Published in the San Diego Union-Tribune, August 27, 2018
Ethical behavior. A no-brainer, you say. Of course, you do the right thing; no way you would bend to the lure of self-centered, personal aggrandizement.
So now let’s look at some of the research of Max Bazerman, professor at Harvard Business School, who concludes that “sometimes we behave in shady ways without consciously realizing we are doing so.” One of the classic examples is Bernie Madoff. The returns made no sense to many, but as long as the money was flowing, no one was really motivated to look behind the curtain and ask the hard questions.
Bazerman explores service professions, in particular doctors and lawyers (of course, lawyers, they get blamed for everything). In the matter of surgeons, I understand they get paid to slice and dice, but in my most recent personal example (back surgery), the physician sent me home the first time, because he sensed that I was not fully committed to doing the surgery. He refused to operate until I was all in. I was so impressed with the man and the results that I have referred several of my friends’ backs to him.
In the case of attorneys who bill by the hour, the incentives are complex and often are in conflict with the client’s desire for low fees versus the legal obligation to give a comprehensive explanation of where the fishhook is hidden.
Bazerman focuses on negotiations. He says many of us are guilty of “ethical fading” — which is code for deception in the service of the desire to win. I have written frequently about the need to stand in the other guy’s shoes, and one of the best techniques, which I use often, is to actually “negotiate for the other guy.”
I am involved in a complex fish negotiation (don’t ask) and the other side knew a great deal about fish and almost nothing about real estate, so my technique was to explain some of the concepts and to tell them where their best interests lay — without any shading. I truly told them what was best for them.
But Mother Teresa I am not. When it came to the rent, to the dollars they needed to pay my client, on that matter, I was only focused on my side. But, because we had been decent and honorable and accurate on the other matters, the rent number medicine went down a bit more smoothly.
Bazerman names the three phases of negotiation (like Elisabeth Kübler-Ross and the five stages of grief). First he talks about behavior in terms of the “should self,” meaning how we prepare ourselves for the discussion and how we think we should and intend to behave — honorably of course. (This starts with offering the other side coffee and cookies in the conference room).
Then during the heat of battle, we morph into the “want self.” Bazerman says that here is where ethical behavior is at the most risk. You may accidentally forget to tell them something relevant (like there is no power from 3 a.m. to sunrise). My personal style is to point out the fishhooks early. The reason is simple. The other side is not stupid. Eventually they will ask about the power, and if you have deceived, you will have deeply dented any trust on other matters that you may have built up.
The third phase is “after the negotiation,” and as you may surmise, revisionist history sets in, and you think you were ethically solid, that your values and your behavior were in line with your true self. Bazerman again, “people may avoid telling a direct lie, but they are willing to be ambiguous,” especially when big dollars are at stake.
One of his proposals to encourage ethical behavior is to change where people sign a contract. If they sign at the beginning, stating that they will tell the truth (think mortgage application), they are less likely to lie than if they sign the contract at the end.
One of his tricks is to show a group of money managers a Standard & Poor’s chart for four different funds. They are asked to pick one they would invest in. Almost all of them pick the “Fortitude Fund” with its fabulous returns. Then he rips the cover off the charts and of course — there is no such thing as the “Fortitude Fund.” It is actually Madoff’s fund.
Rule No. 574: Greed is very bright; wear sun glasses.