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.
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 donts. 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 opponents plan, or undermining an
opponents 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?
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
What
What
What

is
is
is
is

just?
legal?
appropriate and acceptable?
expected?

Is ethical behaviour .

What
What
What
What
What

is practical?
is expedient?
is efficient?
serves ones interests or a clients interests?
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 opponents 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 ones 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?
4. Personalistic ethics (rights lens)
The rightness of the action is based on ones 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 ETHICS

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 Dont 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 negotiators 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
theres 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.
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 negotiators
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
dont 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 ones 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 thats 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.
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? s this
tactic is a strategy or threat? This declaration is gived by prime minister
because in negotiations EU behaves unethically thats why our prime
minister use a tactic for this unethic behaviour.
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 negotiators 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
theres 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.

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 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 sixletter 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.

Competition
This behavior occurs in a social context in which the total amount of
resources available is insufficient to satisfy everyones 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 pizzaeating 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
know that they are in a competition but generally dont 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
peoples 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 countrys culture may not be ethical for another countrys 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 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 Kohlbergs

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 others benefit, improves our position. (If you scratch my
back, ill 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 societys expectations.

Stage Four Authority and Social-Order Maintaining Orientation:

In this stage people believe that obeying societys 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.

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 societys 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
firms agents and make them withdraw their offers and even you can hire
somebody to kill the rival firms agents if they dont 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
doesnt 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 doesnt know the truth but if he didnt requested it, i
think he would have right to know about his condition.

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 Trkiye started to talk
about radiation effects on Black Sea Regions 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 didnt withhold the truth and warned
people about possible effects of radiation, maybe such things wouldnt
happen and people wouldnt have suffered.

Ethical Negotiations: 10 Tips to Ensure Win-Win Outcomes

Peter B. Stark and Jane Flaherty
To some people, the word negotiation has a negative connotation. Typically, these people feel
that negotiation is what a salesperson does to get them to buy his products and services. But
negotiation is not a negative thing. In fact, every one of us negotiates almost every waking hour
of every day. Whenever you communicate--whether you are trying to get your teenager to clean
his room, convince your significant other to take you out to dinner, or encourage an employee to
show up to work on time--you are negotiating. Girard Nirenberg, the author of the first formal
book on negotiation, explains it this way: "When two or more people exchange ideas with the
intent of changing the relationship in some way, they are in negotiation."
When we view negotiation from this perspective, we can see how important it is to improve our
ability to negotiate so we can be more successful in achieving our goals. What we want to ensure
is that when we do negotiate, we do so in a way that will ensure a win-win outcome--one that
meets the needs and goals of both counterparts, and makes both of them willing to come back to
the bargaining table to negotiate with each other again at a later time.
What is the role of ethics in negotiation?
The dictionary definition of ethics is: "a system of moral principles or values; the rules or
standards governing the conduct of the members of a profession; accepted principles of right or
wrong." Ethics establish the means of doing what is right, fair and honest. Why are ethics
important in a negotiation? Let's look at an example.
On April 23rd, 2003, Don Carty, the former CEO of American Airlines, ended his 20-plus-year
career when he was forced to resign over what the unions considered to be a lapse in his ethics.
While Carty was asking rank-and-file employees to take deep pay cuts to save the company, he
was also putting together a package that included $41 million in pension funding for 45
executives. If Carty had been upfront with the unions about this arrangement--perhaps explaining
that he felt these benefits were necessary to retain an executive team that could help pull
American Airlines through the crisis--the outcome may have been different. Instead, the unions
got the facts from the press and demanded Carty's resignation.
Reputation plays a vital role in every negotiation. It's much easier to achieve win-win outcomes
when you have a reputation for being fair, honest and willing to do the right thing. A counterpart
who feels you are unfair, dishonest or unwilling to do the right thing will be less willing to make
concessions or even to begin a negotiation with you in the first place. So guarding your
reputation by always acting in an ethical manner is key to successful negotiation. When making
any decision, remember this: A reputation takes years to build, and only minutes to destroy.
What is the difference between "legal" and "ethical"?

Something may be perfectly legal and still not be ethical. I recently sold a rental house to a
tenant who had lived in the home for two years. The tenant offered to buy the house for
$485,000. I felt the house was worth over $500,000, so I decided to have it appraised. I told the
tenant that if the appraisal came in at more than $500,000, he would have the option of buying
the house at the higher price. On the other hand, if the house was appraised at less than $500,000,
I would decide if I wanted to sell it at the lower price or hang onto it. The appraisal came in at
$480,000--$5,000 less than what the tenant had offered me. I thought about not sharing this
information with the tenant, and saying something like, "$485,000 is a deal." That thought lasted
about one minute. Ethically, I felt I needed tell the tenant about the appraisal price. Then I could
decide if I wanted to sell the house for that price or keep it.
You can't be 95 percent or 99.9 percent ethical. You are either ethical or you are not. Would it
have been legal for me to keep the appraisal from the tenant? Yes. Would it have been the right
thing to do? People for whom the almighty dollar is the highest value would say yes. For me, to
withhold this information was neither right nor fair. In short, doing so might be legal, but it
would not be ethical.
The following 10 tips will ensure that you build all your negotiations on a foundation of ethics-which will, by the way, increase your chances of achieving win-win outcomes. Ethical
negotiators don't think only about what they can "get" out of a negotiation but also about what
they can "give" to their counterpart. In this way, they take the long-term view. They know that a
counterpart who walks away from a negotiation feeling successful will be willing to come back
and negotiate again in the future.
1. Know what is not negotiable. Whenever we work with bank employees, we love to ask the
following question: "How much can you steal from this bank before you get fired?" The question
always draws a laugh because, of course, everyone knows that anyone who steals from a bank
would be fired immediately. This is simply not an area that is negotiable. Knowing what is
negotiable and what is not will make you a much more effective negotiator.
2. Be honest. In a negotiation, whenever you are ethical and honest even though it costs you
something, you gain points. If a counterpart makes an invoice error that is to your advantage and
you inform him of it, that costs you something--but it also earns you respect. A client recently
called to inform us that we had not sent an invoice for services we had performed for her. That
one telephone call let us know that this client is honest. That fact will undoubtedly affect all our
future negotiations with her.
3. Keep your promises. In your eagerness to put a deal together, you may sometimes make
promises and concessions you hadn't planned to make. You demonstrate your ethics when you
fulfill those promises long after the desire to do so has left you.
4. Have multiple options. Going into a negotiation with multiple options will help both you and
your counterpart achieve your goals. If someone proposes an option you feel is unethical, you
will be ready with another, ethical option for accomplishing the same goal. Sometimes you may
encounter negotiators who are unilateral thinkers who have only one option. With them, it's their

way or the highway. If their way is unethical in your opinion, you have only one option--to walk
away from the deal.
5. Be willing to say "no." Some negotiators are quite comfortable looking a counterpart in the
eye and saying "no" when they feel something is not right. Others worry that saying "no" seems
confrontational, even when a proposal does not seem ethical--then later they regret agreeing to
the proposal. Being willing to say "no" to something that is not right is a great strength.
6. Be familiar with the law. Ignorance of the law is not a good excuse for unethical behavior.
When in doubt about the law governing some aspect of your negotiation, check it out.
7. Go with your gut. Recently we were in a negotiation with a company and a person in one
division of the company suggested that we not inform another division of an action we were
planning to take. One counterpart said, "This just smells bad." What he was saying was that this
deal point simply did not feel right. Telling the members of the other division what we were up
to, even though we knew they would be adamantly opposed to it, was the right thing to do.
8. Practice the concept of "no surprises." Gomer Pyle, played by the late Jim Nabors, used to
draw a laugh whenever he said, "Surprise, surprise, surprise, Sergeant Carter." What made this
line so funny was that Gomer Pyle's surprises were always negative. My wife is fond of telling
me, "If you are going to surprise me, stick it in a jewelry box and put a bow on it." Making sure
that a negotiation does not contain any negative surprises will reduce the chances of an ethical
lapse.
9. Follow the Platinum Rule. The Golden Rule tells us to treat people the way we would like to
be treated. Dr. Tony Alessandra's The Platinum Rule tells us to treat people the way they want
to be treated. Caring about your counterparts enough to treat them the way they want to be
treated helps build long-term relationships based on ethics and trust.
10. Be willing to walk away from a deal. When it comes to effective negotiations, remember,
some of the best deals you will ever make are the ones you did not make. All of us have
contemplated buying something from an individual, or entering into a business relationship with
a company, and just getting a gut feeling that we should say "no." So we have walked away from
the deal. Later, when we heard negative information about this individual or company, the
information reinforced the fact that we had made a great decision. In negotiations, your head
may try to rationalize deal points to make your gut feel more comfortable. Remember to go with
your gut instinct, since it does not rationalize as well as your head.
Putting these tips into use is critical to your success as a negotiator. Your reputation is at stake.
And, as some CEOs and CFOs have recently learned, your job is at stake. Practicing ethical
negotiations is not only right--it is a wise investment for your future.