Ethics in Negotiation: Avoid Complicity in Wrongdoing

Ethics in negotiation involves more than just not committing illegal and immoral acts. It also means noticing and calling out the unethical behavior of others, according to a new book.

By — on / Negotiation Training

ethics in negotiation

When we think about our own ethics in negotiation, we tend to focus on the ethical and legal lines we may be at risk of crossing through our actions. We often fail to consider how we could end up enabling the unethical and even illegal behavior of our negotiation counterparts and partners.

More broadly, we have difficulty recognizing when we are complicit in wrongdoing, writes Harvard Business School professor Max Bazerman in his new book, Complicit: How We Enable the Unethical and How to Stop. In Complicit, Bazerman describes numerous negotiation case studies in which bystanders stood by as others engaged in unethical and criminal behavior—and even helped them. For example, many employees of film producer Harvey Weinstein facilitated his predatory crimes against women. And pharmacies, doctors, politicians, and others assisted Purdue Pharma in selling its prescription drug OxyContin despite its highly addictive nature.

In negotiation, we often have financial and other incentives to look the other way. A recent ethics in negotiation case study from Bazerman suggests how we can avoid becoming complicit in wrongdoing—and protect our reputation.

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When Walgreens Ignored the Warning Signs

In the early 2000s, Elizabeth Holmes—a young, charismatic Stanford University dropout—claimed to have invented a technology that could quickly conduct up to 200 types of blood tests with just the prick of a finger. She raised over $700 million from early investors for her startup, Theranos.

In 2010, Theranos was looking to roll out its blood-testing machines across the United States. Walgreens negotiated a pilot partnership in which it would pay Theranos up to $50 million for cartridges to be used in its blood-testing equipment at a small number of pharmacies and loan Theranos another $25 million. As journalist John Carreyrou describes in his 2020 book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, Walgreens was eager to get the company’s technology into its stores before its chief competitor, CVS, beat it to the punch.

Kevin Hunter, an independent lab consultant whom Walgreens hired to evaluate Theranos’s technology and the partnership, grew suspicious of Holmes’s claims at the meeting, particularly after she refused to show him the company’s lab facilities. This and other red flags led Hunter to warn the Walgreens executive overseeing the project, Renaat Van den Hooff, that the technology might not work, according to Carreyrou.

An Alarming Ending

Walgreens went ahead with the project, introducing Theranos machines at 40 of its stores in Arizona and California. Thousands of Walgreens customers received invalid and sometimes frightening blood-test results from the machines, including inaccurate diagnoses of cancer. In May 2016, Carreyrou reported in the Wall Street Journal that Theranos had voided tens of thousands of blood-test results as unreliable. Walgreens ended the deal and pulled the Theranos machines out of its stores.

In 2017, Theranos agreed to pay the State of Arizona $4.65 million to refund customers who had paid for its Walgreens blood tests. Walgreens sued Theranos for its $140 million investment, and the companies reached a confidential settlement. “Theranos’s revolutionary system was a blatant fraud,” Walgreens said it its lawsuit.

Theranos dissolved in 2018, and in January 2022, a federal jury found Holmes guilty on four counts of fraud.

Toward Better Ethics in Negotiation

Why did Walgreens, along with so many others—including the Theranos board and many investors and employees—put so much faith in Holmes’s claims? “People under the sway of a charismatic leader often accept their views unquestioningly, losing their grip on reality in the process,” writes Bazerman in Complicit. “In the corporate world . . . deference to a charismatic leader may enable incompetence, abuse, and unethical and illegal behaviors.”

We are especially susceptible to compromise our negotiation ethics by falling for the false claims of the powerful. “Charismatic leaders who encourage their followers to abandon reason,” such as Holmes and WeWork founder Adam Neumann, writes Bazerman, “are particularly dangerous because they are so skilled at persuading people to accept their lies and look past their wrongdoing.”

Business negotiators can avoid being taken in by false claims by examining the negotiation from the other side’s perspective. In particular, one way to improve our ethics in negotiation, according to Bazerman, is to be suspicious when negotiators ask us to accept their claims at face value.

Walgreens negotiators should have recognized that if Holmes’s claims had been true, she “would have wanted to provide clear evidence of that to Walgreens in hopes of negotiating an even more attractive deal,” writes Bazerman in Complicit. But Walgreens leaders “seemed to have put so much faith in Holmes that they had stopped thinking rationally about their negotiating counterpart’s perspective,” Bazerman concludes.

In Complicit, Bazerman presents numerous case studies to describe how we become complicit with wrongdoing in negotiation and beyond, including overlooking our own privilege, being overly trusting, and creating and accepting unethical organizations. The book offers psychological explanations for our complicity, advice on how to improve our own ethics in negotiation, and strategies for reforming our workplaces.

What strategies would you recommend for improving ethics in negotiation?

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