Ethics in Negotiation: Why They Matter and How to Incorporate Them

If “negotiation is the art of letting them have your way”, how should you go about it? Should you play your cards close to your chest and see what you can get away with, or should you be transparent and stick to your values? In the world of negotiation, ethics matter. Not only do ethical business practices build trust and credibility, but they also set the groundwork for a lasting relationship between parties. 

The Negative Consequences of Unethical Behavior

When one party in a negotiation engages in unethical behavior, it can sour the entire interaction. For example, let's say that you're negotiating a contract with a potential client. You quote a market-value price, and they counter with an offer that is significantly (and not-credibly) lower. You counteroffer, but they refuse to budge. Finally, they reveal that they have another company willing to do the work for a lower price and threaten to take their business elsewhere if you don't lower your price to match.

If you cave and lower your price, you may be able to close the deal, but you've just established a precedent that you're willing to bend over backward to close a sale. If the client ever has another project in the future, they may come back expecting the same concession. Furthermore, if they already had someone ready to do the work for a lower rate, why are they speaking with you? What part of this interaction is true and which parts were designed to manipulate you? Why only tell you when the terms aren't overwhelmingly favorable to them?

This interaction isn’t uncommon. And when someone is acting in ways that damage their credibility and showcase only their desire to help themselves, not to mention the threat of taking all your business away, it should cause red flags. 

The Role of Trust and Transparency

Trust and transparency are critical components of any negotiation. When both sides share information and are honest about their interests and limitations, they can achieve a mutually beneficial outcome. By contrast, if one party suspects that the other is hiding something or trying to take advantage of them, they may become defensive and less willing to compromise.

One way to build trust and transparency is to be clear about your intentions and to stick to your word. Don't make promises that you can't deliver on or say one thing and do another. Also, communication is key – be sure to keep all parties informed about any changes in the negotiation process or any new information that may affect the outcome.

Does that mean you’re transparent about everything? Absolutely not. Of course you’ll hold info back. But communicating clearly, following through on your commitments, and being clear with your intent will build trust. 

Ethical Dilemmas in Negotiation

Negotiation involves making tradeoffs and making choices that involve ethical considerations. Here are some ethical dilemmas that negotiators may face:

Honesty vs. Loyalty: Suppose you're negotiating with your boss for a promotion. They ask you what your salary expectations are, and you reply with a figure that is higher than what the company is willing to pay. You know that your boss is under pressure to stay within budget, but you feel that you deserve to be paid what you're worth. Do you stick to your guns and risk losing the promotion, or do you compromise to show your loyalty to the company?

Fairness vs. Self-Interest: Let's say that you're negotiating a partnership agreement with a potential business partner. You know that there is a clause in the agreement that could significantly benefit your company, but you also know that it would be unfair to your partner. Do you try to push the clause through, or do you act ethically and work to find a reasonable solution?

Transparency vs. Confidentiality: Suppose you're dealing with a client who wants you to disclose confidential information about a competitor. They argue that the information is essential to the negotiation and that it's in both of your best interests to share it. However, you know that disclosing the information would be unethical. Do you risk losing the deal, or do you keep your ethical standards intact?

The key is to consider the long-term ramifications of your choices and to think about how your decisions will affect your reputation and your relationships with others involved in the negotiation.

Tips for Maintaining Ethical Standards

Here are some tips for maintaining ethical standards in negotiation:

Prepare thoroughly: Before entering into a negotiation, research all parties involved and the overall context of the deal. This will help you avoid any surprises and be better prepared to maintain your ethical positions.

Know your values: Be clear about your values and what lines you're not willing to cross. This will make it easier to stay consistent throughout the negotiation process.

Be respectful: Treat all parties with respect and avoid making personal attacks or insults. This will help ensure that all parties feel comfortable and respected throughout the process.

Listen actively: Listen carefully to all parties involved and try to understand their needs and interests. This will help facilitate respectful negotiations that aim for mutual benefit.

Seek mutually beneficial options: Focus on finding solutions that meet the needs and interests of all parties involved. This will help ensure that everyone feels that they've been treated fairly and will be more likely to maintain a good relationship after the negotiation is over.

Ethics matter in negotiation because they build trust, set the groundwork for lasting relationships, and establish a positive reputation. To maintain ethical standards, it's essential to be well-prepared, clear about your values, and respectful of all parties involved. By seeking win-win solutions and avoiding ethical dilemmas, you'll be able to achieve a mutually beneficial outcome that's sustainable over the long term. Remember, negotiation doesn't always have to be a zero-sum game – it's possible for everyone involved to come out ahead if you approach the process ethically.

Aligned DEMYSTIFIES what successful negotiation looks like