Ethics in Negotiation Notes

Ethics in Negotiation

  • Negotiators seek to make deals or resolve disputes.

  • Distinction between deal-making and relationship building.

  • Successful negotiations improve the status quo.

  • Negotiations occur with chosen or unchosen parties.

  • Some negotiations are fair with high ethical standards; others are not.

  • Some techniques pose ethical challenges.

  • A realistic look at ethical contexts is essential.

What are Ethics?

  • Ethics are broadly applied social standards for right and wrong.

  • Ethics emerge from philosophies that:

    • Define the nature of the world.

    • Prescribe rules for living together (Lewicki et al, 2001, p. 164).

  • Ethics deal with beliefs about good/bad and moral obligations.

  • Ethics involve rules for deciding right and wrong.

  • Morals are an individual's personal beliefs about right or wrong (Lewicki, et al. 2001, p. 164).

About Ethics

  • Ethics is a branch of moral philosophy.

  • It studies moral choices in daily life.

  • Ethics is a set of accepted principles guiding choices.

  • It is a deep, complex issue approached from different perspectives.

  • Ethics is applied in all situations as collective morality.

  • Ethical issues are not easily resolved.

  • Ethics seeks to establish principles for socially beneficial decisions.

Why Ethics?

  • What is the place of ethics in teaching and learning?

  • To what extent are deceptive techniques taught?

  • What lines do law/business school courses draw on courtroom tactics or negotiations?

  • What can education bring to training students to cope with duplicity?

  • Reference: Bok, S. (1978). Lying - Moral Choice in Public and Private Life.

What is the Role of Ethics in Business

  • Business ethics is the application of ethics to business decisions.

  • Some consider "business ethics" an oxymoron.

  • Business ethics can be applying moral virtues to a business.

  • It enables a business to embody virtues/values.

  • Business ethics is a complex issue.

Ethical Behavior

  • Conforms to moral standards.

  • Adapts to social norms.

  • Responds to needs and interests of those affected.

Ethical Choice

A person or organization makes an ethical choice when the choice:

  • Aligns with expected standards.

  • Considers stakeholder interests.

  • Involves transparent processes.

  • Seeks consensus.

Ethical Dilemma

  • A difficult choice between options.

  • Transgressing a moral principle.

  • Breaching acceptable behavior.

  • Personal cost/benefits arising from the "right" action.

What Shapes Ethical Behavior at Work?

  • Three factors: person, situations, and company environment.

    • The person (bad apples).

    • Situations (bad cases).

    • Company Environment (bad barrels).

      • Pressures.

      • Organizational culture.

The Law is Not Enough

  • Law cannot always contain the powerful, and the least powerful may lack resources.

  • Law is subject to interpretation; loopholes exist.

  • Law does not always deter repeat offenders.

  • Law is costly and slow moving.

  • Intervention is expensive for victims.

  • Victims may not know their rights.

  • Not everything can be regulated.

  • Some laws are outdated.

Ethical Dilemmas

  • An ethical dilemma exists when economic benefits conflict with social/moral obligations (Lewicki et al, 2015, p. 116).

Ethical Dilemma – (Group Work)

  • Example of negotiating a labor contract with conflicting alternatives.

  • Alternatives include telling the union the company can't afford it, preparing erroneous financial statements, or offering an all-expenses-paid trip to union leaders.

Dilemma 1

  • Selling a car scenario where a buyer offers 500K for a car you value at 350K.

  • How do you respond?

  • Does a prior friendship change your response?

Dilemma 2

  • Selling a house scenario with a target of 20M and a reservation price of 18M.

  • What do you say when asked how much you want for the house?

  • Does a prior friendship change your response?

  • Does your mother being in the room change things?

Lies, Deception and Negotiation

Lying

  • Lying is making a false statement with the intention that it be accepted as true.

  • Lying may be a criminal offense.

  • Three conditions for lying:

    • A statement must be made.

    • The sender knows it's false.

    • The sender intends for the receiver to believe it.

  • A lie can convey truthful information.

Lies

  • Statement contradicting knowledge or belief about something material.

  • The other party may or may not know.

  • Example: Buyer asks if the car is overheating; seller says no.

Lying but not Dishonest!?

  • Negotiators lie on matters not expected to be discussed truthfully.

Lying is Natural!?

  • Lying might be ingrained in our genes.

Lying is Natural!?

  • Lying is normal and often spontaneous (Smith, D. L., 1994).

Public v Private Morality

  • Falsehood is acceptable when truth is not expected.

Deception

  • Deception includes misleading, obfuscating, hiding the truth, or promoting false beliefs.

  • The purpose is to secure an advantage.

  • There are many forms: conning, seduction, bluffing, puffery.

  • Negotiation tactics have implications for relationships, process, and outcomes.

Deception

  • Any behavior intended to mislead.

  • Includes falsehoods and deceptive practices.

  • Is there a link between deception and survival?

Deception

  • An act/statement intended to mislead about intent or future actions.

Synonyms for Deception

  • Double-dealing

  • Fraud

  • Subterfuge

  • Evasion

  • Misinformation

Deception

  • Dictionary definition: hiding the truth for advantage.

    • Lies: deliberate misrepresentation.

    • Equivocations: vague statements.

    • Concealments: hiding the truth.

    • Exaggerations: stretching the truth.

    • Understatements.

    • Misleading by act or statement.

Lying and Deception

  • Deception encourages belief in untrue information.

  • Lying is a common form of deception.

  • Not all deception is lying.

  • Deception encompasses misrepresenting/distorting facts or withholding information.

  • Deception is often ambiguous.

  • Lies can be ambiguous but less so.

  • Deception raises ethical issues.

Ethically Ambiguous Negotiation Tactics

Lying

  • Alternatives to lying.

  • Ethical issues concern truth telling.

  • Attention is on lying and deception.

  • Fraud is wrongful deception for financial gain.

  • Minor untruths may be ethically acceptable to some, but deception is not.

Puffery

  • Exaggerating value.

  • Example: claiming to have spent 2 million on renovations.

Nondisclosure

  • Keeping knowledge that would benefit the opponent.

  • Example: Knowing a competitor's lower price.

Change of Mind

  • Behaving contrary to previous statements.

  • Example: Denying a prior stated price.

Distraction

  • Providing excessive information or feigning weakness in one area.

Threat

  • Statements of cost intended to impose on non-compliance.

Bluffs

  • Threats made without the capacity to carry them through.

Why People Use Unethical Tactics

  • To increase power in bargaining (Lewicki et al. 2001, p. 171).

  • Competitive negotiators may use unethical tactics.

Explanations and Justifications

  • Tactics are justified as unavoidable, harmless, avoiding negative consequences, or appropriate to the situation.

Explanations . . . II

  • Tactics produce good consequences, prevent others from doing it to us, or give someone what they deserve.

Risks Associated with Unethical Negotiations

  • Rigidity in the future.

  • Damaged relationships.

  • Sullied reputation.

  • Lost opportunities.

The Consequences of Unethical Conduct

  • Is the tactic successful?

  • How does the negotiator evaluate the tactic?

  • How do others view the negotiator?

Negotiating Ethically

Ethics Pays Because . . .

  • Coerced agreements will be broken.

  • Trust and comfort are needed for people to buy in.

Basic Criteria for Ethical Negotiations

  • Golden Rule: Treat others as you want to be treated.

  • Universalism: People are not a means to an end.

  • Utilitarianism: Do the greatest good for the greatest number.

  • Distributive Justice: Everyone is better off.

Ethical Standards for Evaluating Tactics and Strategies - Hitt

  • Make decisions based on:

    • Return on investment.

    • Legality.

    • Organizational strategies and values.

    • Personal conviction.

Conclusion

  • Deception is likely in negotiation and everyday life.

  • Some deceptive behaviors are acceptable with few negative consequences.

Conclusions

  • Some deceptive behaviors can permanently damage reputation and business prospects.

  • There are many perspectives on the role of deception in negotiation.

  • Some experts advise against lying under any circumstances.

  • Others suggest lying is natural.

Conclusion

  • The likelihood of encountering gross deception depends on the negotiation paradigm, moral outlook, and trust level.

  • Using deception depends on your personal value system.