Breakout Session # 104 Tom Reid Chief Problem Solver Certified Contracting Solutions, LLC www.certifiedcontractingsoluti

2. Ethics in Negotiations Breakout Session #104 Tom Reid Chief Problem Solver Certified Contracting Solutions, LLC www.certifiedcontractingsolutions.com Date: April 24, 2007 Time: 10:45 - 11:45

3. 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.

4. 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

5. 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)

6. The Result? Ethical Chaos

7. Ethics vs. Societal Norms • Ethics • Etiquette • Fashion • Grammar All four are societal codes but only the first deals with character.

8. 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?

9. 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.

10. What is Ethical Negotiation? AMOUNT Fair and Reasonable Bulwarism Nibbling Budget Bogey Blackmail Escalation Intersection Non-negotiable Chinese Auction TIMING Patience Deadline Speed Fait Accompli Surprise Status Quo SOURCE: Karrass, Chester L. The Negotiating Game. World Publishing, New York. 1970. P. 173

11. INSPECTION Open Inspection Limited Inspection Confession Qualified Third Party No Admittance BROTHERHOOD Equal Brothers Big Brother Little Brother Long-lost Brother Brinkmanship More “Maneuvers”

12. ASSOCIATION Alliances Associates Disassociates United Nations Bribery DETOUR Decoy Denial Withdrawal Good and Bad Guys False Statistics and Errors Scrambled Eggs Low-balling Scoundrel Even More “Maneuvers”

13. AUTHORITY Limited Authority Approval Escalation Approval Missing Man Arbitration And Finally….

14. 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.

15. 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

16. Relative Standards

17. 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

18. 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.

19. Compliance versus Commitment • Compliance can be measured • Commitment comes from within and is based on character.

20. Compliance Federal Sentencing Guidelines Sarbanes Oxley HIPAA Commitment Morals Values Mission Character Which is more important?

21. 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.

22. 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

23. 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

24. 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

25. 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.

26. 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.

27. 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

28. 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.

29. 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)

30. 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.”

31. 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

32. 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.”

33. The Golden Rule • Appropriate use of this rule is an integrity guideline for any situation Maxwell, John C., Ethics 101, p.16

34. 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.

35. 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.

36. 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.

37. Why You Should Adopt It • The Golden Rule is accepted by most people • The Golden Rule is easy to understand • The Golden Rule is a win-win philosophy • The Golden Rule is a compass when you need direction

38. How Do You Want To Be Treated? • I want to be valued. • I want to be appreciated. • I want to be trusted. • I want to be respected. • I want to be understood. • I do not want others to take advantage of me.

39. 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.

40. 5 P’s of Disaster • Pressure • Pleasure • Power • Pride • Priorities Maxwell, Op. Cit.

41. 8 Good Choices • Take responsibility for your actions • Develop personal discipline • Know your weaknesses • Align your priorities with your values • Admit wrongdoing quickly and ask forgiveness • Take extra care with finances • Put your family ahead of your work • Place high value on people

42. Invest in the Covey Bank Account • Treat people better than they treat you • Walk the second mile • Help people who can’t help you • Do right when it is natural to do wrong • Keep your promises even when it hurts

43. 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 Gold or Golden Rule?

44. 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/

45. 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.

46. 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?

47. 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.

48. 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.

49. 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 Dole Duke University Commencement 2000.

50. 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