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Ethics in Negotiation

What are ethics and how are they implicated in negotiations?

Ethics are broadly applied social standards for what is right or wrong in a particular situation, or a process for setting those standards. Ethics grow out of particular philosophies, which purport to define the nature of the world in which we live, and prescribe rules for living together. Discussion of business ethics frequently confuse the following terms:

  • Ethical – defined as what is appropriate as determined by some standard of moral conduct.
  • Prudent – wise, based on trying to understand the efficacy of the tactic and the consequences it might have on the relationship with the other.
  • Practical – what a negotiator can actually make happen in a given situation.
  • Legal – what the law defines as acceptable practice.

People in and out of organizations are routinely confronted with important decisions about the strategies they will use to achieve important objectives, particularly when a variety of influence tactics are open to them. These decisions frequently carry ethical implications. The major ethical questions that arise in negotiation can be worked out through consideration of these questions:

  • What are ethics and why do they apply to negotiation?
  • What questions of ethical conduct are likely to arise in negotiation?
  • What motivates unethical behavior, and what are the consequences?
  • How can negotiators deal with the other party’s use of deception?

Commonly understood approaches to ethical reasoning include:

  • End-Result ethics The moral rightness of an action is determined by considering its consequences. This is commonly referred to as “the end justifies the means”.
  • Duty ethics – This views ethics as resulting from the rules in place or applicable to the individual or situation.
  • Social Contract ethicsThe moral rightness of an action is determined by the customs and norms of a particular society or community.
  • Personalistic ethicsThe moral rightness of an action is determined by conscience.

What human biases give rise to ethical problems in negotiation?

Numerous cognitive biases stand in the way of individuals determining or choose what is an ethical course of conduct.

    • Bounded EthicalityRefers to the limits of people to make ethical decisions because they are either unaware or fail to fully and deliberately process information.
    • Illusion of superiorityPeople view themselves and their actions much more favorably than others view them. People focus on their positive characteristics and downplay their shortcomings. In relative terms, people believe they are most honest, ethical, capable, intelligent, courteous, insightful, and fair than others.
    • Illusion of Controlpeople believe they have more control over events than they really do; often feel they can control outcomes; can lead to a type of gambler’s fallacy in decision making, however, it can also give rise to ethical problems, such as when people make claims of quality control that cannot be met.
    • Overconfidencemost overconfident about their knowledge; people claim to be 75% certain, when they are actually correct only 60% of the time; people who have unmet goals are more likely to engage in unethical behavior.

How can negotiators determine and calibrate ethical behavior?

When evaluating whether negotiation strategies and tactics are ethical, begin by assessing the economic, legal, and equitable influences on the decision:

  • Determine the economic outcomes of potential courses of action.
  • Consider the legal requirements that bear on the situation.
  • Assess the ethical obligations to other involved parties regarding what is “right and ‘just and fair”.

Once you have a thorough understanding of the economic, legal, and equitable influences, choose a course of action based upon:

  • the results you expect to achieve;
  • your duty to uphold appropriate rules and principles;
  • the norms, values, and strategy of your organization or community; and
  • your personal convictions.

The following approaches (questions) can be used to gauge whether a course of action is ethical.

    • The Front-Page testHow would I feel if the course of action I am considering were reported on the front page of the local newspaper or blog?
    • Reverse Golden RuleHow would you feel if the party did to you what you are thinking about doing to them; putting yourself in their shoes?
    • Role modelingWould you be proud about other people looking up to you? Would I advise others to do this?
    • Third-party advice – What is the opinion of a neutral third party regarding whether the action is ethical? Do not tell them what side your on.

What are unethical tactics in negotiations?

Unethical tactics are those meant to deceive or harm others with no overwhelming individual or societal good that outweighs the harm of deceit. More often than purely unethical, a tactic may be ethically ambiguous. That is, the tactic may or may not be improper, depending on an individual’s ethical reasoning and circumstances. An action may be illegal, but the individual does not hold it to be unethical. Conversely, an action may be legal but considered unethical.The selection and use of a given tactic is likely to be influenced by the negotiator’s own motivations and his or her perception/judgment of the tactic’s appropriateness.

  • The Power Motive – The objective is to acquire or demonstrate individual power. In the exchange of facts, arguments, and logic, it is assumed that the information is accurate and truthful. Any inaccurate and untruthful statements (i.e., lies) introduced into this social exchange manipulate information in favor of the introducer. Power motives often lead to ethical tactics such as bluffing, falsification, misrepresentation, deception, and selective disclosure, the liar gains advantage (discussed below).
  • Competition Motive – When motivated to be competitive, and when expecting the other to be competitive, the negotiator would see the marginally ethical tactics as appropriate. When both parties are competitively motivated, they exhibit the greatest tendency to employ marginally ethical tactics.

Generally, a negotiator’s own motivational orientation, whether cooperative or competitive, does not cause differences in their view of the appropriateness of using a tactics; rather, it is the individual’s perception of the other party’s motivation that affects their assessment. In other words, negotiators are significantly more likely to see the marginally ethical tactics as appropriate if they anticipated that the other would be competitive versus cooperative. There is no consensus as to whether using ethically ambiguous tactics is appropriate.Examples of common negotiation tactics that are potentially unethical in a given situation include:

  • Competitive bargaining – Competitive bargaining is generally assumed and ethical. Using tactics, however, that are meant to deceive or coerce the other party may be seen as unethical in a given situation. This is very subjective, but the negative effects of a tactic being perceived as unethical is the same.
  • Emotional manipulation – Using tactics that intentionally affect the emotional state of the other party in an attempt to sway her otherwise-logical decision making may be seen as unethical.

There are, however, tacitly agreed-on rules of the game in negotiation. In these rules, some minor forms of untruths—misrepresentation of one’s true position to the other party, bluffs, and emotional manipulations—may be seen as ethically acceptable and within the rules. Outright deception and falsification are generally seen as outside the rules. Several categories of tactics that are generally seen as potentially inappropriate and unethical in negotiation, including:

  • Misrepresentation – Deception by omission versus commission. “Passive misrepresentation” (also known as misrepresentation by omission) is a strategy in which a negotiator does not convey his or her true preferences and allows the other party to arrive at an erroneous conclusion. “Active misrepresentation” (also known as misrepresentation by commission) is a strategy in which a negotiator deliberately misleads his or her opponent.
  • Backing out of a negotiated agreement – While breaching a legally binding contract is illegal, there is a separate analysis as to whether it is unethical. Likewise, backing out of a legally unenforceable contract may also be unethical.
  • Revoking an an offer – Making or revoking an offer in bad faith (generally as tactical move) is generally viewed as unethical by the affected party.
  • Inappropriate information collection – This regards tactics used to collect information from the other side that is either disingenuous or used to create a negative reaction in the other party. Examples of this type of tactic would include “bluffing”, which is the misrepresentation of a fact or position to achieve a desired reaction in the other party. Another tactic is “nickel-and-diming” which is a colloquialism that refers to the strategy of repeatedly asking for more favors or resources after a negotiation has presumably ended.

When a negotiator employs unethical tactics, there is generally an underlying explanation or justification to rationalize the behavior. Common justifications might assert that the tactic was unavoidable or harmless, it was fair to the situation; it will help to avoid negative consequences, that it will produce good consequences or the tactic is altruistically motivated, “They had it coming,” or “They deserve it,” or “I’m just getting my due,” “They were going to do it anyway, so I will do it first”, “He started it.”

What are the consequences of acting unethically?

A negotiator who employs an unethical tactic will experience either or both positive or negative consequences. Once the tactic is employed, the negotiator will assess consequences on three standards:

  • Effectiveness – Did the tactic work. That is, did the negotiator got what he or she wanted as a result of using tactics, and what were the resultant consequences?
  • Reactions of others – How does the negotiator feel about herself after using the tactic. A separate set of consequences may come from the judgments and evaluations of the counterparty, constituencies, or audiences that can observe the tactic.
  • Reactions of self – the negotiator will experience consequences depending upon whether using the tactic creates any discomfort, personal stress, or even guilt. Conversely, the actor sees no problem in using the tactic again and even begin to consider how to use it more effectively.

Unethical acts may effect or cause a negotiator to adjust her: Positions, Interests, Priorities and preferences, BATNAs, Reservation prices, Key facts

A negotiator who employs an unethical tactic will experience either or both positive or negative consequences. Once the tactic is employed, the negotiator will assess consequences on three standards:

  • Effectiveness – Did the tactic work. That is, did the negotiator got what he or she wanted as a result of using tactics, and what were the resultant consequences?
  • Reactions of others – How does the negotiator feel about herself after using the tactic. A separate set of consequences may come from the judgments and evaluations of the counterparty, constituencies, or audiences that can observe the tactic.
  • Reactions of self – the negotiator will experience consequences depending upon whether using the tactic creates any discomfort, personal stress, or even guilt. Conversely, the actor sees no problem in using the tactic again and even begin to consider how to use it more effectively.

Unethical acts may effect or cause a negotiator to adjust her: Positions, Interests, Priorities and preferences, BATNAs, Reservation prices, Key facts

If you think the other party is using deceptive tactics, in general you can do the following:

  • Question – Ask probing questions and phrase the questions in different ways.
  • Draw and Line – Force the other party to lie or back off.
  • Confront – Test the other party or “call” them on the deceptive tactic. This can be done conflictive or non conflictive manner. A conflictive approach will close the negotiation, while a non-conflictive manner amy not. An example would be to discuss what you see and offer to help the other party change to more honest behaviors.
  • Ignore – Ignore the unethical tactic and proceed to negotiate with a focus on the interests at stake.
  • Reciprocate – Respond in kind.

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