Avoid common ethical traps in business negotiations

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You are an ethical person. You have expectations that the other person is ethical too. However, common biases can lead you astray even with out you being conscious of your actions.  For example you may negotiate with someone in good faith on a matter of mutual interest, but not having addressed an issue, your thoughts and theirs may be very different with respect to other actions.  Often the emphasis is on a narrow area without having considered other ramifications that may have negative impacts.  If they are minor, they may not matter. If the are major you may want to ensure a wider perspective. 


Major Examples


To gain further insight into this area check out this article from the Harvard Law School Program on Negotiation entitled Negotiation Ethics in Business: Avoid Common Traps

This article presents three recent stories with Facebook, Christie’s, and New York State with a film studio.

These three examples illustrate material examples and lessons to be learned, but what follows addresses the more common place issues where you have to decide whether it is important enough to take an action or not.


More Common Examples


As a professional speaker I give over 70 presentations annually in person and virtually. With one professional organizations I have presented to over 30 of their over 200 chapters over several years. There is a norm within this professional organization regarding speakers, travel expenses, and presentation fees. This has resulted in a more informal relationship associated with expectations. Email works fine to address the when, where, why, how, and what will happen relative to the event. Although formal contracts are necessary and I use them with larger venues and more complex conferences, emails work just fine for one on one professional presentations like this where I have a track record with the organization.

Given these previous experiences, this informal process has worked very well.

As part of the negotiation I ask if the organization can provide me with a reference letter or email after the session that I can share with other chapters should their be a request for references with their organization..  Overall, this works well and most comply.  No issues there. Some ask to record the session for their members only.  That is fine too. No questions there as long as the recording is only for their members and is destroyed after a reasonable amount of time (say 90 days) as my material is proprietary in nature and changes over time.

With that as background

 what happens when a client does not follow through with the agreement

as indicated above.  There is no formal contract in these instances. There has never been an issue on paying the fee or for reimbursement of expenses. Should a formal contract have been prepared with all of the specifics spelled out? Would that have made a difference? What are the ramifications when the other party does not follow through with what they said they would do? As a business person you have to weigh these things and decide if they are important enough to take action. Generally, a reminder may be all that is needed for a reference letter or an email. That works most of the time. For those that still do not respond, is it worth it to push this further? Personally, I think not.  You get the idea.  You have elements like this in your business and you have to make these kinds of decision on too.


Your Motivation Not to Notice


Think about how transparent you are, or the other party is about various actions with you. Sometimes to complete the deal you are willing to overlook some elements to complete the deal. 

You may consciously or unconsciously decide not to notice with the hope it is not and will not be an issue.

Sometimes with the hope of what a long term deal may offer you may be willing to overlook some aspects of the deal in the short term. Later these may materialize. That is not what you had hoped. So, what can you do?

Take Preventative Actions

As a Qualified Mediator with the State of Minnesota that mediates business to business issues nationally make sure you understand what your and their investment is with the transaction. Make good faith estimates.

Consider bringing in experts to assist with your assessments.

Evaluate the probability of success.

When you are considering partners consider a broad approach initially.

Develop criteria to evaluate the potential partners to partner with only the best. If you  are partnering with someone close to you, realize that your bias may cause you to overlook some aspects of the negotiation. Consider hiring someone or delegating the negotiation to a member of your team that can be neutral in the negotiation. In the end you need to decide how important it is to ensure that everyone is on the same page, or if not does it matter? If it matters with respect to all of the details, having a third party process this for you may very well be in your best interest to avoid your bias impacting the agreement.




Know yourself. Be aware of your biases. Think through the transaction. The time to plan for the divorce is before you marry. That is, consider what could go wrong and incorporate that into the understanding or the agreement. If you are not concerned about potential negative repercussions, this may not be material for consideration. If you are concerned, and the party is close to you, consider a third party or delegate this negotiation to someone else in your organization. Think it through and do what you think is appropriate given the magnitude of the issue, the time needed to complete the transaction, and the fall out should something not develop as planned.

About the author

Mike Gregory is a professional speaker, an author, and a mediator. You may contact Mike directly at mg@mikegreg.com and at (651) 633-5311. Mike has written 12 books (and co-authored two others) including his latest book, The Collaboration Effect: Overcoming Your Conflicts, and The Servant Manager, Business Valuations and the IRS, and Peaceful Resolutions that you may find helpful. [Michael Gregory, ASA, CVA, MBA, Qualified Mediator with the Minnesota Supreme Court]