The Value of Trust and Integrity in Negotiating

If you don’t have integrity, you have nothing. You can’t buy it. You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing.

Henry Kravis

I write and speak a lot about negotiation. It’s an integral part of a career as a turnaround authority. Anyone in the turnaround field spends a great deal of time negotiating on a client’s behalf with vendors, lenders, bankers and employees — sometimes even family members.

In a previous post, “A Key Ingredient to a Successful Negotiation,” I wrote about the importance of mutual respect among parties in reaching a beneficial and positive outcome for any negotiation.

While some people admire underhanded business tactics and thrive on dirty negotiating and attempts to smear people’s reputations — anything to score a win — I persist in believing that integrity in business still has a place. And conducting yourself at all times with integrity has the added benefit of actually helping you negotiate better deals.

Yes, engaging in dirty tactics may win you a few deals. But word of your character and the way you negotiate will get out. And soon your reputation as a dirty dealer will affect the way you are perceived. Before you even walk into a negotiation the next time, your opponent’s back will be up. They don’t trust you. And without trust and dealing with integrity, deals are much more difficult to make and can even fall apart.

I recently read an article on Forbes.com, “Success Will Come and Go But Integrity is Forever.” The author, Amy Rees Anderson, addresses the value of trust.

“The value of the trust others have in you is far beyond anything that can be measured. For entrepreneurs it means investors that are willing to trust them with their money. For employees it means a manager or a boss that is willing to trust them with additional responsibility and growth opportunities. For companies it means customers that trust giving them more and more business. For you it means having an army of people that are willing to go the extra mile to help you because they know that recommending you to others will never bring damage to their own reputation of integrity. Yes, the value of the trust others have in you goes beyond anything that can be measured because it brings along with it limitless opportunities and endless possibilities.”

In the book “Essentials of Negotiation” the authors Roy J. Lewicki, David M. Saunders and Bruce Barry write about the role of trust in negotiations. “Trust increases the likelihood that negotiation will proceed on a favorable course over the life of a negotiation.”

And in addition to producing more favorable outcomes for your clients during your career, you’ll enjoy a positive reputation for the rest of your life.

And that good reputation can lead to more business. Some of my best and long-standing referral sources are from professionals who sat across the table and appreciated integrity and my straightforwardness.

Even years later, will people remember that you negotiated a big deal for a client? Or are they more likely to remember the dirty way you did it.

I opened this post with a favorite quote from Henry Kravis. I had the fortune to work with him many years ago, so I know firsthand that his sentiments are sincere. He practices what he believes and is also a generous philanthropist.

As that great philosopher Bob Marley said, “The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.”

 

Trust Your Gut

I enjoy reading “The Ethicist” column in the New York Times each Sunday. People ask the columnist, currently Chuck Klosterman, questions like “Should I get a flu shot so others don’t get sick?” and “Do I have an ethical obligation to stop patronizing a business that has been in trouble for employing undocumented workers?”

Some of the questions are tough and I’m glad I don’t have to answer ones that address issues like problems with cat custody and which of two brothers should donate a kidney to their dad.

url-1Fortunately, in my business, I’m rarely faced with what I’d call ethical dilemmas. While I do see plenty of questionable ethics, for me they are rarely dilemmas because the answer is invariably clear on what course of action to take.

I mentioned in my most recent column, “Trust Your Gut,” that I turn down work if I am asked to do something unethical. I have never regretted it.

When you consider what is at stake in involving yourself in something wrong, it’s an easy choice. First, it’s wrong. And secondly, why would I risk my reputation for a short-term salary, no matter how large?

I subscribe to what a former client, Henry Kravis, once said, “If you don’t have integrity, you have nothing. You can’t buy it. You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing.”

In one case I was interviewed to take over as president of a large healthcare business. The previous president had been fired when the board found out that they had overbilled Medicare and Medicaid to the tune of several million dollars.

I knew I had the job, as I was the only person they were talking to and I knew people on the board. The position would pay a lot of money.

My advice was that they had to be up front about the overbilling and develop a plan to pay it back. When I asked how long it would take to pay the money back, they said they had estimated two to three years.

I said, “Go to Medicare and Medicaid, tell them what has happened and that you have fired the president and hired me and then present the plan on how we will pay them back.”

Their response? No. They had decided that the downside of admitting the problem was too great, so they did not want to notify anyone and weren’t planning on paying the money back. But they would bill correctly going forward.

I was stunned. My initial response, which I may or may not have uttered aloud was, “Are you crazy?!”

They said, “This is what we are going to do. We want you to start Monday and we need your commitment that you will follow our plan.”

While they saw a path out of their troubles that allowed them to keep millions of dollars of stolen taxpayer money, I saw a group of people taking a very bad situation and making it much, much worse.

Beyond the ethics of the situation, had I been president of that company when the government found out, I would have been held responsible. The choice was an easy one.

In the ensuing years I kept up with what happened to the company. It wasn’t pretty. The government found out about the overbillings and sued the board of directors, CEO and the CFO. They also lost their licenses.

It’s a sad story, but hardly an uncommon one. And I didn’t need to write to “The Ethicist” column at the New York Times for an opinion on what to do.