BUS 420NEGOTIATION PROCESS

Ethics in Negotiation

Instructor: Prof. Azize ERGENELİ

Prepared By: Orçun DİNÇTOPAL 20211888 M. Murat ÇİFTÇİ 20311879 Utku GÜĞERÇİN 20312067 Eray ERSOY 20312001

March-2007

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Negotiation is a pervasive features of business life. Success in business typically requires successful negotiations. In a competitive and morally imperfect world, business people are often faced with serious ethical challenges. Herboting suspicious abut the ethics of others, many feel justified in engaging in less-than-ideal conduct to protect their own interests. The most sophisticated moral arguments are unlikely to counteract this behaviour. We believe that this morally defensive behaviour responsible, in large part, for much undesirable deception in negotiation. Drawing on recent work in the literature of negotiations, we present some practical guidance on how negotiators might build trust, establish common interests, and secure credibility for their statements thereby promoting honesty.

“We must make the world honest before we can honestly say to our children that honesty is the best policy” George Bernard SHAW

What do we mean by ethics?

Ethics are broadly applied social standards for what is right and wrong in a particular situation, or a process for setting those standards. And ethics grow out of a particular philosophies which; define the nature of the world in which we live and prescribe rules for living together.

Why do people choose unethical behaviour?

The first answer that normally occurs to us is that people are corrupt, degenerate, or immoral. In fact these answers are to simplistics; moreover, they do not help us understand and control our own behaviour, or successfully influence and predict the behaviour of others in a bargaining environment.

Here were three primary factors motivational factors which lead negotiators to consider using unethical tactics: the pursuit of profit, the desire to beat an opponent in a competitive environment, and the need to insure or restore some standard of justice that has been violated.

Three major categories of ethical conduct were used to describe the broad range of questionable negotiating strategies and tactics: means/ends, truth-telling, and relativism.

The more e is committed to abide by certain rules and procedures, the more one believes that following the rules will eventually lead to the desired ends. The second group of tactics, relativistic vs. absolute, forces us to deal with questions of whether there are truly absolute rules and principles of right and wrong, or whether questions of ethics must be answered by each individual in his own personalized, subjective view of the world. Many authors have suggested that bluffing, misrepresentation or factual distortion is sometimes necessary in order to effectively negotiate; such behaviour, however, may well be seen by others as unethical and inappropriate.

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We believe that the negotiation process raises a host of ethical issues, more so than most other interpersonal transactions. Much of what has been written on negotiating behaviour has been strongly normative abut ethics, and prescribed “dos and don’ts”. We do not believe that this approach facilitates the understanding of how negotiators actually decide to act unethically. We believe this process can best be understood by a simple decision-making model.

We proposed that a negotiator who chooses to use an unethical tactic usually decides to do so in order to increase his negotiating power. Power is gained by manipulating the perceived base of accurate information (lying), getting better information about n opponent’s plan, or undermining an opponent’s ability to achieve his objectives. Using these tactics leads to two kinds of consequences; first, actual attainment or non-attainment of these goals he was seeking; and second, evaluation and criticism of the tactics by the negotiator himself, by his opponent and by observers. Negotiators usually feel compelled to justify their actions –i.e., they know they have done something “wrong” and need to establish a “good reason”

We suggested that the decision to use ethical or unethical tactics may be influenced in varying degrees by differences in individual backgrounds, personality, rewards or punishments associated with ethical or unethical actions, and the social and cultural norms that dictate what is appropriate or inappropriate in a given environment. We have made a number of assumptions about ways to judge and evaluate human conduct in the realm of ethics. We have intentionally avoided taking a strong normative stance, and have not tried to emphasize our own biases about what kinds of conduct are ethical or unethical. Instead, we have proposed several conclusions that can be drawn from research, experience and common sense:

1- Individuals will often disagree as to what kinds of negotiating tactics are “ethical” or “unethical”, and in which situations it is appropriate or inappropriate to use them.

2- The decision to use an unethical tactic can be probably best be understood as a quasirational decision making process in which a variety of personality and situational variables are likely to affect that decision.

3- In deciding to use an unethical tactic, a negotiator is likely to be most heavily influenced by what he believes the consequences will be for his choice: will it help him accomplish his objectives, and what kind of feed back is he likely to receive from others?

4- Negotiators who have used unethical tactics in the past, or might be considering their use in the future, should strongly consider three possible consequences of using unethical tactics:

a) Will they really help achieve objectives?b) How will they affect the quality of the relationship with this opponent in the future?c) How will they affect their reputation?

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Negotiators frequently overlook the fact that while unethical or expedient tactics may get them what they want in the short run, these same tactics typically lead to long-term problems and to diminished effectiveness.

Rules of the game

An assumption: every negotiation situation involves questions of ethics. What are the understood “rules of the game?”

What is fair? What is just? What is legal? What is appropriate and acceptable? What is expected?

Is ethical behaviour ….

What is practical? What is expedient? What is efficient? What serves one’s interests or a client’s interests? What is necessary to win?

Like the poker player, a negotiator hopes that his opponent will overestimate the value of his hand. Like the poker player, in a variety of ways he must facilitate his opponent’s inaccurate assessment. The critical difference between those who are successful negotiators and those who are not lies in this capacity both to mislead and not to be misled.

Four major approaches to ethical reasoning

1. End-result ethics (results lens)The rightness of an action is determined by evaluating its consequences. Here

the question is: “what will be the result?”

2. Duty ethics ( reputation lens)The rightness of an action is determined by one’s obligation to adhere to

consistent principles, laws and social standards that define what is right and wrong. Here the question is: “what will others think?”

3. Social contract ethics ( relationship lens)The rightness of an action is based o the customs and norms of a particular

society or community. The question here is: “how will this impact others?”

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4. Personalistic ethics (rights lens)The rightness of the action is based on one’s own conscience and moral

standards the question here is: “what should I do?”

So when in an ethical quandary we answer the following questions;

What will be the result? What will others think? How will this impact others? What should I do?

THE IMPORTANCE OF NEGOTIATION ETHICHS

Commonly held assumptions reflect negatively on the ethics of the negotiation tactics of car salespeople, lawyers, horse traders, and other people who have a reputation of trying to influence folks into reaching agreements by misrepresenting facts. This kind of stereotyping has attached itself to people from different countries, ethic groups, or even as reflected in the expression from the 60s ‘Don’t trust anyone over 30’.

Negotiation is about many things; one of its central elements is convincing others to accept the accuracy or reality of information that will influence their decision. Most negotiators know that it is, indeed, possible to influence people by lying to them. But good negotiators also realize that when other parties find out they have been on the receiving end of lies, the lying negotiator’s credibility goes down to tubes.

There is an old expression ‘If you cheat me once, shame on you. ‘If you cheat me twice, shame on me.’ People who have been taken in by dishonestly resent it; if they are able, they try to get out of deals where there’s been misrepresentation.

In general, a general negotiator must make positive misstatement to be held liable fraud. First, when the negotiator makes a partial disclosure that is; or becomes, misleading. Second, where the negotiator acts as a fiduciary. Third, when the negotiator has important information about the transaction not accessible to the other side. Fourth, where required by statue.

On the other side we can say that negotiation is not a competitive sport. In competitive sports, the object is to end up winning the game, the race, or the event. Negotiators who focus on treating other parties as opponents run the risk of ending up with reluctant counterparties to whatever agreements may be reached. Unless all the parties are fully committed to their agreement, it may well fall apart; in those circumstances the negotiation has failed.

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The ethics of negotiation should be based on several understandings;

Reluctant partners make undependable partners so treating negotiation partners with respect and honesty simply makes common sense.

Negotiators need to recognize up front that the only reason to use negotiation to resolve a conflict, agree on a project, or conclude a sale because other parties may be able to add value an individual or a single company cannot do acting alone.

Transparency in the negotiation process is more likely to bring about buy-in than hidden agendas or tricky maneuvers.

Other parties have feelings.

Last understanding is the Golden Rule of treating others as you would wish to be treated has the bottom line value of increasing other parties’ enthusiasm about negotiating with you as well as their enthusiasm about the ultimate agreement.

Good negotiation ethics: honesty, transparency, respect for others are all genuinely pragmatic approaches to use. A negotiator’s reputation is not unlike that of a restaurant; if you have bad meal, you are not likely to return. And a negotiator with whom others don’t want to deal is effectively out of business.

Negotiator also should understand four major approaches to ethical reasoning: end-result ethics, or the principals of act utilitarianism; rule ethics, or the principle of rule utilitarianism; social contract ethics, or the principles of community-based socially acceptable behaviour; and personalistic ethics, or the principles of determining what is right buy turning to one’s conscience. Each of these approaches may be used by negotiators to evaluate appropriate strategies and tactics.

Consequently we can say that negotiation ethics is more important for negotiator that’s why negotiator should recognize ethics carefully. Also unethical behaviours are most important to the negotiator. Because when he or she faced with unethical behaviour he or she should find the reasons for unethical behaviour.

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WHEN CAN BE ETHICS IMPORTANT AND HOW?

When negotiators deal with the other parties using of deceptions, negotiation ethics become important. They behave differently like above:

Intimidation Fulility portroyal Discomfort and relief Bluffing Gentle prods Minimization Contradiction Altered information A chink in the defense Self-disclosure Point of deception cues Concern Keeping the status guo Direct approach Silence Ask Probing Questions Recognize the Tactic Ignore the tactic Ask questions “Call” the tactic Respond in kind Discuss what you see and offer to help the other party change to more honest

behaviors.

If we want to give an example for the ethics importance, we can look at the EU(European Union)-Turkey negotiations. In this negotiations EU seems to behave unethic. Becasue its criterians which they describe is not apply equally to all candidate countries. Criterias that are negotiated are not objective.For example a matter that says “ In future if there exists a digestion trouble, EU will stop the negotiations with Turkey” is not applied for Crotia which aply EU at the same time with Turkey.

Also we can see some tactics from Turkey government in negotiations.Our Prime minister give a declaration that “When we perform criterias in the negotiation process, if EU says we can not take you, we will evaluate other choices.” This is an example of indimitadion tactic.Is this tactic ethic or unethic? Why our prime minister give this declaration? İs this tactic is a strategy or threat? This declaration is gived by prime minister because in negotiations EU behaves unethically that’s why our prime minister use a tactic for this unethic behaviour.

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There exists a lot of example for the ethics importance because in our life we generalley negotiate.When we talk with our friend, when we bargain in the shopping-center, when discussed important subjects, when the countries improve their relationships etc.. All that is exists when we negotiate ethics become important, well than why? Because arriving at clear, precise, effective, negotiated agreement depends on the willingness of parties to share accurate information about their own preferences, priorities, and interests.At the same time, because negotiators may also be interested in maximizing their self-interest,they may want to disclose as little as possible of their positions-particularly if they think they can do better bay manipulating the information they disclose to the other party.This situation may cause unthical behaviours like deception,misstatement,bluffing,falsification or selective disclosure.

WHY DO THE NEGOTIATORS NEED TO KNOW ABOUT THE ETHICS?

Even the subjects are different, everyone negotiates. Little has been published and said about the ethics in negotiation because questions or comments about the ethics in negotiation arise for someone, when he or she negotiates, otherwise ethics will not be discussed. There are no written, certain rules about the ethics (in negotiation). But the basic solution for ethics in negotiation is too simple, it is empathy. Empathy (the ability to identify with and understand somebody else's feelings or difficulties) will make the sides of the negotiation think about what they are doing – ethical or unethical. But negotiators use empathy when they want to use, especially in the business life, mainly for profit – even it is for short term -, there are many unethical conducts in negotiations.

The answer of the topic, in fact, lies in the short term – long term relationship. Unethical tactics may give (just a probability) the negotiators what they want in the short run. These same tactics typically lead to long term problems and to diminished effectiveness. In other words a short term gain may easily become a long term stumbling block to future deals. So, unethical behaving negotiator’s credibility goes down the tubes. In the recent decades, in business life, the importance of the creditability for all parts involved in the business, has got more and more meaning. Each sides of a business do not want just the sell-buy, service-benefit or give-take relationship. They want to become a part in the business through adding some value to what they are doing. In this unnamed cooperation everyone should add value to make the business more valuable – should not make problems (of course through the unethical behaviours)

As the old expression says: “If you cheat me once, shame on you. If you cheat me twice, shame on me.” people who have been taken in by dishonesty resent it; if they are able, they try to get out of deals where there’s been unethical behavior. If one behaves unethically in a negotiation, every word he told, in fact, is a bomb in his/her mouth and ready to go off.After these significant examples, you will see a graphic in the below. It shows the relationship between success in unethical negotiation and time, including the short and long run.

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X axis represents the time. It may be the time of just one negotiation (30 minutes may be) or may represent the whole career of a negotiator (15 years maybe, if he is lucky). Y axis is the negotiation success through unethical behavior. As time passes, the success increases, through unethical behaviors and it makes the perfect trend! In a very short time the negotiator can be very successful. It does not mean every successful negotiator must behave unethically to be very successful. But assume; this is the graph of a hard negotiation, both sides insist on what they want to get and the negotiator can be only successful after 2 or 3 days negotiation.

This short and successful negotiation seems practical and easy, but really risky. The negotiator may gain a lot in the short run but surely, at least in the long run, he may get lots of things that should not be lost, even the business itself. After lying, coercion, bribe, corruption, violence… surely the dirty success will come at the end of the negotiation. It will not be eternal and when the other parties aware of the unethical conduct, it will really be hard to overcome this situation.

The case was same for Tin Men, the movie. In the movie, two salesmen, working for an aluminum siding company, are in the front garden of a house and they try to take some photographs of the house. Because they want to meet someone from the house, they speak with each other very loudly and so, the lady in the house comes to the garden and asks what they are doing. The salesmen lies: “We are from Life Magazine and we try to take your house photographs to use in a presentation about aluminum siding this week, in Life magazine.” Because Life Magazine is important for her, the lady wondered what they want to do with her house photo. Salesmen say that the photo will be a before picture in life magazine! As the salesmen hope, a before picture is unacceptable for the lady. So, they make the lady to buy aluminum siding for the house through unethical behaviors at the end of their negotiations. (Of course they have no relationship with Life Magazine). They sell a lot using these

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unethical tactics and at the end they lose their licences for selling. They lose the only instrument to do what they are doing best, their jobs.

Unethical behaviors can be perceived as available all the time or practical to use. But they require risks, not to be taken for rational people or firms.

WHAT MOTIVATES UNETHICAL CONDUCT?

There are several major dimensions of human conduct and the business system that motivate unethical conduct. Missner (1980) suggest four: profit, competition, justice and generating wants (advertising). While the strategies and tactics of negotiating have little to do with advertising strategies in the conventional sense, questions and issues of profit, justice and competition are common to the evaluation of negotiating behavior.

Profit The pursuit for profit is fundamental to the business system, whether it be the

company president who is striving to maximize the earnings of the competition, the stockholders who are looking for bigger dividends, or the salaried clerk who is pushing for a raise. In this context, we define profit as the “desire to get more” rather than in strict accounting terms.

Profit is clearly a motive in negotiating. By its very nature, negotiating is a process by which individuals strive to maximize their outcomes. Individuals trying to maximize their profit frequently use negotiating strategies and tactics because they are recognized as techniques for enhancing profit.

Businessmen frequently defend profit and the profit motive as ethically neutral, not inherently bad or good. In contrast, however, many ethical philosophers and political theorists have argued that profit is a “dirty six-letter word”. Lastly and surely it can be said that desire to get more can not motive always unethical conduct. But there is a strong relationship between the two.

CompetitionThis behavior occurs in a social context in which the total amount of resources

available is insufficient to satisfy everyone’s desires; therefore, competition occurs.

In the business system, there are several different types of competition. The fundamental differences between these types are whether competitors know that they are competing, whether they know the identity of their competitors, and whether they attain their goal by simply “getting there first” or by blocking their opponent in his pursuit of the goal. An example of the first type is (1) someone trying to set a record for pizza-eating to win recognition in the Guiness Book of World Records; an individual is trying to surpass a previous record without knowing whether anyone else is trying to do as well. The second case, (2) knowing that others are competing but not knowing who the competitors are, is exemplified by many scientists simultaneously searching for a cure for cancer. These scientist

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know that they are in a competition but generally don’t know where each one stands in the race. An example of the third case (3) might be two scientists, each of whom knows the other well, and each racing to gain recognition for solving a specific scientific problem. While both may ultimately achieve their goal, only one will get the recognition. An example of the fourth case would be (4) two athletic teams competing in a track meet. In most events, team members know who their components are, and know that they have to beat their opponent in their individual events. The key distinguishing aspect of this fourth type is that the competitor can only achieve his objective by defeating the opponent. If there were only one team in the track meet- and none of the team members was good enough to set world records – then the fundamental nature of the competition would be lost.

We shall call the first three types incidental competition, and this type essential competition. Here it can be argued that the closer a negotiator comes to a situation of essential competition, where a specific adversary has to be defeated in order to achieve a goal, the more a party is predisposed to use tactics that are ethically questionable. In most competitions, there are rules that limit what people can and can not do. It can be argued that when the goal is to defeat an opponent, there may be considerably greater pressures to violate the rules in order to make sure that defeat occurs.

Justice Questions of justice are largely based on differing standards of outcome distribution:

what parties actually receive (in economic or social benefits) compared to what they believe they deserve. Conflict arises when parties disagree as to how well they have actually performed, and how much they deserve for their performance. As an example of the first case – determining how well they have performed – suppose one person becomes a millionaire through inheritance while the other person has had to work 60 hours a week for 20 years to attain the same status. In the second case – determining what they deserve for their performance – a justice question may arise over whether a labor union deserves an across-the-board increase of 25cents/hour. Moreover justice questions arise when parties disagree about whether the rules were followed in attaining a particular end. The more parties fundamentally disagree about the nature of the rules that apply in a given situation, or the manner in which the rules were (or were not) observed, the more likely these disagreements will lead to an ethical controversy about which fairness standards are “right” and “wrong”.

Factors That Affect A Negotiator To Behave Unethically:

Demographic Factors: One factor that affect people to behave ethically or unethically is demographic factors, major demographic factors that affect people’s ethical behavior are; age, gender, nationality and cultural background, and past experience. People in different age groups may differ in their opinions of what is ethical and what is not.A behavior that is ethical for one country’s culture may not be ethical for another country’s culture.

Personality Differences: Major personality traits that affect people to behave ethically or unethically are; being a team oriented or self oriented individual, being cooperative or competitive, being a high mach or low mach (machiavellist) and locus of control. (Internal or External) People who are more team oriented, more cooperative, lower mach and who has an

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external locus of control tend to have more strict ethical rules and live their lives according to those rules.For example Japanese people fits very well with this example they value ethical rules very much, they are team oriented and cooperative individuals and they have an external locus of control so they believe in their destiny.Where as American people are more self oriented and competitive individuals they believe that what is ethical for them is ethical for eveybody.

Moral Development: This subject is explained very well under Kohlberg’s Moral Development Theory.This theory holds that moral reasoning, which is the basis for ethical behavior, has six identifiable development stages and these stages are grouped under three levels.

Pre-Conventional Level: This level of moral reasoning is common especially in children but adults also use it. People in the pre-conventional level judge the morality of an action by its direct consequences.

Stage One Obedience and Punishment Orientation: In stage one, individuals focus on the direct consequences of their actions on themselves.For example, an action is percieved wrong if the one who commits it gets punished, worse the punishment is, act is percieved to be more immoral.

Stage Two Self-Interest Orientation: In Stage two, right behavior is defined by what is in one's own best interest.Stage two reasoning shows a limited interest in the needs of others unless the interest we show on other’s benefit, improves our position. (If you scratch my back, i’ll scratch yours.)

Conventional Level: The conventional level of moral reasoning is common especially in adolescents and adults. People who are in conventional level, judge the morality of actions by comparing these actions to societal views and expectations.

Stage Three Interpersonal Accord and Conformity: In this stage people try to fill social roles and they look for the feedback (Approval or Disapproval) from the society. They try to be a good boy or good girl to live up to society’s expectations.

Stage Four Authority and Social-Order Maintaining Orientation: In this stage people believe that obeying society’s rules is not important because of the feedback they receive from society, but they believe that, it is their duty to obey rules because if anyone does not, it may ruin society’ well being.

Post-Conventional Level: The post-conventional level is also known as the principled level.In this level individuals begin to realize that they are separate from the society at large and they believe that one's own perspective should be viewed before the society's.

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Stage Five Social Contract Orientation : At this stage individuals are viewed as holding different opinions and values, and so they should be valued and respected seperately. Laws and rules are regarded as social contracts not as dictations that everyone must obey and laws that do not increase social welfare should be changed when necessary to meet the greatest good for the greatest number of people.

Stage Six Universal Ethical Principles: In this stage moral reasoning is based on universal ethical principles.Laws are considered to be valid if they are grounded on justice and disobeying the laws that are not just is the society’s duty.

Major Dimensions Of Ethical Conduct:

Means-Ends Approach: .”Ends Justify Means.” This is the motto of the Machiavellist approach and it means that when outcome of a certain activity is desirable, we can tolerate the ways we used to achieve that outcome.

For example you are working in a construction company and there is a bridge building contract that will take place in two days and your manager decided that you should go to bidding and you should win the contract whatever it takes, he told you whatever it takes maybe he meant that you can use an inside man and learn the appropriate price for the contract and you bid that price and you win, or maybe he meant you can bribe the rival firm’s agents and make them withdraw their offers and even you can hire somebody to kill the rival firm’s agents if they don’t accept the bribe! These example may seem extreme but at the means-ends approach if you reached your goal it justifies your ways you used when reaching it.

Absolutism Vs. Relativism: Absolutism and relativism are two extreme ethical approaches to reality. While they are both valid and supported by facts, they are very contrasting in their views. In absolutism, everything is certain. On the other hand, relativism is more subjective. An ethical absolutist believes that there is a single or universal moral standard for the whole society, and everybody must conform with these standards.For example if two individuals in society are in conflict about something if it is right or wrong, then one one of them should be mistaken, because according to absolutist view ethical standards are universal. The extreme opposite of absolutism is relativism. Relativists think that in some situations, exceptions of moral standards may be necessary.In contrast to absolutists, relativists think that if two individuals in society are in conflict about something if it is right or wrong they can be both right because there is nothing like an absolute universal moral standard.

Truth Telling or Withholding Information: Truth telling is an important subject in ethical conduct, especially in medicine ethics.For example there is a patient diagnosed with cancer in late stages, and he expresses that he doesn’t want to know the truth if the results of his tests are bad.Should the doctors tell him the truth or withhold the information?In this situation probably it is best if he doesn’t know the truth but if he didn’t requested it, i think he would have right to know about his condition.

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There is a good example in our country about truth telling, at first sight it seems not related with medicine ethics but its consequences is very much related: Cahit Aral (A Former Trade Minister) was at charge of Trade Ministry during the Chernobyl Disaster in 1986. When people in Türkiye started to talk about radiation effects on Black Sea Region’s agricultural products (Tea Especially), Trade Ministry became afraid of lower agricultural trade income and to avoid the ‘gossips’ about effected products Cahit Aral drank a glass of tea during a press conference and said “Nothing happens to us.” After a few years there was an enormous rise in the number of birth defects and cancer patients in Black Sea Region. If he didn’t withhold the truth and warned people about possible effects of radiation, maybe such things wouldn’t happen and people wouldn’t have suffered.

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BIBLIOGRAPHY

LEWICKI J. Roy, David M. SAUNDERS, John W. MINTON, 2000Negotiation (McGraw-Hill International Editions)

THOMPSON Leigh, 1998The Mind and Heart of the Negotiator (Prentice Hall)

BAZERMAN M. H., & Roy J. Lewicki, 1983Negotiation in Organizations (Beverly Hills)

WHITE James, 1980 Machiavelli and the Bar:Ethical Limitations on Lying in Negotiation (Journal of Personality and Social Psychology)

http://www.busiweek.com

http://www.culture-at-work.com/ethics.html

http://www.negotiatormagazine.com/article217_1.html

http://www.negotiatormagazine.com/article301_1.html

http://www.nextlevelpurchasing.com/articles/negotiation-ethics.html

http://oregonstate.edu/instruct/comm440-540/ethicsanddeception.html

http://www.negotiations.com/articles/ethical-negotiation/

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