The High Cost of Being Right

Do me a favour:

The next time you hand in your yearly budget, add a line item expense for “Being Right”.  Now add another for “Teaching Business Ethics”.  Go ahead and plug in a big fat number with a lot of zeros in both.

Let me know how that flies with the Board.

While most (hopefully all) of you are getting a bit of a chuckle thinking about the idea, all you have to do is look at the year-end statement of corporations all across the world and you’ll likely find those line-items cleverly disguised under “loss from lawsuits” or as a note with a reserve for ongoing litigation.

Here’s the thing:  the goal of corporate conflict management is to reduce risk and minimize loss.  Skillfully handled, you can also maintain or even grow valuable relationships.  But executives who dig their heels in to ‘take a stand on principle’ need to be reminded that there’s no room in the budget for principle.

Does that mean you settle every case that comes up?  Of course not.  Companies can and should defend themselves against nuisance suits and shouldn’t be strong-armed into settlements that aren’t in their best interests.

But there’s the rub:  a company’s interests lie in growing and making money.  It seems to me that teaching an adversary valuable lessons would be something you could charge for, rather than have to pay for.  Why would I throw away good money trying (and failing) to teach the other guy how things are supposed to be done?  Likewise, I doubt many corporate leaders negotiated a “Being Right” benefit addendum to their employment contracts.

There are a lot of factors in play when it comes to dispute resolution on the corporate level — potential relationship and public relations ramifications, legal expenses, risk of adverse judgements, time and resource allocation, precedent, BATNA, not to mention the actual value at stake, just to name a few.  Stubbornness and ego shouldn’t be among them.

When addressing conflict, executives need to think strategically as to what’s in the best long-term interests of their stakeholders, and they need to be humble (and wise) enough to see the difference between how things are and how they should be.

Anything less is irresponsible.

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