Negotiate 1-2-3

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Golden Rule Ethics

Learning Objectives Est. time: 15 min.

  • Recognizing moral issues in negotiation
  • Defining your ethical standards before you negotiate.
  • Negotiating with people who do not share your perspective

Introduction

Every time we go to the bargaining table, we implicitly decide how much (if anything) we owe other parties—and why.

  1. Should we worry about the fairness of the outcome?
  2. Must we be honest? How much should we reveal?
  3. Can we use pressure tactics to force someone to come to agreement?

These are not easy questions. Often they are not a matter of choosing between right and wrong. Rather they involve a difficult balance of competing responsibilities—responsibilities to ourselves, to others, and to the organizations on whose behalf we negotiate. They also require clear-eyed assessments of the situations in which we find ourselves and the people with whom we deal. Most of all, they demand recognition of our own core values.

These issues should not be addressed on the fly. Going into a negotiation, we should know what our obligations are—to ourselves and to others—and where ethical boundaries must be set.

Here is a short video about Jim Golden, a personal injury lawyer who made a profound change in the way he negotiates in order to align his approach with his personal values. Watch the short clip and then consider the questions that follow.


Take a few moments to think about the first question. Then click on the button below it for some brief comments. Do the same for the two questions that follow.

  1. If you were the head of the trucking company, would you have allowed Jim Golden to try his novel approach?
    Click for Hidden Comment

    Employees often feel a conflict between their personal impulse to be fair to external parties with whom they deal and their responsibility to act in their organization’s best interest. This is a version of what economists call the “principal agent” problem.

    Bear in mind that when Jim Golden extends a no-strings-attached, five-figure check to an accident victim, that’s not his money that he is offering. Nor does it belong to his company’s CEO. Rather it belongs to the owners of the company, the shareholders. There would be no problem, of course, if Golden could somehow be absolutely sure that such a payment would reduce the ultimate cost of settlement. But that certainty is impossible in particular cases.

    As Golden and the president have subsequently learned, his approach has actually saved the company money, though they could not have known that in advance. Still it seems reasonable to say that, as with any business investment, the experiment was worth trying. The harder question is deciding what Golden and the company would have done if it turned out that the generous gesture did not reduce settlement and litigation costs. What then?

    For Golden personally, it would have been difficult as he had grown increasingly uncomfortable with the tactic of delaying settlement in order to force claimants to make big concessions. It likely would have been hard for him to return to his old way of doing business. As for the company, some would say that as long as it acts within the law, its sole duty is to maximize shareholder value. Thus if squeezing claimants is profitable, doing so is not only permissible, it is required.

    That is a superficial answer, however. It does not take into account intangible benefits for the company, such as burnishing its public reputation and enhancing morale for its own workers. As for those who invest in a company, they have a right to know how it uses its resources and how it conducts itself. So long as it is transparent about its policies, investors can make an informed decision about whether to buy its shares. For some, a policy of being more “fair” than the law requires might deter them from investing. Others might regard it as a powerful reason for doing so.

  2. Why do you think that Golden’s no-strings-attached gesture often promotes early and cost-efficient settlement?
    Click for Hidden Comment

    The conventional response to personal injury claims is for companies and their insurers to “defend, deny, and delay.” Where there has been harm and quite possibly fault, that approach casts negotiation as a zero-sum battle where the winner is the one who can outwait the other.

    Such wins, however, may only be relative to what the loser gets. In truth it may be a negative-sum, lose-lose process, where the longer that negotiation drags on, the less there is for the parties to divide. Jim Golden’s unconditional offer can be understood as an attempt to preempt that dynamic before it ever takes hold.

    Although he does not use this mantra, it sends a signal of his being willing, even eager to “engage, empathize, and expedite.” The fact that he makes the first move and makes it quickly disrupts other parties’ expectations in a constructive way. It compels many of them to consider where they want the process to go. Jim believes that his own openness unfreezes other people, at least much of the time, and allows them to dispense with their emotional agendas.

    He says that the “person who is the most aggressive, the most brazen, the most angry, is often, if you dig down underneath, the most fearful.” It is not just what Golden says, but how he says it.

    Jim Golden, an unconventional personal injury lawyer

    As you may see from the photo above, he is a look-you-straight-in-the-eye kind of person. He is also an intense listener. Standing well over six feet tall, he comes across as strong and confident. If his openness is reciprocated, he is ready to reach a quick settlement that is fair to everyone. But if not, he is also willing to let the dispute be resolved by a judge and jury. “I think if you can get past the fear,” he observes, “the animosity, then maybe you don’t have to prove things to other people—or yourself.”

  3. Do you think Golden’s approach to negotiation is only appropriate to personal injury cases or might it be adapted to other kinds of disputes?
    Click for Hidden Comment

    Jim Golden is confident that his open approach is not limited to personal injury cases. He has used it to resolve other kinds of legal disputes, including ones involving intellectual property issues. In his experience, it is all too easy for people to fall into the costly trap of believing that unless they use aggressive tactics themselves, other parties will exploit them.

    When both sides believe that, minor differences can escalate into major conflict. Golden believes that negotiation strategy need not be an either-or proposition. One can be open without being naïve or weak. He is prepared to fight if other parties are uncooperative. Jim is not alone in that belief, of course. Nor is he alone in recognizing the need to align his personal values with his professional practice.

    The obstacles in the way of encouraging more people to follow his example cannot be wished away, however. Jim was fortunate in having a client who had confidence in his judgment and ability. If the CEO of the trucking company had vetoed his plan, that likely would have been the end of it. Or, to flip the situation around, if the CEO had originally conceived of the idea, he might have had difficulty finding an attorney who would be both willing to try the approach and also have the interpersonal skills to implement it successfully. In the actual case, casting the approach as an experiment, a pilot test laid the foundation for significant change in the way in which the company does business.

Summary

Many of our important negotiations occur in the workplace. We negotiate on behalf of our company when we deal with customers and when seek goods or services from vendors. Lawyers likewise negotiate to advance the interests of their clients. In the parlance of economists, we negotiate as agents, acting to maximize the welfare of our principals.

Difficult moral issues arise when an agent’s values are not fully aligned with the entity they represent. Concern about the fairness of an outcome is exemplary, provided that the negotiator bears the cost of being generous. But an employee who makes a concession to an outside party in the name of fairness, spends the company’s money, not their own.

That is not to say that people should park their own principles at the door when they go to work. Far from it. But before undertaking a negotiation, they should reach a clear understanding with the superior about what they are—and are not—willing to do when they are negotiating for others.

Additional Resources

Next Module: Getting in Sync [10 min.]
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