The Negotiator Magazine

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The alleged accounting chicanery that has led to the scandals ascribed to Andersen, Enron, Worldcom, Tyco, and other corporate giants can be analyzed from the perspective of negotiation. If negotiation is viewed as the exchange of information between parties in order to influence the parties’ actions, we can see the actions of decision-makers in the accused companies as a faulty negotiation in which disinformation rather than facts was used to induce others to act. By presenting false information, investors were induced to purchase or hold stock while insiders were selling; employees were influenced to accept corporate actions that harmed employees both on the job and in terms of their retirement; lending institutions were influenced to extend credit to non-creditworthy businesses.

Each of those groups of stakeholders (the investors, employees, and lending institutions) derived harm from the positional bargaining of corporate leaders who demonstrated no concern about any stakeholders other than themselves.

A good negotiator must always govern what he or she says or does by measuring whether it helps or harms his or her interests. A good negotiator must also recognize that, because negotiation is not a competitive sport, unless another party’s interests conflict with his or her own, there is rarely a reason to erect obstacles to negotiation partners’ interests; it will not increase the likelihood of true mutual agreement. Losing parties tend to walk away grumpy, looking for ways to avoid their obligations.

The failure of a small number of America’s corporate leadership to give consideration to the interests of their constituents and other stakeholders has given a black eye to the system. Negotiators need to be fair and create buy-in among the parties. By behaving unfairly, or selfishly, the corporate bad apples have harmed the reputation of the vast majority of businesspeople who take their stewardship roles seriously. More importantly, their actions set the domino tumbling.

When corporate leaders take stakeholders seriously it increases the likelihood of a viable and fair marketplace, which serves the interests of decision-makers, their constituents, and the others who depend on a fair and equitable outcome. This, in turn, leads to good business practices and a stronger economy.

Steven P. Cohen is a Beverly, MA-based executive coach with clients on both sides of the Atlantic and president of The Negotiation Skills Company, Inc. www.negotiationskills.com. His new book, Negotiating Skills for Managers, published by McGraw-Hill, is now in bookstores. Cohen earned a Masters degree in business ethics at Henley Management College in the United Kingdom, and a law degree at Columbia University.

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