Compromise Is Not Win-Win; And Split The Difference Isn’t “Fair”

Compromise is not a win-win, it is in fact a lose-lose. You give up something you want in exchange for the other side giving up something they want. Often compromise is necessary at the end of a negotiation to make a “deal.” However, it should rarely be used at the beginning.

Further Split The Difference is not necessarily fair, though most Americans think it is, and experienced negotiators will use it as a tactic to get the outcome they want. I was reminded of both of these tactics when talking with a friend who had just finished a six figure renovation of their house. I am certain the owner of the firm that did they work wanted to make a profit (which he did ) and have an outstanding reference, which he would have had it not been for $100.

This firm, like many firms has many employees who fulfill customers’ needs, wants and demands on behalf of the firm. Owners of firms are less involved in specific customer issues as the firm gets bigger. The question is what metrics are the owner using to measure and then manage his/her employees. In too many situations the metric is $ and lack of a complaint to the owner signifies everything is ok. Not true. Most Americans, even in this day of Yelp and other online reviews don’t complain. They just don’t recommend.

On this particular project a $2,700 item went awry (the actual cost to fix it was unknown at the time). Both the customer and the contractor shared blame. The contractor’s employee asked my friend what he felt was fair. He outlined that he felt a 2/3-1/3 split was fair and why. The contractor’s employee agreed. When the final bill arrived for this “fix” the contractor’s employee asked my friend how to share the bill. Using the same logic that produced the 2/3-1/3 suggestion he suggested he pay $900.

The employee then noted that some of the cost was due to a change requested by my friend that increased the replacement cost, also there was labor and materials involved, which was understood from the beginning. The employee suggested by friend pay $1,100. My friend said he agreed he should pay for the increased cost and 1/3 of the rest. This meant my friend would pay $970. The employee said how about $1,070. As my friend never considered this a “negotiation” (though everything is), he simply said sure. However, he does not feel it was fair, but isn’t going to fight over $100.

The employee will be able to show her boss that she recovered more that the $900 originally planned, which will make her look good. The problem is, neither of them know the cost was the loss of a raving fan. He still will recommend them, just not as enthusiastically.

What get’s measured gets managed. Are you measuring what you should or just what is easiest to measure?

Mitch

This entry was posted in customer loyalty, management, Negotiation and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s