Assessment of Ethical Negotiation - Coursework Example

Assessment of Ethical Negotiation According to Friedman and Shapiro (1995) “there are reasons to engage both in deception and honesty in negotiations, and there are enormous risks associated with either a purely honest or purely deceptive strategy.” Assess this statement, relating your answer to various perspectives on what is ‘ethical’ in negotiation. Abstract Negotiation is very important in business transactions. One can either negotiate honestly or deceptively. The outcome of either will determine business sustainability. Honest strategy in negotiation will allow for the development of trust, transparency and respect in the negotiation process and its participants. It will help bridge business sustainability in the long run since it help develops long term relationship. On the other hand, deceptive strategy in negotiation can bring so many risks to business sustainability. Applying it in business negotiation would lead to adverse effect in the reputation of the company using it. Such effect in reputation could bring long term damage to relationships of the company with investors, suppliers and customers putting at risk its position in the market. Introduction Negotiation is a crucial element in any business transactions or communications. Steven Cohen (2002) defined negotiation as a “mechanism for reaching an agreement” (p.2) between or among parties. It is a process to make decisions. Cramton and Dees (1993) defined negotiation as a process of communication towards an agreement in order to implement an “exchange, distribution of benefits, burdens, roles, or responsibilities” (p.2). Lewicki and Hiam (2007) consider it the ultimate practice that “allows you to move in and out of business situation with confidence and success” (p.2). Businesses that negotiate effectively become successful than the others. Successful negotiations results to mutual commitment of the involved parties to fulfil the agreement they have reached (Cohen 2002). Fairness is crucial in successful negotiations. However, successful negotiation also uses deceptive strategy. It is a reality the either honest or deceptive strategies are used n the negotiation process. First, we need to define deception to benchmark the discussion of this paper. Cramton and Dees (1993) defined deception as “ any deliberate act or omission by one party taken with the intention of creating or adding support to false belief in another party” (p.3). Lying, “bluffing, exaggeration, posturing, stage-setting, and outright misrepresentation” (p.1) are forms of deception strategies that businesses used today. Consequently, honesty in this context is defined as an actuation without any trace of deceptive strategies. The core issue is the outcome of choosing either honest or deceptive strategies. Friedman and Shapiro (1995) rationalise that there are reasons and risks involved in choosing deceptive or honest strategies in negotiations. This essay will look into the reasons and risks involved in using deceptive and honest strategies in negotiations and evaluate its impact in business organisations or persons utilizing such strategies. Honest Strategy in Negotiation Negotiation involves effective influence on the negotiating party. Thus, the element of liking (Cialdini & Wissler 2002) is one of the core principles why a negotiation is taking place. Ideally, liking a person or even an organisation should develop a sense of honesty in communication so as not to jeopardise one’s influence on the person he or she liked. A person who feels he is taken advantage by a person he is negotiating may just leave the negotiation process not fulfilling an agreement or not sealing a deal at all. Anne Burr (2001) emphasized that the most effective negotiation is carried out by cooperative negotiators since they do their best to be ethical in their communications. Cooperative negotiators address wide range of interests to discuss with their negotiating parties (Cohen 2002, p.5) to put value into the negotiation process. Their goal is ensure that all parties win something out of participating in the negotiation process. Thus, in the end none of the parties involved felt that they are taken advantage of in the negotiation. The cooperative approach to negotiation is very crucial in laying down an honest foundation in negotiation particularly if the participants have different cultural, social or economic backgrounds (Cohen 2002). Trust is therefore crucial in getting pass that differences in order to pave the way for the creation of an agreement which is actually the goal of negotiation. Trust is build up when honesty is the core element that is being applied in negotiating transactions. Negotiating in good faith is very important in displaying an honest and truthful negotiation. Good faith is actually more than an act of honesty. It involved consistency of expectation of just action of the other party (Burr 2001) thereby encouraging every member of the negotiating party to be consistently honest in their actions and communications with each other. Reasons or Benefits of Honest Negotiations The results of acting in good faith thereby showing honesty in negotiation has a long term effect in the reputation of the company or the person in negotiation. Reputation in business is very important. It is how business relationship thrives in the long run. Parties in the negotiation look for business relationship that is build on trust in order to ensure that they are efficiently gaining value in the business transaction not only in the short run but most importantly in the long term (Burr 2001). After all, businesses strive to survive for the long term. Thus, building trustful business relations is a rational approach to business negotiations or transactions. Aligning their goals with that of their business partners is an important step to ensure a successful business relationship. Business transactions that are not based on trust or honest negotiations will eventually become costly for a business. This is the reason why Burr (2001) believed that commercial transactions that is not based on trust is rare in today’s business market. Contracting suppliers or business partners must have an element of trust to ensure that what is being given to the business is reliable, in good condition and supportive of the overall goal of the business. This is also very important in new investments particularly if it involves foreign investors who do not know the terrain of local business market. Provision of business information from a potential investment partner must be given and accepted honestly to ensure that the data where business decisions will be made are accurate and effective. If one negotiates using a false set of data in a business transaction just to mislead the other parties will only result to risking closing the deal particularly if early on the other party knew of the deception. Risk in Utilisation of Honest Strategy in Negotiation Although, honest strategy in negotiation is the most ideal in creating lasting relationships in business, there are still other parties who choose to employ deceptive. They abuse the honesty of other parties and sometimes they get away with it putting the honest parties at a disadvantage at the end of the business negotiation. Thus, the honest parties in negotiation are the one who benefit less from the negotiation outcome. In the end, their business interest is not fully considered with the deceptive party taking most of the benefits in the negotiation. Thus, not getting the optimum business deal and losing it to deceptive negotiators is the cost incurred by honest negotiators for laying down honesty and trust at the start of negotiation which was taken advantage by deceptive negotiators. However, this gain by the latter will only serve them in the short term since their deceptive actions affected their business reputation already. As a result, there will be hesitations in the future in transacting business with them. Another point in which honest strategy in negotiation might become relative to the person using it is the utility of the concept that “truth is relative” (Cloke & Goldsmith 2001 par. 6) which means that telling the truth in negotiation depends on how truth is interpreted by each negotiating party. A truth for one might not be true for the other. Thus, each party acts on its own biases with regards to the interpretation of what is true or what is honest or not. The above risks in negotiating honestly resulted to a stance of being cooperative but with an element of reservation or condition (Burr 2001). This element of conditional cooperativeness will help deter abuses or employment of deceptive strategies. If one party abuse the trust of other parties in negotiation, the abuse parties will retaliate towards the abuser. This strategy actually came about as a buffer against deceptive strategies adopted in negotiations. It is an acknowledgement of the reality that not all of those you deal with will reciprocate your honesty and good faith in negotiation. Burr (2001) admitted that this strategy is highly successful in facilitating the creation of trust in business relationships. Bad reputation in the business industry is the most effective retaliation that the strategy of conditional cooperative in negotiation can do to deceptive negotiators. The adverse effect on business reputation as a result of deceptive negotiation strategies is documented to significantly impact the stability of business relationships in the long run specifically in recurring business transaction and in the market in general. A business with a bad reputation from other businesses will have difficulty establishing good and lasting relationships with potential business partners, suppliers and even customers (Burr 2001). Reliability and trustworthiness is very crucial in business dealings. It serves as collateral for good faith. In today’s globalise market where merging and sharing information have become the norm of business transactions, information of unreliability and not trustworthy of businesses will easily reached the ears of potential business partners and clients. Opportunities for business transactions will be put at risk when bad reputation hounds a business alienating businesses in the globalise business market. Deceptive Strategy in Negotiation Deception is a reality in negotiation. It does not bring long term benefits to the reputation of a business. Still, there are parties in negotiation that implement deceptive strategies in order to gain success in the negotiation process. What are the reasons why deceptive strategies are used in negotiation even if based on the previous discussion it will only result to long term risk in business dealings? Reasons for the Commission of Deceptive Strategies in Negotiation One thing that encourages deceptive strategy is the absence of written rule that the practice of good faith must be present in negotiations. It is only accepted by law in the implementation of agreements, not in negotiations (Burr, 2001). Thus, many do get away in using deception in business negotiations. Also, during the 1980s businesses concentrated their negotiation trainings on strategies that would deliver short term returns (Coburn 2006) without any concern for long term considerations in business relationships. Even though the use of deception strategies is highly debated in the ethics of business, much of the discussion dwells on the justification of the unethical strategies used in negotiation (Cramton & Dees 1993, p1). Carr (1968 cited in Cramton et al 1993, p 1) for example, argued that “business ethics….. permits… deceptive practices … acceptable outside the business”. In short, some sectors view deceptive strategies as necessary in business transactions. They view it as an opportunity to advance their interests and as a justification for addressing their desperation to get ahead (p.2). In short, they are weak in sustaining their ethical standards in front of the opportunity to get better deals or to earn more. It is human nature to be tempted by better things confronting them resulting to ethical standards compromise. Individuals adopt deceptive strategies in negotiation to be at par with the traditional expectations that those who are successful in negotiations are promoted easily (Lewicki et al 2007). Successful negotiators are rated highly by their peers and are seen as leaders in their midst. These traditional notions of negotiations influenced one to create shortcuts to their negotiating activities by using deceptive negotiating tactics. They believed that doing so project personalities of professional success in front of their colleagues. Also, recognition in the form of promotions is one of the core motivations why employees used deceptive strategies in negotiation. Emotions also form part of the reasons why individuals follow deceptive strategies in negotiations. A person tends to resort to deceptive strategies when he is not patient enough or not adept enough to go through the process of an honest negotiation where one has to adapt and understand certain ways of the other parties in negotiation. Thus, one has to understand his emotional status when participating in a negotiation process. Shapiro (2006) shared that using “appreciation, affiliation, autonomy, status and role” (p. 109) as tools to understand and put in check one’s emotion would be helpful to put emotional balance in a negotiator during the negotiation process. As a result, he would stick to using non-deceptive strategies in negotiation. Common Deceptive Strategies and its Risks Lying is the most common deceptive strategy used by some negotiators. However, manipulation is a deceptive strategy that breeds other forms of deceptive strategies. Coburn (2006) outlines some of the common manipulative strategies used negotiation to a point of deceiving a party in negotiation. Decoy strategy in negotiation. This involves adding false interests in the plan of negotiation to entice the other party to come into an agreement. Such dishonest strategy might lead an unsuspecting party to agree to conduct business transaction based on invalid interests leaving them at a disadvantage. The clear risk of this strategy is in agreeing to something that is not there which can be costly for a business. Extreme offer strategy. Offering more or offering less than what is expected is the outcome of this strategy lowering the expectation of the party negotiating. In the end, the party agrees to a compromise that puts them at a disadvantage position wherein the party they are negotiating with earns more than what they expect. However, when discovered, the deceived party will stop any dealings with the deceiving party risking the latter to lose future gains. Nibbling strategy in negotiation. A last minute inclusion into the contract to trap the party into agreement of covering some cost or any form of disadvantageous clause in the contract is the strategy of nibbling negotiation. Such strategy could cause wariness in business dealings particularly if it was proven that the information was intentionally excluded in previous negotiations to take advantage of the other party. Cherry picking strategy. The strategy of cherry picking tries to trap a seller, for example, in giving in to the prices dictated by the buyer negotiator in the pretext that the competition offers such price range. This will result to the seller selling at a lowest price with the buyer saving cost. The risk, however, in this strategy is the probability of the seller not selling to the buyer anymore in the future if they found out that they have been manipulated to give the lowest price to the buyer at their disadvantage. Good cop, bad cop strategy. This strategy tends to confuse the negotiating party so that they will yield to a concession more advantageous to the other party. In this strategy, a person or a business representative is faced with two sets of negotiators. One appears to be on your side, the good cop while the other appears to be not on your side, the bad cop. The risk here is that when the party being confused in the negotiation realised what is happening and cause him to leave the negotiation process. The above manipulative strategies have the common characteristics of taking advantage of the other party in negotiation so as to derive higher yield from the negotiation. It mainly involves withholding or manipulating information to the point of lying on the actual terms of agreement being negotiated. It should be noted that information sharing is very crucial in negotiation since it is the factor that adds value to the negotiation. Thus, as information is widely shared, the value of the business transaction increases. However, any attempts of withholding or manipulating information in essence lessen the value of the business transaction. Such loss of value diminishes the business relationship being fostered by the negotiation process. The parties being manipulated in no time will be able to sense the deception leading to a loss in confidence both in the negotiation process and integrity of the deceiving company. Thus, the result would be a one time business transaction that will never be repeated again. Thus, the long term risk of deceptive negotiation becomes very costly to the reputation of the company. This is what happens when a company negotiates based on competition, meaning the relationship between parties is not given importance (Lewicki et al 2007). Cohen (2004) emphasized that “negotiation is not a competitive sport” (par. 6) wherein each party strives to be ahead of the other in order to win without any regard for ethical practice. Conclusion Negotiation is a crucial stage of business transaction. Adding value to negotiation or the result of it should be the core goal of a negotiation strategy. Value here means something that would help sustain your business as a result of negotiation. Thus, it is crucial to determine the manner or strategies adopted in negotiations that can add value to the process and to business sustainability. Negotiations make or break the business transaction. It is true that most of the time, deceptive negotiators gain the upper hand in the negotiation process. However, their success is not considered a success at all if viewed on the long term benefits of their deceptive actions in negotiations. The ripple effect it will create on their reputation within the business industry is far more disastrous for their long operational viability. After all, a business only thrives in the market if investors, suppliers and customers believe in their trustworthiness and reliability as a business entity. This has been the invisible hand in business longevity throughout history. No amount of advertisements or product come-ons will strengthen the image of a company or a product if the market does not put its trust on it anymore. Decrease in trust will result to lower access to capital since financers would not be willing to lend to businesses known in the industry for poor reputation in business ethics. Lack of capital would surely put any business at a disadvantage in a very competitive market that is capital intensive. The ripple effect of deceptive negotiation is far reaching than what a company imagines. It is very crucial to consider the outcome and the status of business relationship when considering a deceptive strategy in negotiation. One must heavily balance the short term gains from deceptive strategies to the long term gains of honest strategy in negotiations. Honest negotiation is the only way to go for solid business relationships. It will help propel businesses towards growth and strong networks in the future. Taking advantage of other parties in negotiation will only be self-defeating for in the end you are just nurturing the demise of your business in using deceptive tactics in business transactions. Thus, being honest, transparent, and respectful (Cloke et al 2000) are practical strategies to use in negotiation to reap beneficial returns for business sustainability. It should be noted, however, that one must not castigate the persons involved in deceptive negotiation as what Coburn (2006) advocates in a negotiation model based on principles. It is better to stick to looking into the strategies and not the persona behind it. This way, there will be room left for a chance of resuming good relations in the future on a personal basis. Also, not bringing personal disagreements as a result of deceptive strategies in negotiation would bridge for the possibility of change in negotiating strategies once the persona behind it realise the damage such strategy creates in the growth of his personal and business relations. Recommendations The following recommendations culled out from Cramton and Dees (1993 p.18) are presented in order to counter or prevent deceptive strategies in negotiations. 1. Adopt a wise selection of partners in negotiation as a measure to mitigate occurrence of deceptive negotiation tactics 2. Gather reliable data to verify the reputation of potential partners in negotiation. Do not only rely on the data they gave but do your own research to ensure that you have the necessary information to assess the veracity of reputation of the potential negotiation partner. 3. Put everything in writing particularly agreements or claims so that when conflict arises both parties will be able to refer to a written agreement. 4. Put in place bonds and warranties as a security measure in case agreements will go awry in the future. 5. Ensure smooth transaction by hiring a skilled intermediary that can add value to the negotiation process as well as cushion the risk of manipulative tactics in the negotiation. The above recommendations will be enough to help any entrants to a negotiation process to prepare profusely or counter any possible deceptive nuances in negotiation. In a way, deception will be averted with the interjection of honest means of communication through the use of candour or manoeuvres from deception. Lewicki and Hiam (1993 p.3) shared the following strategies in assessing the impact of strategies towards outcome and relationship building. This will be useful in assessing whether to apply a particular strategy towards a negotiation process. Strategy Outcome Details Avoiding Lose-Lose Priority for both the outcome and relationships are low. Both outcome and relationship are not important to pursue the conflict in negotiation. Accommodating Lose-Win High importance on relationship Low importance on outcome Competing Win-Lose High importance on outcome Low importance on relationship Collaborating Win-Win High importance for both outcome and relationship Compromising Split difference Combination of approaches depending on the situation The above table showed recommended strategies useful in deciding which strategy to use in relation to the importance appropriated for relationship and outcome of the negotiation. Doing so would lessen mistakes in utilising deceptive strategy in negotiation since parties will not lose sight of the real issue in a complex negotiation process. The above recommendations will form as a lighthouse for the negotiation parties to refer to in order to stick to honest strategy to avoid further complications. BIBLIOGRAPHY Burr, A.M. (2001). Ethics in negotiation: Does getting to yes require candour?. Dispute Resolution Journal. Mar-Jul. Retrieved on September 3, 2009 from http://findarticles.com/p/articles/mi_qa3923/is_200105/ai_n8940569/ Cialdini, R.B. & Wissler, R.L (2002). The Science of Influence. Dispute Resolution Magazine. Fall 2002. American Bar Association. Cloke, K. & Goldsmith, J. (2001). In mediation as in life, truth is relative. Dispute Resolution Journal. March-July. Retrieved on September 3, 2009 from http://findarticles.com/p/articles/mi_qa3923/is_200105/ai_n8939410/?tag=content;col1 Coburn, C. (2006). Neutralising Manipulative Negotiation Tactics. 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