Ethical Leadership: Create More Value in Negotiation

Ethical leadership in the realm of negotiation involves more than just doing the right thing. It should motivate us to look more broadly at how much value we create in the world—and how we can do better.

By — on / Leadership Skills

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In our negotiations and beyond, all of us engage in behaviors that create value—as well as actions that destroy it. Ethical leadership requires us to become more aware of the harm we cause in the world, work to reduce it, and to encourage those we lead to do the same. 

Consider the Sackler family, which owns pharmaceutical company Purdue Pharma. Sackler family members have served on Purdue’s board and in executive roles with the company. The family, which has an estimated net worth estimated of at least $13 billion, is known for being highly philanthropic, having funded art galleries, museums, and research institutes in the United States and abroad.

The same Sackler family that has given away a great deal of money to respected causes also has been implicated in the opioid epidemic that has killed more than 232,000 Americans, writes Harvard Business School professor Max H. Bazerman in his new book, Better, Not Perfect: A Realist’s Guide to Maximum Sustainable Goodness (HarperCollins, 2020). On October 21, the U.S. Justice Department announced that Purdue Pharma had agreed to plead guilty to criminal charges regarding its aggressive marketing of opioid medications, including OxyContin, and to pay about $8.3 billion in penalties as restitution for its crimes. The company admitted to marketing opioids to doctors that it suspected of writing illegal prescriptions, paying illegal kickback to doctors, and defrauding federal health agencies. 

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As part of the settlement, the Sackler family agreed to pay $225 million in civil penalties and could face criminal charges in the future, the New York Times reports. The family has been accused of funneling billions of dollars out of Purdue and hiding it in foreign bank accounts. 

The controversial $8.3 billion settlement will allow Purdue Pharma, which entered bankruptcy in 2019, to continue to manufacture opioid medications as a public trust under governmental control, National Public Radio reports. Because Purdue is in bankruptcy protection, the federal government is expected to have difficulty collecting the billions in penalties. The company still faces thousands of lawsuits from cities, tribes, states, and individuals.

Toward More Ethical Leadership

In his book Winners Take All: The Elite Charade of Changing the World (Vintage, 2019), journalist Anand Giridharadas argues that people who gain their wealth through unethical practices often give some of it away to distract from their illegal or immoral behavior. Though finding this argument “a bit too cynical,” Bazerman believes Giridharadas “nicely highlights that we should judge people by the cumulative net value that they create or destroy, rather than giving them credit for an isolated aspect of their behavior.”

As negotiators, we can move toward creating more value not just for ourselves, but for the world, even in everyday negotiation situations. We can also show moral leadership by prompting others to make more ethical decisions in negotiation. “We should think about our decisions as a whole, taking credit for where we do well, but also noticing where adjustments may be worthwhile,” writes Bazerman in Better, Not Perfect

Here are a few principles of ethical leadership and negotiation from Bazerman:

  1. Broaden out. Rather than looking narrowly at how a proposal would benefit your organization, show organizational leadership by considering how it would affect society. “Moral decisions come from asking what will do the most good rather than what will do the most good for a small group that happens to be connected to us,” writes Bazerman. 
  2. Adopt the “veil of ignorance.” To make the most ethical decisions, the philosopher John Rawls challenged us to imagine that we know nothing about our position in society—such as our relative status, wealth, race, gender, etc. “In this uninformed state, behind a veil of ignorance, you will be in a better position to decide how society should be structured for the greater good,” explains Bazerman. 
  3. Compare multiple options. When making decisions in negotiation, we often consider one option at a time—one proposal, one job candidate, etc. Yet Bazerman and his colleagues Iris Bohnet and Alexandra van Geen have found that people make more rational—and ethical—decisions when they compare two or more options rather than just evaluating one. Effective leadership involves weighing several choices simultaneously and encourage others to do the same. 

What other components of ethical leadership do you value in negotiation? 

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