3rd Ingredient® Part 5: The Color Of Ethics Is Gray - Part Two

Jim Blasingame

First let's establish that, with their unethical behavior, the bad actors at Enron, plus the other high-profile marketplace miscreants who have been exposed in abundance of late, weren't exactly plowing new ground; they were merely using newer implements.

The marketplace was born when Gog, the Neanderthal, traded some shells to Ooma, the Alsatian, for a hide. And ever since Ooma failed to mention a quality defect in his next hide deal with Gog, the concept of ethics has been an abiding element in business.

Lots Of New Owners
In the small business sector we have our own challenges. The SBA says over 800,000 new entrepreneurs enter the marketplace every year in America. More than at any other time in history people are entering the marketplace on their own behalf at all stages of life: young, middle aged, over 60. Fertile entrepreneurial soil is creating unprecedented opportunity for so many. But it has also created interesting ethical dynamics.

It's not that these new entrepreneurs don't know how to behave. But if they are brand new to the marketplace, or have been insulated from ethical pressures inside of a large organization, their ethical taproot, with regard to weathering marketplace pressures on their own behalf, may still be relatively shallow and untested. Now as new business owners they must operate ethically on their own - perhaps for the first time in their career - in the gray area.

Many of us fine-tuned our professional ethics at the knee of an employer mentor. More and more young people are beginning their professional lives as business owners instead of as employees, which tends to limit opportunities to work with a positive ethical mentor.

For those of us who are a little longer-in-the-tooth in the entrepreneurial marketplace, it now is our responsibility to become mentors to this new generation of owners. Here are two of many ethical lessons I have learned in my 30+ years in the marketplace.

Industry Ethics
Let's revisit Webster's definition of ethics: "A system or code of moral standards of a particular person, group, or profession."

Notice how Webster infers that ethics may vary between different groups or professions. In the marketplace you will find that there are, in fact, ethical protocols that may vary somewhat from industry to industry; subtle ways of dealing and negotiating. This doesn't mean that there are different interpretations of the truth, just different ways of operating within the gray area.

If you're not yet a veteran of your industry, find people you can trust who are veterans, and observe them. You may find that your own personal ethical system needs to be elevated to be acceptable in a new environment. However, if you find that your standards are higher than those around you, always default to your standards.

Good Faith
One philosophy that helps me maintain my ethical bearing in a negotiation is what my mentors taught me to call "Dealing in good faith." This is where you behave consistently, and honor the spirit of an agreement even when you don't have to. Here is an example:

Let's say you and I are negotiating a business transaction that has several deal points. When the formal agreement is prepared, a mutually accepted key point for your side is unintentionally omitted, but the omission is not noticed until after both of us have signed the agreement, which is now legally binding. Even though we both had a chance to read the agreement before signing, and I now have no legal obligation to allow the document to be amended, if I am dealing in good faith, I will make sure that our contract is as we agreed during the negotiations, and allow the omitted point to be added.

An example of not dealing in good faith is when your conduct or words have led someone to believe you will behave or perform in a certain way, and then at the last minute, when you may have achieved some negotiating leverage, you do something different that lessens the value of the deal for the other party.

It has been my experience that most people will behave ethically. But unfortunately, there are those who will not. When you do business with someone who does not deal in good faith, you can never assume that the verbal agreements you have made in the pre-contract stage of a negotiation will be honored, especially if the other party has, or thinks they have gained negotiating leverage. These people are moving targets and I avoid them whenever possible.

It's okay to be a tough negotiator. You should do your homework and conduct thorough due diligence. Absolutely, fight for the best deal you can get. None of this precludes you from behaving consistently, and dealing in good faith.

Write this on a rock... The best and simplest way to conduct business successfully AND ethically is by dealing in good faith. You will find that dealing in good faith will allow you to be a tough negotiator AND work toward a deal where everyone wins.


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