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Breakout Session # 104Tom Reid

Chief Problem Solver

Certified Contracting Solutions, LLC www.certifiedcontractingsolutions.com

Date: April 24, 2007

Time: 10:45 - 11:45

Ethics in Negotiations

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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.

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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

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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)

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The Result?

Ethical Chaos

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Ethics vs. Societal Norms

• Ethics

• Etiquette

• Fashion

• Grammar

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

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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?

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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.

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What is Ethical Negotiation?

TIMINGPatienceDeadlineSpeedFait AccompliSurpriseStatus Quo

AMOUNT

Fair and Reasonable

Bulwarism

Nibbling

Budget Bogey

Blackmail

Escalation

Intersection

Non-negotiable

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

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More “Maneuvers”

INSPECTIONOpen InspectionLimited InspectionConfessionQualifiedThird PartyNo Admittance

BROTHERHOOD

Equal Brothers

Big Brother

Little Brother

Long-lost Brother

Brinkmanship

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Even More “Maneuvers”

ASSOCIATION

Alliances

Associates

Disassociates

United Nations

Bribery

DETOUR

Decoy

Denial

Withdrawal

Good and Bad Guys

False Statistics and Errors

Scrambled Eggs

Low-balling

Scoundrel

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And Finally….

AUTHORITY

Limited Authority

Approval

Escalation Approval

Missing Man

Arbitration

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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.

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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

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Relative Standards

What Standard Applies?

0

2

4

6

8

10

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14

16

1 2 3 4 5 6 7 8

Situation

Eth

ical

Val

ue

Legal Standard

Ethical Standard

Personal Standard

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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

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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.

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Compliance versus Commitment

• Compliance can be measured

• Commitment comes from within and is based on character.

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Which is more important?

Compliance• Federal Sentencing

Guidelines• Sarbanes Oxley• HIPAA

Commitment• Morals• Values• Mission• Character

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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.

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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

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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

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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

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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.

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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.

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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

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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.

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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)

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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.”

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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

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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.”

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The Golden Rule

• Appropriate use of this rule is an integrity guideline for any situation

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

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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.

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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.

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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.

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Why You Should Adopt It

1. The Golden Rule is accepted by most people

2. The Golden Rule is easy to understand

3. The Golden Rule is a win-win philosophy

4. The Golden Rule is a compass when you need direction

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How Do You Want To Be Treated?

1. I want to be valued.

2. I want to be appreciated.

3. I want to be trusted.

4. I want to be respected.

5. I want to be understood.

6. I do not want others to take advantage of me.

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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.

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5 P’s of Disaster

1. Pressure

2. Pleasure

3. Power

4. Pride

5. Priorities

Maxwell, Op. Cit.

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8 Good Choices1. Take responsibility for your actions2. Develop personal discipline3. Know your weaknesses4. Align your priorities with your values5. Admit wrongdoing quickly and ask

forgiveness6. Take extra care with finances7. Put your family ahead of your work8. Place high value on people

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Invest in the Covey Bank Account

1. Treat people better than they treat you

2. Walk the second mile

3. Help people who can’t help you

4. Do right when it is natural to do wrong

5. Keep your promises even when it hurts

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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

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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 = http://ethics.iit.edu/codes/

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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.

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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?

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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.

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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.

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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 DoleDuke University Commencement

2000.

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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

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MySpace Sites

• Official NCMA Group– http://groups.myspace.com/officialncma

• Government Contracting Professionals– http://groups.myspace.com/

governmentcontractingprofessionals

• My Site(!)– http://www.myspace.com/

GovernmentContractsGuru

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Questions?

• www.Ask-Tom-Reid.com

• www.certifiedKsolutions.com

• www.governmentcontractingsolutions.com/blog

• www.govcon-solutions.com