocated benefits roughly equally so that whoever created the benefit didn't always get it all. But when it came to burdens, the rule was equity, not equality. That is,whoever created the burden had to pay for it. Burdens carried more responsibility. Only when no future relationship was expected between the participants were the burdens allocated equally.

Negotiating burdens can be more complex than bargaining for benefits.When dealing with burdens, people are not very good at finding issues over which they would normally agree. That is because they're in fight-or-flight mode. "All of a sudden things become adversarial," says Neale. "I'm trying to reduce my burden as much as possible, so I'm not paying attention to you and what youwant."

But in fact, there can be opportunities for all parties to win. Burdens make it especially important to recognize the potential for "creating value." What may be onerous to you may not be that bad to somebody else. Take for example the allocation of housework. The wife abhors bathroom cleaning. The husband hates washing dishes. But he doesn't hate to wash dishes as much as she hates to clean bathrooms. As a result, shies willing to take on feeding the dogs. She washes the dishes and feeds the dogs in order to avoid cleaning the bathrooms. To her, she is much better off. His single chore may take less time, but she finds it more onerous — so they have created value.

Of course, if the other side sees something as a burden and you see itas a benefit, by all means don't let on. You want to get credit for taking on the burden so you can cash it in for a benefit in future negotiations.

by Barbara Buell

Related Information

"The Allocation of Goods and Bads: The Impact of Contribution,Outcomes Valence, and Relationship"
Organizational Behavior and Human Decision Processes, Vol. 64,249-260

Negotiating Rationally, Max H. Bazeman and Margaret A. Neale,Free Press, 1992

Video

Winners Don't Take All
Despite all we've heard about win-win deals, very few managers are really skilled at creating value or expanding the pie in negotiation settings. We focus on getting what we want without recognizing that negotiation can involve a range of trade-offs, leading to rewards for both sides. ( video available for purchase)

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