Negotiation and Ethics

Negotiation and Ethics


Dealing less than ethically in business can have serious consequences for our personal reputations as well as our organizational reputations with customers/clients and in the communities in which we operate.

However, in difficult economic circumstances there can be a tension between a ‘business decision’ versus an ethical one. Should negotiators do what is ‘right’ if it means the likelihood of significant financial loss to their organization, or to the other party, or to the wider community?

Then there is the opportunity for personal financial gain for negotiators (eg. bonuses, commissions). These may foster a short-term drive to ‘win the deal’ that overrides making concessions to establish a long-term ethical relationship.

Current negotiation literature states that some form of deception can be a necessary part of the bargaining process. For example, it is accepted practice to be unwilling to tell your ‘must have’ issues or to disclose your bottom line. In fact ‘This is my final offer’ is seen as the most common lie told by negotiators.

Deception is linked to ethics and we need to appreciate there are distinct cultural variances. These include cultural differences between countries, as well as between organizations and individuals.

So perhaps what is the ‘right’ thing to do is not always clear.

In practice, ethics is behavior that fits your values

What do we mean by ‘ethics’? It may be defined as a set of core beliefs and values by which we make choices about how to act in given situations.

While fairly easy to define, how can we put it into practice? Given that being seen to have negotiated in bad faith can cause serious reputational damage, organizations need to make their values clear to their negotiators.

Taking time to establish an organizational ethical code is a worthwhile exercise. It causes people, personally and as a group, to think through their mission and obligations to the whole of society.

Ethical Decision-Making Tests

At the public policy level of our ENS International negotiation consultancy, we would say:

‘We seek to encourage and assist organizations and people to include ethical dimensions in their negotiations and thereby help to create a better world’ (adapted from The Ethics Centre, Sydney).

To implement such a policy, and appreciating that varying negotiation contexts have their own twists and nuances, here are some useful ethical decision-making tests to consider.

+ The Sunlight Test. When your decisions are brought into the full light of day. Would I be comfortable if my actions were disclosed in tomorrow’s newspaper?

+ The Golden Rule Test. Do unto others as you would have them do unto you. Would I want others to treat me in this way?

+ The Greatest Benefit Test. Calculating the most favourable consequences. Of my possible options, which would create the most benefit or least harm?

+ The Good Society Test. Creating a better world if everyone did the same. Will this decision result in making the world a better place?

+ The Best Friend Test. Doing the action to your best friend, spouse or
children. How would I feel if this was done to …X… (the person most dear to you)?

+ The Authority Test. Views of an external authority. What
would an important (named) ‘authority’ think?

+ The Counselling Test. Giving advice to others. How would
I advise another in my situation to act?

+ The Legacy Test. How will others remember you in future. Does this
decision reflect how I want to be remembered?

While organizations should make their ethical values clear to their negotiators and provide feedback against organizational standards, each individual has the responsibility to decide whether or not to personalise organizational values.

  1. What are the accepted norms for the context?
  2. How would others act in similar situations?
  3. Do I wish to behave in that way?

To discuss this article in more depth and explore developing your negotiation capabilities, please contact us via email or call +612 9299 9688.