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The Route to Ethical Behaviour: Better Negotiation

Stephen White

The premise that corporations should be inherently ethical is deeply flawed, and our experience informs us so. Although most companies manage to stay below the publicity radar there are sufficient examples which do make the news to recognise that these are more than just an aberration.  From Enron, to the Ponzi schemes used by Bernie Madoff, to the zero hours practices of Deliveroo, the sweat-shop employment conditions of virtually every clothing retailer and the pursuit by betting companies of gamblers into addiction, the list of examples is just too long to consider these are exceptions to the rules.

And yet most C Suite executives would swear on their grandmother’s life that they take painstaking care to ensure that their organisations are diverse, woke, intolerant of every negative ism, morally upright and representative of the best of corporate values. Where is the dissonance?

This is not a capitalism thing. Charities succumb to unethical practices by their field workers who trade aid for sex. Political organisations allow racism (especially antisemitism) to overpower common decency when selecting and deselecting candidates for office. State enterprises wallow in corruption allegations.

Managing Conflict

The problem is in the way that organisations train their people to manage conflict. Conflict is a given in every corporate body, internally with owners and staff and colleagues, and externally with suppliers, customers, regulatory bodies, the taxman and the government. Negotiation is the most commonly used method to resolve these conflicts. It is a core skill which transcends virtually every discipline at virtually every level. Most organisations recognise that it is a skill not natively well-developed for many people, so huge amounts of money are spent on training people to be better at it. However the basis of this training is unethical, and produces unethical behaviour throughout.

It works like this. If the basis of negotiation is competitive compromise – aka haggling or splitting the difference, but preferably in my favour – the output will be more conflict. B wants to pay 5, S wants to charge 10, they settle at 7 or 8 as a compromise. Neither is satisfied, both got something but neither got what they wanted. So to get closer to their selfish ideals (because that is how they are rewarded) B begins to lie about what is affordable, S invents stock shortages and mythical alternative purchasers. Out of these untruths and half-truths emerges an unethical subtext to commercial relationships. Similarly the zero hours employers who claim that the gig economy is in the interest of the workers and the thumb-screwing retailers who increase their negotiating leverage on suppliers by claiming that downward price pressure is good for the consumer and will result in more volume for the supplier are at best fooling themselves about their motives, and at worst being perniciously immoral.

Big data should limit the negotiating deceit, but in fact it encourages it. Government, in the face of lots of data about pay increase stagnation in the private sector and billions poured into the NHS in extra funding bamboozles nurses into believing that a 1% increase this year is fair.  The British public overwhelmingly knows it is not only not fair but it is immoral. When the NHSPRB (the independent review body on NHS Pay) reports in the next few weeks the Government is unlikely to accept their findings; instead it will haggle between the recommended increase and the 1% already on the table. This behaviour is reprehensible, and is borne out of poor negotiation practice.

Haggling

There is an alternative. Negotiating is not about haggling except as part of the endgame of a deal and even then only about small relatively inconsequential variables. It is an activity with little intellectual input and requires virtually no skill. Skilful negotiating is about identifying value differentials between the parties and value creation through creativity. In its most effective iteration it is collaborative and usually cooperative. These attributes are often seen as being weak and concessionary which is why many companies steer clear of them, fearing commercial disadvantage but in the confident hands of effective negotiators they are the opposite. Of course sometimes they don’t work because of the intransigence of the parties. But that is just as true of the haggle form of negotiating; it is not a reason to reject the art-form as defective.

Novartis, and now BooHoo are putting schemes in place which use bonuses to reinforce ethical behaviour. Unilever recently announced it was going to require all suppliers to pay a living wage to their employees. Uber have accepted that zero hours employees need to have the trappings of humane employment such as work breaks and holiday entitlements. All very laudable, but unless they also look again at their negotiating methodology the unethical behaviour they disliked being accused of – and to their credit did something about - will continue and proliferate.

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