Ethics, Fairness, and Trust in Negotiations Chapter 8 Ethics, Fairness, and Trust in Negotiations

Understanding How Ethics and Values Apply 8-2 Understanding How Ethics and Values Apply Negotiation is voluntary process dependent upon communication and motivation The process often involves less than frank and open communication Need to reconcile deceptive tactics and fair agreements Need to establish trust

Negotiating Skills 8-3 Skill 8.1: Identify ethical systems that may guide parties to a negotiation Skill 8.2: Determine the substantive fairness of a negotiation Skill 8.3: Ensure the procedural fairness of a negotiation Skill 8.4: Distinguish between ethical and unethical concealment behaviors Skill 8.5 Learn to create trust in negotiations

Chapter Case: Withholding Information 8-4 Employer sought concessions from a union in contract negotiations to curb rising health care costs Union asked employer to switch to self-insurance to reduce cost Employer was already self-insured but did not share that information with the union in case the union asked for share of savings

Ethics Ethics is the study of morality 8-5 Ethics is the study of morality Ethical belief system is a basis for one’s values Values reflect belief about “ends” and “means” of achieving goals Behavioral rules are the accepted customs, standards, or models for ethical actions

Ethical Theories 8-6 Ethics of purpose: A good end cannot be reached with bad means Ethics of principle: “Do unto others as you would have them do unto you” Ethics of consequence: The end justifies the means

Tactics for Success: Moral Decision Making 8-7 Chapter Case: Should the negotiator tell the employees that the employer is already self-insured? Ethics of consequence: What benefits will result if he does? What harm will result if he does not? Which outcome has the best overall consequence?

Tactics for Success (cont’d) 8-8 Ethics of principle: Are the employees entitled to the information? Should the employer expect similar treatment from the other side? Ethics of purpose: Does withholding the information subvert the negotiation process? If the employees do not have all the information, can they fairly evaluate the employer’s offer?

Rokeach’s Terminal and Instrumental Values

Values 8-10 Values can be self-centered, internal standards accepted for one’s own behavior Values can be social-centered, external standards expected for another’s behavior Rokeach described end or terminal values and means or instrumental values

Behavior Rules 8-11 Descriptive behavior rules show what people do in certain situations Injunctive behavior rules show what people should do in certain situations Injunctive behavior rules become laws and codes of ethics

Substantive Fairness Seen in distribution of value Proportionality 8-12 Substantive Fairness Seen in distribution of value Proportionality Reciprocity Impartiality Parties are heard

Traps to Avoid: Alternatives to Lying 8-13 Asked your bottom line, say you’re not ready to reveal it If you claim you “lack authority” then don’t seek authority Don’t want to volunteer alternatives, ask opponent for options Only make promises you can keep Don’t lie about facts, limit discussion to opinion of facts

Procedural Fairness Seen in appropriateness of tactics used 8-14 Seen in appropriateness of tactics used Functionalist Model Bargaining is voluntary process Purpose is to reach valid agreement Practices that threaten valid agreement violate purpose Negotiation is also adversarial process in which parties use bargaining techniques to gain information and advantages

Procedural Fairness (cont’d) 8-15 Reciprocity standard—would you want to be treated in this way? Universality standard—would you advise others to behave this way? Publicity standard—would you like to see the actions in the press? Trusted friend standard—would you tell your friend of your actions? Legacy standard—do you want to be remembered for acting in this way?

Appropriate Tactics 8-16 Gain information about opponent by asking friends, associates, and contacts Make an unrealistically high opening demand Hide your real bottom line Give false impression you aren’t in a hurry to pressure your opponent

Inappropriate Tactics 8-17 Misrepresent factual information or nature of negotiations to improve one’s position or because your opponent did Falsely threaten or promise things with no ability to deliver Bypass your opponent’s negotiator to undermine opponent’s position Gain confidential information by bribery

Unethical Negotiating Gambits 8-18 Unethical Negotiating Gambits The Decoy The Red Herring The Deliberate Mistake Escalation Planted Information Never-Ending Negotiation

Trust Essential factor in negotiation Enables cooperative behavior 8-19 Essential factor in negotiation Enables cooperative behavior Reduces harmful conflict Facilitates work Involves some risk Requires interdependent relationship

Five Bases of Trust Deterrence-based trust – imposed penalties 8-20 Deterrence-based trust – imposed penalties Self-interest trust – mutually advantageous Relational trust – reliability in past performance Identity-based trust – “us” culture Institutional-based trust – imposed by the situation

Levels of Trust

Trust and Distrust Business relationships are multifaceted 8-22 Business relationships are multifaceted Parties can trust and distrust at the same time Trust can range from high to low depending on relationship Distrust can range from high to low depending on relationship

High/Low Trust and High/Low Distrust HIGH TRUST Interdependency Joint goals Reason to be confident Little reason to be wary Multifaceted and reciprocal relationship Separate and shared goals Many areas for confidence Many reasons to be wary LOW TRUST Limited interactions No reason for confidence No reason to be wary Monitoring or compelling each other’s behavior Ample reason to be wary LOW DISTRUST HIGH DISTRUST

Establishing Trust Assess the situation 8-24 Assess the situation Are there incentives for parties to deceive one another? Are there time constraints? How well do you know the other party? How does the other party see you? Are there common interests to build trust upon?

Establishing Trust (cont’d) 8-25 Build mutual trust Use norm of reciprocity Display trust in the other person Demonstrate trustworthiness by following through on a promise Recognize mutual interests Guard your reputation for trustworthiness

Tactics for Success: How to Build Trust in a Negotiation 8-26 Speak their language by active listening Manage your reputation by dealing with parties honestly                 Recognize your interdependency because negotiating is a voluntary exercise Make a unilateral concession    Label your concessions Explain reasons for your demands