As a professional negotiator, I am often asked, ‘How honest should I be in a negotiation?’
Before I provide a response, consider the following statement in The Australian by a hedge fund boss reviewing his fund’s performance. The background is that his fund underperformed the market benchmark gain of 8.6% by losing 35.4% of its value in the last 12 months.
Richard Toh made the following statement to investors:
“I have come to the realisation that I am not good at what I am doing, but I guess that some of you have sensed that already.
I was hopelessly out of sync with the market, selling when I should have been buying and buying when I should have been selling.”
I was astonished by the candour. Others in his position would have pleaded for patience from investors by attributing the loss to a timing error. Another play is to blame others and terminate key personnel -throw someone else under the bus.
As negotiators we operate in an ethical and moral framework as well as a legal one. We also understand that trust is an important component of successful long-term relationships. We know that while we will have many relationships in our career, we have only one reputation.
To demonstrate how honesty is the best policy, consider how a skilled negotiator will manage a potential incentive to lie. Harvard researchers have found that there is a powerful incentive to lie when one of the parties perceive their position as powerless. They try to correct his imbalance by lying.
When asked how many customers they have, a startup may claim that they have many, just to impress a potential buyer. Faced with this situation a master negotiator will reframe the position to their advantage. They will state, ‘Yes, you are our first customer, and we realise how important it is for us that this works for you. We will dedicate our entire team to making sure that this solution works.’
In this startup example, having no customers initially appeared as a weakness, but was able to be framed as a position of strength!
Similarly, there is a tendency to see little white lies as harmless because they are so widespread. Examples are:
Lie Truth
I was caught in traffic. I forgot.
I was out of range. I ignored your call.
You look great in that shirt It’s too small
We’re familiar with this slippery slope where lying becomes normalised and the lies become bigger.
In an era of where lying has become widespread and fake news and alternative facts have become part of public debate, master negotiators know that being open and truthful will build trust and sustainable long-term relationships.
So next time you are faced with the temptation to smooth things over with a little white lie or incomplete truth, instead consider telling the truth... it might just work out better for you.
With honesty, it might sting a little now, but the alternative is typically even worse... Plus lying means you have more to remember!
Happy negotiating!