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Is honesty essential in a negotiation?

Imagine you are selling your 10-year-old car. At the last service you are advised that the transmission had some major issues and would probably need replacing within six months. You have a potential buyer who is willing to pay your asking price. They don’t ask any questions about the condition of the car. Do you have an obligation to disclose the information about the transmission?

What if the buyer asks “Are there any mechanical issues”? Does this change the situation?

What if the stakes are higher? Instead of selling a car worth $10,000, you are selling a property worth $5,000,000 and you know that Council is about to rezone the land which will reduce it’s value? These are examples of ethical dilemmas that may arise in a negotiation. For some people, these scenarios may not provide an ethical dilemma at all. For others it may be quite a challenge to determine what is the right thing to do. An ethical dilemma exists for a negotiator when the possible actions or strategies create a conflict between the potential economic benefits of doing a deal and one’s social or moral obligations to other involved parties or one’s broader community. Given the very nature of most negotiations, this means it is almost impossible to avoid some degree of ethical dilemma in any negotiation. In general, our choices in an ethical dilemma lie somewhere between “I never lie” and “everyone should look out for themselves”. Rarely, is it black and white. Rather than “I never lie” it is more likely to be “I never lie unless…”. We create our own ethical boundaries which are often subconscious and unrecognized but which we use to justify small untruths or omissions. Some ethical decisions may relate to illegal behaviour. Take for example, a company that hacks into the database of its main competitor to gain private information that will help improve its market position. Or the eco-warrior who trespasses on private property and chains himself to a tree to gather publicity and put pressure on the property developer to change their plans. In general, most ethical choices in negotiation relate more to the decision to tell (or not tell) the truth. There are some negotiations where it is expected that a certain amount of bending of the truth will take place and it may not be considered unethical. Who, for example, has ever believed a car salesman who says “This is the lowest I can go.”? Or perhaps the disgruntled supplier who makes an empty threat to sue for an unpaid bill of a $300? Back in 1968, Carr suggested that bluffing was a completely acceptable tactic in business negotiations. He likened it to “good poker playing”. In fact, he went so far as to argue that if a business man (it was the 60's) failed to bluff he was probably "at a serious disadvantage in business dealings". In the ensuing years there have been both critics and supporters of Carr's position. Many critics argue that business people and corporations should be held to higher standards of ethical conduct. At the end of the day, the question whether certain lies or omissions are ethical or not is generally going to be slightly grey. You may wish to apply the “billboard” test: When you head to work tomorrow morning, would you be happy to see your white lie or deliberately withheld fact on a billboard at the side of the road? Would your decision appear reasonable then? For more information about how to negotiate effectively, or for assistance with your next negotiation, contact us for a no obligation discussion.

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