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Ethics in Negotiations . Breakout Session # 104 Tom Reid Chief Problem Solver Certified Contracting Solutions, LLC Date: April 24, 2007 Time: 10:45 - 11:45. What is the State of Ethics in Business?. Enron WorldCom Adelphia Communications

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Ethics in Negotiations

Breakout Session #104

Tom Reid

Chief Problem Solver

Certified Contracting Solutions, LLC

Date: April 24, 2007

Time: 10:45 - 11:45

what is the state of ethics in business
What is the State of Ethics in Business?
  • Enron
  • WorldCom
  • Adelphia Communications
  • Catholic Priests
  • Stephen Ambrose
  • 2002 Winter Olympics Figure Skating
  • Societal views of lawyers, politicians, etc.
the importance of wise choices
The Importance of Wise Choices
  • Acting unethically is a choice
  • In any situation we can choose to act ethically or not
  • Sometimes we can trust our “gut”
  • Other times we can’t
why is this a dilemma
Why Is This a Dilemma?

We make unethical decisions for one of these reasons:

  • We do what is most convenient (thoughtless)
  • We do what we must to win (need)
  • We rationalize our choices with relativism.
  • We don’t know any better or practice ignorance of convenience
  • We are fearful (actual or perceived threat)
the result
The Result?

Ethical Chaos

ethics vs societal norms
Ethics vs. Societal Norms
  • Ethics
  • Etiquette
  • Fashion
  • Grammar

All four are societal codes but only the first deals with character.

what is the role of ethics in negotiations
What is the Role of Ethics in Negotiations?
  • When does “puffing” become misrepresentation?
  • Is it ever appropriate to lie?
  • Can silence be unethical?
  • Can you remain intentionally ignorant?
  • Is it ethical to seek not what you deserve, but what you can get?
business ethics
Business Ethics

“There’s no such thing as business ethics – there’s only ethics. People try to use one set of ethics for their professional life, another for their spiritual life, and still another at home with their family. That gets them into trouble. Ethics is ethics. If you desire to be ethical, you live it by one standard across the board.”

Maxwell, John C. There’s No Such Thing as “Business” Ethics, p.v.

what is ethical negotiation
What is Ethical Negotiation?


Fair and Reasonable



Budget Bogey





Chinese Auction





Fait Accompli


Status Quo

SOURCE: Karrass, Chester L. The Negotiating Game. World Publishing, New York. 1970. P. 173

more maneuvers

Open Inspection

Limited Inspection



Third Party

No Admittance


Equal Brothers

Big Brother

Little Brother

Long-lost Brother


More “Maneuvers”
even more maneuvers




United Nations






Good and Bad Guys

False Statistics and Errors

Scrambled Eggs



Even More “Maneuvers”
and finally

Limited Authority


Escalation Approval

Missing Man


And Finally….
when do we become ethical
When Do We Become Ethical?

“A course entitled ‘The Ethics of Corporate Management,’ offered at the University of Michigan, says in its description, ‘This course is not concerned with the personal moral issues of honesty and truthfulness. It is assumed that the students at this university have already formed their own standards on this issue.’” Maxwell at 6.

the fallacy of relying on the law
The Fallacy of Relying on the Law
  • As a western society we set our legal standard well below our ethical standard
  • Not always true in other societies
the rule of law
The Rule of Law

“I’ve lived my life in a society where there was no rule of law. And that’s a terrible existence. But a society where the rule of law is the only standard of ethical behavior is equally bad.”

- Aleksandr Solzhenitsyn

blanchard peale s three questions
Blanchard/Peale’s Three Questions
  • Is it Legal?
  • Is it Balanced?
  • How Will it Make me Feel About Myself?

Blanchard, Ken and Norman Vincent Peale, The Power of Ethical Management.

compliance versus commitment
Compliance versus Commitment
  • Compliance can be measured
  • Commitment comes from within and is based on character.
which is more important

Federal Sentencing Guidelines

Sarbanes Oxley







Which is more important?
which is more important21
Which is more important?
  • Commitment is grounded in authentic behavior supported by an ethical framework which integrates our intellectual, emotional, spiritual, and physical selves.
  • Commitment shifts expenditures from compliance, damage control, and penalties to a quality working environment and greater productivity.
  • Compliance is the bottom rung of the ethical ladder.
what do we believe about ourselves
What Do We Believe About Ourselves?
  • Most people consider themselves “always” or “mostly” ethical
  • Most people feel that being “mostly ethical” is OK UNLESS they are on the short end of another’s ethical lapse
can you trust your conscience
Can you Trust your Conscience?
  • Can be hardened
  • Can’t be trusted if tainted by bad choices
  • Thus “trusting your gut” is only valid if you have a habit of making ethical choices
regulating lawyers
Regulating Lawyers
  • The American Bar Association (ABA) publishes the “Model Rules of Professional Conduct”
  • State Bar Associations adopt the Model Rules with state-specific changes
  • Each state regulates its own attorneys and the standards can vary
use of metadata
Use of Metadata

Metadata is the “hidden” information that travels with a document revealing who created it, who made changes, the substance of deleted text, when the changes were made, and comments reviewers may have made.

metadata aba view
Metadata - ABA View
  • The Model Rules say that you need only notify the other party that you have received “inadvertent” information. There is no restriction on its use.
  • Implication is that it is sending person’s responsibility to remove the data.
metadata state views
Metadata – State Views
  • New York = prohibits the use of “surreptitiously obtain[ed] privileged or otherwise confidential information” of an opposing party.
  • Florida = prohibits looking at metadata on a document inadvertently sent
  • Maryland = OK to view metadata
aba opinion on negotiations
ABA Opinion on Negotiations
  • “It is not unusual…to make a statement that is less than entirely forthcoming.”
  • “A party … might exaggerate …emphasize strengths, and minimize … the weaknesses.”

ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 06-439, April 12, 2006.

aba opinion
ABA Opinion
  • “Such remarks, often characterized as ‘posturing’ or ‘puffing’ are statements upon which parties to a negotiation ordinarily would not be expected justifiably to rely,and must be distinguished from false statements of material fact.” (emphasis added)
aba opinion30
ABA Opinion
  • “Rule 4.1(a) applies only to statements of material fact that the lawyer knows to be false,and thus does not cover false statements that are made unknowingly, that concern immaterial matters, or that relate to neither fact or law.”
aba opinion31
ABA Opinion
  • Items deemed NOT material facts:
    • Downplay willingness to compromise
    • A bargaining position without disclosing the “bottom line”
    • Overstatements or understatements re: Strengths or weaknesses
    • Opinions as to the value or worth of the subject matter
aba conclusion
ABA Conclusion

“Under Model Rule 4.1 in…a negotiation…a lawyer representing a party may not make a false statement of material fact to a third person …. [S]tatements regarding a party’s negotiating goals or its willingness to compromise, as well as statements that can fairly be characterized as negotiation ‘puffing,’ are ordinarily not considered ‘false statements of material fact’ within the meaning of the Model Rules.”

the golden rule
The Golden Rule
  • Appropriate use of this rule is an integrity guideline for any situation

Maxwell, John C., Ethics 101, p.16

universal rule
Universal Rule
  • Christianity - Whatever you want men to do to you, do also to them.
  • Islam - No one of you is a believer until he loves for his neighbor what he loves for himself.
  • Judaism – What is hateful to you, do not do to your fellow man. This is the entire law; all the rest is commentary.
universal rule35
Universal Rule
  • Buddhism – Hurt not others with that which pains yourself
  • Hinduism – This is the sum of duty; do naught unto others what you would not have them do unto you.
  • Zoroastrianism – Whatever is disagreeable to yourself, so not do unto others.
  • Confucianism – What you do not want done to yourself, do not do to others.
universal rule36
Universal Rule
  • Bahai – And if thine eyes be turned toward justice, choose thou for thy neighbor that which thou choosest for thyself.
  • Jainism – A man should wander about treating all creatures as he himself would be treated
  • Yoruba Proverb (Nigeria) – One going to take a pointed stick to pinch a baby bird should first try it on himself to feel how it hurts.
why you should adopt it
Why You Should Adopt It
  • The Golden Rule is accepted by most people
  • The Golden Rule is easy to understand
  • The Golden Rule is a win-win philosophy
  • The Golden Rule is a compass when you need direction
how do you want to be treated
How Do You Want To Be Treated?
  • I want to be valued.
  • I want to be appreciated.
  • I want to be trusted.
  • I want to be respected.
  • I want to be understood.
  • I do not want others to take advantage of me.
making decisions
Making Decisions
  • Ethics are demonstrated in action; actions that demonstrate ethics are choices or decisions
  • Making a bad choice, or even a series of bad choices does not prohibit making the next choice a good one.
5 p s of disaster
5 P’s of Disaster
  • Pressure
  • Pleasure
  • Power
  • Pride
  • Priorities

Maxwell, Op. Cit.

8 good choices
8 Good Choices
  • Take responsibility for your actions
  • Develop personal discipline
  • Know your weaknesses
  • Align your priorities with your values
  • Admit wrongdoing quickly and ask forgiveness
  • Take extra care with finances
  • Put your family ahead of your work
  • Place high value on people
invest in the covey bank account
Invest in the Covey Bank Account
  • Treat people better than they treat you
  • Walk the second mile
  • Help people who can’t help you
  • Do right when it is natural to do wrong
  • Keep your promises even when it hurts
gold or golden rule
Those who go for the GOLD:

Ask what can you do for me

Make convenient decisions

Sacrifice family for finances

Develop a rationale for their actions

Process a “me first” mind-set

Count their dollars

Base their values on their worth

Those who go for the GOLDEN RULE:

Ask “What can I do for you?”

Make Character decisions

Sacrifice finances for family

Develop relationships with their actions

Possess an “others first” mind-set

Count their friends & blessings

Base their worth on their values

Gold or Golden Rule?
ethical norms
Ethical Norms
  • Norms are regular ways of doing things that everybody agrees on. Unlike other conventions, ethical norms regulate all aspects of our lives in ways that are crucial for the existence of society. They are also a core part of who we are.

Idiots Guide to Understanding Ethics, p.9

  • If men were angels, no government would be necessary. James Madison (1751 - 1836)
  • Ethical Codes Database =
what to do
What to Do?
  • Adopt the golden rule in all of your dealings
  • Learn to make good choices that firm up your integrity, not harden your conscience.
  • The solution lies in the consistent application of good choices
  • Each action you take, good or bad, affects the world we live in.
personal responsibility
Personal Responsibility
  • Old Standards:
    • Is this Legal?
    • Is this specifically against company policy?
    • Can I sleep at night? [recall hardened conscience]
  • New Standard
    • Is this how I would want someone I trusted to act on my behalf?
what goes around
What Goes Around…..
  • Peer pressure is the single greatest influence on behavior – both good and bad.
  • Actions speak louder than words.
  • Organizational commitment must be stated and demonstrated.
why ethics in negotiations
Why Ethics in Negotiations?

Why do societies have a common language,a standardized form of money, and universal electric outlets? The unifying answer – it reduces the cost of dealing with each other – is obvious. And so it is with ethical norms.

Brauer, Jurgen, “Business Ethics: Scandals and Standards,” Phi Kappa Phi Forum (Vol 87, No. 1) pp.28,33.

your moral compass
Your Moral Compass

“In the final analysis, it is your moral compass that counts far more than any bank balance, any resume, and yes, any diploma”

Elizabeth Dole

Duke University Commencement


future sessions
Future Sessions
  • Sarbanes Oxley
    • Breakout Session #1005
    • Tuesday April 24, 2007
    • Time 1:40 - 2:40
  • Six Sigma
    • Breakout Session #1708
    • Wednesday April 25, 2007
    • Time: 10:40 - 11:40
myspace sites
MySpace Sites
  • Official NCMA Group
  • Government Contracting Professionals
  • My Site(!)