Negotiators: Guard Against Ethical Lapses

By — on / Negotiation Skills

Adapted from “Negotiators : Guard Against Ethical Lapses,” first published in the June 2009 issue of Negotiation.

During the past several years, one scandalous story of unethical behavior after another has made headlines: Countrywide’s and AIG’s risky business practices, trader Bernard Madoff’s Ponzi scheme, and former Illinois governor Rod Blagojevich’s alleged attempt to sell a U.S. Senate seat. As instances of people behaving badly proliferate, some commentators have wondered if we are experiencing an epidemic of immorality.

Madoff and Blagojevich seem to represent extreme cases on the fringes of human behavior—a couple of very bad apples. In fact, new psychological research suggests that most of us experience ethical lapses under certain conditions. But rather than knowingly causing harm, as Madoff did, we are more likely to unintentionally violate our own moral code.

In negotiation, even minor instances of immoral behavior could damage your reputation and your organization’s as well. Here we present three common ethical pitfalls and suggest ways to police yourself and your counterparts.

1. We let ourselves off the hook.

Few of us set out to behave badly. Yet when given an opportunity to cheat, many people will take it, researchers Lisa L. Shu, Max H. Bazerman, and Francesca Gino of Harvard Business School found in recent research. In one study, Shu and colleagues asked college students to solve math puzzles for money. Some of the students were given an opportunity to cheat—they could grade their own work and take more money than they’d earned with no consequences. In addition, certain participants were asked to read a university honor code before completing the task.

Not only did some participants choose to cheat when given the chance, but they also justified their cheating in questionnaires they filled out after the study.

Students who read the honor code were less likely to cheat than those who didn’t read it. Those who did cheat after reading the honor code were less able to remember details about the honor code when the experiment was over, a phenomenon that Shu and colleagues call motivated forgetting. In a follow-up study, some participants not only read the honor code but signed it to indicate their compliance. Almost none of these participants cheated.

Although the studies demonstrate “the pervasive dishonesty of ordinary people,” according to the researchers, they also show that presenting decision makers with a moral code greatly improves their ethical behavior.

Applying these findings to negotiation, you might open talks by discussing your intention to behave fairly and honestly and then ask your counterpart to do the same. When trust is a special concern, you might even write an honor code for interested parties to sign. Making ethics salient in your negotiation could curb the temptation to deceive.

2. We imitate those who are close to us.

When Rod Blagojevich was indicted, five of his closest advisers—his brother, a top fund-raiser, two former chiefs of staff, and an Illinois businessman—were also charged with crimes related to his alleged illegal activities.

Does proximity to unethical behavior cause people to lose their moral compass? To find out, Gino and her colleagues Shahar Ayal and Dan Ariely (both of Duke University) asked Carnegie Mellon University students, gathered together in a room, to solve a series of math puzzles in five minutes, working on their own. At the start of the experiment, each student was given $10. At the end of the experiment, they were allowed to keep 50 cents for each correctly solved problem and were asked to return their unearned money to the experimenter.

There were clearly too many problems to be solved during the short time period. In one condition, students graded their own answers and awarded themselves money without monitoring from the experimenter, thus enabling them to cheat. In two other conditions, soon after the students started to work, an actor posing as a student participant stood up and shouted, “I’ve solved everything. What should I do?”

The experimenter allowed the “student” to leave with the full $10, even though it was clear he hadn’t earned the money fairly. In one of these two conditions, the actor was wearing a plain T-shirt; in the other, he was wearing a T-shirt from a rival school, the University of Pittsburgh.

How did the presence of an obvious cheater influence the students?

As compared to the condition in which no actor was present, more students cheated when an actor wearing a plain T-shirt left early with all of his cash. By contrast, when an actor wearing a rival school’s T-shirt cheated, students cheated even less than they did when no actor was present. The results suggest that we tend to copy the unethical behavior of those who are like us, but condemn the dishonesty of outsiders. When you negotiate, be mindful of the tendency to imitate rule breakers who belong to the same groups as you, whether family, coworkers, or team members.

In addition, call attention to dishonest behavior. Gino and colleagues found in a follow-up experiment that students cheated less after an actor asked the experimenter, “So, is it OK to cheat?” Like honor codes, pointing out dishonesty or the potential for it can reduce its incidence.

3. We view gains and losses differently.

If unethical behavior flourished during recent boom years, research suggests that it will get even worse during the current bust. Psychologists have long known that when people are making decisions, they much prefer choices framed as gains to those framed as losses, even if the net outcome would be the same. In a new study, professors Mary C. Kern of Baruch College and Dolly Chugh of New York University found that our ethics are swayed by the framing of information as well. In one experiment, the researchers had pairs of MBA students engage in a negotiation simulation involving a real-estate sale.

The seller’s agent was assigned to represent a family that wanted to sell their property only to a party intending “tasteful use.”

Meanwhile, the buyer’s agent represented a developer of high-rise hotels that did not want its identity or intended use of the property to be revealed to the seller.

In one condition, the buyer’s agents were told they had a 25% chance of gaining the property and thus earning a 3% commission; in another condition, the buyer’s agents were told they faced a 75% chance of losing the property and the commission. In subsequent negotiations with the seller’s agents, buyer’s agents presented with a 75% chance of loss were less honest about the developer’s intentions than were buyer’s agents facing a 25% chance of gain.

Clearly, the actual probabilities in both conditions were identical, pointing to the real danger of the ethical framing effect. Rather than reflecting a different underlying reality, frames distort our perceptions of identical data.

The ethical framing effect offers all the more reason to frame your proposals as gains rather than losses whenever possible. Similarly, when negotiating debt and other burdens, look for opportunities to soften the blow, such as promises of future business.

When negotiators feel desperate, they will be even more tempted to deceive you—just as you would be if the tables were turned.

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