“I don’t really care much about the job security and health benefits of my soon-to-be ex-employees,” this business owner told her chief negotiator. “My financial bottom line is far more important to me. But John (our potential purchaser) doesn’t know this. So tell him I really do care a great deal about the job security and benefits issues. Then we can trade these off for a more favorable financial deal.”
Last week’s column addressed the legality of tactics like this. We evaluated whether parties using such tactics would be liable for fraud, the legal theory most likely violated by questionable negotiation tactics.
Would this statement subject the soon-to-be ex-business owner to legal liability for fraud? Probably not. The six elements of fraud are not satisfied.
The statement would not have been a 1) knowing 2) misrepresentation of a 3) material 4) fact 5) that is reasonably relied upon by her counterpart, thus 6) causing damage.
Did the owner and her chief negotiator knowingly misrepresent a fact, and was it relied upon by their counterpart, thus causing damage? Yes.
Was it a “material” fact “reasonably” relied on by their counterpart? Most courts would likely interpret this, in a legal sense, as expected bluffing. The owner effectively said she was extremely interested in one thing, but really wanted something else.
Yet, despite its legality, it still was an intentional misrepresentation, right? Absolutely. This is why we should not solely evaluate a tactic based on its legality in determining if and when and where to use it. Its legality should only provide the floor.
The next level of analysis must include, in addition to its legality, the tactic’s potential impact on the negotiation and on your reputation, and its morality.
SHORT AND LONG-TERM IMPACT
I never will consciously use a negotiation tactic that a) does not have a decent chance of helping me achieve my substantive goals, b) might harm my relationship goal with my counterpart, assuming I want a future relationship, and/or c) may ultimately harm my personal reputation as an honest, straightforward and professional negotiator.
A previous seminar participant recently sent me an e-mail describing how one of his counterparts once sawed off a portion of the legs of their chairs before they arrived. Was this legal? Yes. Was it effective in accomplishing any substantive goals? No. And would doing it harm the “cutter’s” reputation? Of course.
This is an easy call. The more difficult question relates to the potential impact of bluffing and other “games” that have a greater chance of helping parties achieve their substantive goals – yet likely would harm their relationships and/or reputations if their use of such tactics came to light.
If you were a union negotiator, would you tell the company representative that your members were “willing to strike” when you pretty much know this to be untrue? If the company representative asks you point-blank – how should you respond?
If you answer completely truthfully, you will weaken your leverage. Yet, if you don’t, you may later lose some credibility. And you might try to block the question, but what if your counterpart pushes?
My bottom line? Consider how your counterpart would view you if he or she later learned that you used the tactic under consideration. Is the potential benefit worth it, or will such disclosure embarrass or harm you or your reputation? That’s the key question. Answer it before you use the tactic.
Last, but certainly not least, don’t use a tactic if you find it morally objectionable and just plain wrong.
If you consider all bluffing to be unacceptable lying, don’t bluff. You will have to live with yourself after the negotiation concludes.
Don’t compromise your moral beliefs. That just would not be right. It’s just not worth it.
Published June 13, 2003 The Business Journal