CHAPTER 9
Ethics, Fairness, and Trust in
Negotiations
Understanding How Ethics and Values
Apply
 Negotiation is voluntary process dependent upon
communication and motivation
 The process often involves less than frank and
open communication
 Need to reconcile deceptive/ misleading tactics and
fair agreements
 Need to establish trust
Negotiating Skills
 Skill 1: Identify ethical systems that may guide
parties to a negotiation
 Skill 2: Determine the basic fairness of a negotiation
 Skill 3: Ensure the procedural fairness of a
negotiation
 Skill 4: Distinguish between ethical and unethical
concealment/ disguise behaviors
 Skill 5 Learn to create trust in negotiations
Chapter Case: Withholding
Information
 Employer sought concessions from a union in contract
negotiations to curb rising health care costs
 Union asked employer to switch to self-insurance to
reduce cost
 Employer was already self-insured but did not share
that information with the union in case the union asked
for share of savings
Ethics
 Ethics is the study of morality
 Ethical belief system is a basis for one’s
values
 Values reflect belief about “ends” and
“means” of achieving goals
 Behavioral rules are the accepted customs,
standards, or models for ethical actions
Ethical Theories
 Ethics of purpose: A good end cannot be
reached with bad means
 Ethics of principle: “Do unto others as you
would have them do unto you”
 Ethics of consequence: The end justifies the
means
Tactics for Success: Moral Decision
Making
Chapter Case: Should the negotiator tell
the employees that the employer is
already self-insured?
Ethics of consequence:
 What benefits will result if he does?
 What harm will result if he does not?
 Which outcome has the best overall consequence?
Tactics for Success (cont’d)
Ethics of principle:
 Are the employees entitled to the information?
 Should the employer expect similar treatment
from the other side?
Ethics of purpose:
 Does withholding the information subvert the
negotiation process?
 If the employees do not have all the
information, can they fairly evaluate the
employer’s offer?
Rokeach’s Terminal and Instrumental Values
Values
 Values can be self-centered, internal standards
accepted for one’s own behavior
 Values can be social-centered, external
standards expected for another’s behavior
 Rokeach described end or terminal values and
means or instrumental values
Behavior Rules
 Descriptive behavior rules show what people
do in certain situations
 Injunctive behavior rules show what people
should do in certain situations
 Injunctive behavior rules become laws and
codes of ethics
Substantive/ Fundamental Fairness
Seen in distribution of value
• Proportionality
• Reciprocity
• Impartiality
• Parties are heard
Traps to Avoid: Alternatives to Lying
 Asked your bottom line, say you’re not ready to
reveal it
 If you claim you “lack authority” then don’t
seek authority
 Don’t want to volunteer alternatives, ask
opponent for options
 Only make promises you can keep
 Don’t lie about facts, limit discussion to opinion
of facts
Procedural Fairness
• Seen in appropriateness of tactics used
• Functionalist Model
• Bargaining is voluntary process
• Purpose is to reach valid agreement
• Practices that threaten valid agreement violate
purpose
• Negotiation is also adversarial process in which
parties use bargaining techniques to gain
information and advantages
Procedural Fairness (cont’d)
 Reciprocity standard—would you want to be
treated in this way?
 Universality standard—would you advise others
to behave this way?
 Publicity standard—would you like to see the
actions in the press?
 Trusted friend standard—would you tell your
friend of your actions?
 Legacy standard—do you want to be remembered
for acting in this way?
Appropriate Tactics
 Gain information about opponent by asking
friends, associates, and contacts
 Make an unrealistically high opening demand
 Hide your real bottom line
 Give false impression you aren’t in a hurry to
pressure your opponent
Inappropriate Tactics
 Misrepresent factual information or nature of
negotiations to improve one’s position or
because your opponent did
 Falsely threaten or promise things with no
ability to deliver
 Bypass your opponent’s negotiator to
undermine opponent’s position
 Gain confidential information by bribery
Unethical Negotiating Gambits
 The Decoy/ Incentive or bribe
 The Red Herring
 The Deliberate/ Intentional Mistake
 Escalation
 Planted Information
 Never-Ending Negotiation
Trust
 Essential factor in negotiation
 Enables cooperative behavior
 Reduces harmful conflict
 Facilitates work
 Involves some risk
 Requires interdependent relationship
Five Bases of Trust
 Deterrence-based trust – imposed penalties
 Self-interest trust – mutually advantageous
 Relational trust – reliability in past performance
 Identity-based trust – “us” culture
 Institutional-based trust – imposed by the
situation
Levels of Trust
Trust and Distrust
 Business relationships are multifaceted
 Parties can trust and distrust at the same time
 Trust can range from high to low depending on
relationship
 Distrust can range from high to low depending
on relationship
High/Low Trust and High/Low Distrust
HIGH
TRUST
LOW
TRUST
Interdependency
Joint goals
Reason to be confident
Little reason to be wary
Multifaceted and reciprocal
relationship
Separate and shared goals
Many areas for confidence
Many reasons to be wary
Limited interactions
No reason for confidence
No reason to be wary
Monitoring or compelling
each other’s behavior
No reason for confidence
Ample reason to be wary
LOW DISTRUST
HIGH DISTRUST
Establishing Trust
 Assess the situation
• Are there incentives for parties to deceive one
another?
• Are there time constraints?
• How well do you know the other party?
• How does the other party see you?
• Are there common interests to build trust
upon?
Establishing Trust (cont’d)
 Build mutual trust
• Use norm of reciprocity
• Display trust in the other person
• Demonstrate trustworthiness
by following through on a promise
• Recognize mutual interests
• Guard your reputation for trustworthiness
Tactics for Success:
How to Build Trust in a Negotiation
 Speak their language by active listening
 Manage your reputation by dealing with parties
honestly
 Recognize your interdependency because
negotiating is a voluntary exercise
 Make a unilateral concession
 Label your concessions
 Explain reasons for your demands