The Australian Banking Royal Commission has been quite embarrassing with cover-ups, poor conduct and unethical treatment of customers. But it does bring to light key lessons for negotiators.
These lessons are particularly true for those who are perceived to hold the balance of power. In other words, if you are negotiating with someone who is seen to have very little power - there is a high chance your actions will come under public scrutiny at some point.
It is highly unlikely the banking industry will be the only one to come under scrutiny. All you need to do to come to this conclusion is read the paper to see similar accusations in industries like retail/grocery buying, leasing, franchising, etc.
I’m not saying that the lessons aren’t true if you are the underdog… it is more that you aren’t likely to get the opportunity to behave poorly if the other party holds all the power cards.
Accountability
Executives who don’t play ethically run the risk of being held accountable by somebody at some point.
While this is true for executives, it is increasingly true for all of us. The consequences of our actions might not be so serious that we face jail like Martin Winkerton - the Volkswagen CEO with a role in the diesel emission scandal - but we will be judged by our peers and at the very least, face damage to our reputation. If you treat one customer poorly, chances are they will talk to your other customers. Excuses like ‘everyone was doing it’ won’t cut the mustard. Society demands we are held accountable and social media means that very little remains secret for long.
So, don’t do anything you wouldn’t want the world to find out about - because they just might!
Fairness
Society’s tolerance for people being treated unfairly is low. The media is quick to jump up and support the little guy, causing all sorts of PR headaches for the big corporates. Just think of the dairy farmers, $2 milk, and the pressure put on large retailer buyers to behave fairly.
However, it doesn’t only apply where one side is small, do you recall the recent incident where Canberra Airport was accused of holding a Qantas aircraft hostage? Qantas is no little guy, but with an airport vehicle parked behind their aircraft until an $18,000 diversion fee was paid, Qantas had very little power. There is a chance that with enough heavy-handed negotiating from the airports, and complaining from the airlines, the airports will find themselves faced with having to hand some of their negotiating power to the regulators.
So, if you want to keep the power you have, use it fairly. This isn’t easy to do, it requires discipline and a mature approach to negotiating. Try to give the other side what they want, on terms that work for you.
Openness and Transparency
There is also huge pressure on all of us now to be open and transparent in almost everything we do. Chances are, anything we want to keep to ourselves will come out eventually.
The good news is that it will only help lubricate your negotiations. In my experience, many negotiations suffocate through lack of disclosure and openness. Furthermore, being open and transparent with your counterparties can only help to build trust and reciprocity.
So, be prepared to share more than you might be comfortable with. Ask yourself: will sharing this move them closer or further away from me? If you have bad news to share, share it early, but share the basis and background for it too.
Conclusion
Eventually, we are all judged on how we behaved in the marketplace. Rather than repeating the mistakes of others before us, let’s be fair, open and transparent in all our dealings. Ultimately, the test of measure should be ‘am I prepared to be held accountable for this?”