## Monday, October 11, 2021

### Heuristic: The mythical "Fixed-Pie"

This heuristic is mentioned by Neale and Bazerman in a chapter on a textbook for Negotiating. The chapter was titled Heuristics and the Limits to Negotiation (1983)

It is obvious that if my piece of pie is bigger then yours must be smaller.

If my length of string is shorter, yours will be longer.

If the company keeps more profits than the pay of the employees must be lower, and so on for any single-variable system.

Untethered from reality

Untethered from reality, this kind of thinking can mutate into some strange places.

This simple view fosters simple thinking. It is not a big step to think that if the worker can hurt or "short" the company then it automatically gives him equal advantage. That is, by making the other party's piece of string shorter than theirs will automatically become longer.

Equipment can be damaged or parts fed into tools incorrectly to create "ass-time" at great expense to the company.

Scrap can be deliberately created to generate over-time to fix the scrap or run more production on over-time to backfill the shortfall.

Profit and work-rules are demanded that make the company unable to reinvest and remain competitive in the market.

Back to the "Fixed Pie" analogy

What if I like crust and you like filling? Is it possible that BOTH OF US COULD HAVE ALL OF THE PIE? I can have all the crust and you can have all the filling!

"Balderdash!" you say. "Nobody likes crust that much."

What if I like thick crust pizza (pie) and you like thin crust with lots of topping? You get two-thirds of the toppings and I get two-thirds of the crust. We were able to create a solution where, in total, we both got 2/3rds (4/3 total) of the pie that was important to us.

We did it by negotiating until each party understood what was important to the other and by looking at additional dimensions, dimensions below the obvious.

In the real world

Suppose a contract is struck between a company and a Union. Suppose one part of the agreement is that the Company shall allow 10% of its employees vacation on any given day.

But that poses a problem. In a group of 15 people is 10% one person or two people a day?

Suppose the contract anticipated that question and dictated that on 50% of the work days the company must approve 1 person/day and on the other 50% of the work days it must approve 2 people/day.

As the supervisor you have the option of:

• Alternating weeks which is the most common way to implement it
• Alternating days which is a pain to implement
• Allowing two on Tuesday-Wednesday-Thursday which is what YOUR boss wants
• Allowing two on Monday-Friday and one on Tuesday-Wednesday-Thursday which is what your people prefer EVEN THOUGH THEY ARE GETTING FEWER DAYS THAN THE CONTRACT SPECIFIES.

How did it play out?

I actually had 35 employees. I approved 4 on Mondays and Fridays and 3 on TWT. In appreciation the other employees did not "blow-off" those days in my department.

My boss got tired of calling me on Monday and Friday to rob me of my "extras" to support the other areas he was responsible for covering and hearing me tell him "I have four on vacation". He took over vacation policy.

I still had (at least) four people missing on Monday and Friday. They saw my boss's move as an attempt to inflict maximum pain on them. The perception was that we had a win-win situation worked out and my boss was seen as a control-freak. Game on!

I was informed by my people that if they wanted to take a Friday or Monday, they were going to take it and figure out how to cover it later*. Furthermore, they LOATHED leaving their area to cover areas that were "on their ass" for people.

*40% of the "sick" slips were signed by one "doctor" in one facility in Grand Ledge. I suspect the receptionist handed them out. I was never invested enough to determine if the person signing them was actually a doctor at that facility.

#### 1 comment:

1. One of my favorite compensation models was created by the Springfield Remanufacturing Company in the early 1980s. They were one of the first ESOP leveraged buyouts, with the employees buying the company from International Harvester for below book value, as the only alternative to closing the deeply unprofitable operation. Between stock ownership and a profit-sharing program with quarterly payouts, the people in the company were so motivated to make money that they did extraordinary things to create cash flow and value. It's a great story detailed in the book, "The Great Game of Business". I have developed a similar comp model for large retailers, but no managements have shown interest in changing their worldview yet. Imagine the quality of customer service in a big-box store if the employees got quarterly bonuses for maximizing profits and customer satisfaction.

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