Ethics in Negotiation

Ethics in Negotiation: Oil and

Water or Good Lubrication?

H. Joseph Reitz, James A. Wall, Jr,, and Mary Sue Love

I

n his 1996 year-end column for Forbes, merchant banker and economist John Rutledge

describes two weeks of negotiations over an

acquisition for a private equity fund. The hours of

bargaining were tense, long, hard, and far more

complicated than he had envisioned. Nevertheless, he reports:

Despite all the haggling, we ended on a

friendly note. All of us-buyer,

seller.

lender-shook

hands and clinked champagne glasses. As we were leaving, the

seller said he would like to discuss

teaming up with us in a joint venture. I

beamed. Some buyers wouldn’t have

liked this. They think if the seller doesn’t

hate them at the end of a deal, they

haven’t squeezed

out every last drop of

money. I disagree. We believe that when

someone wants to do repeat business

with us, it is the highest form of praise.

Allowing your opponent in a transaction

to walk away with his dignity, his humor,

and his bearing intact, and with a pretty

good deal in his pocket, is the right way

to do business.

W

.walk away from a deal, any deal,

rather than violate your principles to win

it., .The twist, of course, is that business

organizations

organized around principles are often more successful and

make more money than those organized

around the idea that greed is good. Nice

guys often finish first.

Ethics in Negotiation:

Oil and Water

or Good

Lubrication?

Being the “nice

guy” isn’t so bad.

It works, it feels

better--and it

pays off.

QUESTIONABLE

NEGOTIATION

AND ETHICAL CRITERIA

Rutledge then lists a set of principles learned

from his first business partner and admonishes

his readers to

Rutledge’s thesis that ethical negotiating

not only the right thing to do but frequently

also more profitable represents an argument more common today than in the socalled “decade of greed” in

the 1980s-and

one that

finds more...