Ethical Systems -- Withholding Information

Ethical Systems -- Withholding Information in Negotiations

What ethical systems should be in place prior to negotiations, so both parties in the discussions have fairness and good will going into the negotiations? This paper reviews and critiques that question. This paper also addresses the question of substantive fairness of the negotiation and the question of procedural fairness when it comes to negotiations. Moreover, what concealment behaviors are ethical in negotiations and what concealment behaviors are considered unethical in negotiations? And, how can parties learn to create trust in a one-shot negotiation arrangement and in a long-term negotiation relationship?

What are the ethical systems that can help lead parties to negotiation?

The Negotiator Magazine lists ten ethical questions and suggestions that negotiators should use in order to build negotiations based on "a foundation of ethics" (Stark, et al., 203, p. 2). These are not "ethical systems" per se (those will be presented also) but they are important ethical steps and reminders for professionals and amateurs to use when entering into serious discussions where negotiating is part of the dialogue. a) "Know what is not negotiable" (knowing this helps going into to the discussions); b) "Be honest" (being honest and ethical -- even it if costs you something -- you "gain points" Stark explains); c) "Keep your promises" (fulfill promises no matter what); d) "Have multiple options" (one option should be to walk away if the other party is unethical); e) "Be willing to say 'no'" ("no" should not be considered confrontational); f) "Be familiar with the law" (there is no excuse for being ignorant of laws and regulations); g) "Go with your gut" (it is smells bad, feels bad, it probably is bad); h) "Practice the concept of 'no surprises'" (avoiding negative surprises reduces the chances of ethical gaffs); i) "Follow the Platinum Rule" (treat people the way they want to be treated); and j) "Be willing to walk away from a deal" (some of the best deals are the ones "you did not make") (Stark, pp. 2-3).

Concealment behaviors that are unethical

Journalists Peter B. Stark and colleague Jane Flaherty recount the story of the former CEO of American Airlines, Don Carty, who, on April 23rd, 2003, "was forced to resign over what the unions considered to be a lapse in his ethics" (Stark, p. 1). What happed that forced an end Carty's 20-year career? Carty had asked union members -- rank-and-file to take "deep pay cuts to save the company," Stark explains. But wait, while Carty was asking the union members to give up substantial dollars on their paychecks, he was at the same time "putting together a package that included $41 million in pension funding for 45 executives," Stark continues. Because he concealed this fact from the union he found himself in hot water.

Stark reports that if Carty had been totally honest with the union's rank-and-file members, and told them that top executives were getting benefits that "were necessary to retain an executive team that could help pull American Airlines through the crisis" it might have resulted in a different, more positive outcome for Carty (p. 1). But he concealed those facts and soon the media learned of Carty's deal with top executives, and when the union learned through the media that they had been asked to take cuts but 45 high-ranking employees were getting $41 million in pensions funding, the pressure was on Carty to go, and he was forced to resign.

Meanwhile, in their book, Negotiating Essentials: Theory, Skills, and Practices, authors Michael R. Carrell and Christina Heavrin present a case of withholding information during negotiation that is pertinent to this paper. In a PowerPoint on Chapter 8 the authors present an issue in which the employer has asked the union -- during contract negotiations -- to accept "concessions" in order that skyrocketing health care costs can be minimized (Carrell, et al., 2008, 8-4). Responding to the employer's position, the union then asked the employer to "switch to self-insurance to reduce" the cost of health insurance. However, it turns out the employer already was self-insured but he did not share that information with the union negotiators "…in case the union asked for [a] share of [the] savings" (8-4).

In response to the presentation of this case, the authors report there are three ethical theories relative to this case. One, the Ethics of Purpose -- a good end cannot possibly be achieved with "bad means"; two, Ethics of Principle -- in negotiations one should "Do unto others as you would have them do unto you"; and three, the Ethics of Consequence -- the end "justifies the means" (Carrell p. 8-6). Should the negotiator tell the employees that the employer is already self-insured in this case?

Under the Ethics of Consequence concept there are three questions presented that help define this issue: a) what benefits will result if the negotiator does tell the union? b) what harm may come if the negotiator doesn't tell the union? And c) which of those two outcomes "has the best overall consequence?" (Carrell, p. 8-7). In this instance, not telling the employees can backfire on the employer because eventually the union will find out the truth and it will cause a potentially disastrous loss of trust. The best overall consequence is for the employer to fully explain that he has already secured self-insurance and let the honesty chips fall where they may.

Within the Ethics of Principle one can fairly ask, are the employees entitled to the information that the employer is already self-insured? Should the employer "expect similar treatment from the other side" if the employer is candid about the insurance issue? The authors ask questions under Ethics of Purpose side of the issue: a) is the negotiation process "subverted" if the information is withheld from the union? And b) is it possible for the employees in this company to "fairly evaluate the employer's offer" if the workers do not have all the information? (Carrell, p. 8-8). The answer is yes; the negotiation process is indeed subverted when the information presented is not thorough and honest.

How does "substantive fairness" enter into these negotiations?

Having asked those pertinent questions about the dynamics of withholding information, Carrell and Heavrin assert that rules of behavior include an evaluation of fairness. The authors assert that substantive fairness relates to "Proportionality" (the correct presentation is proportioned for ease of understanding); "Reciprocity" (fairness in give and take); "Impartiality" (objectivity where possible); and the fact that "Parties are heard" and heard with a sense of substantive fairness (Carrell, 8-12).

The values that this employer in question should be embracing are "social-centered" and "external," Carrell explains on 8-10; values that are "self-centered" that are put forward for one's own needs is unacceptable -- in this case, withholding vital information from the union in fear of having to pay the union a percentage of the savings is self-centered and unworthy in the field of substantive fairness.

Ensuring the procedural fairness of the negotiation

Nancy A. Welsh, professor in the Dickinson School of Law at Penn State University, explains that within the criteria for judging procedural fairness there are "four process characteristics" that are significant in determining procedural fairness (Welsh, 2006, p. 169). Welsh's first point: People are far more likely to judge a negotiating process as fair "…if they are given a meaningful opportunity to tell their story." Secondly, Welsh asserts that when people are assured that the decision-maker "has listened to them and understood and cared about what they had to say," they will come away feeling the negotiating process was fair, whether they won or lost. Thirdly, "People watch for signs that the decision-maker is trying to treat them in an even-handed and fair manner"; and fourth, people will always value "a process that accords them dignity and respect" (Welsh, p. 169). Moreover, Welsh continues, people who come away from negotiations believing they were treated fairly "…are more likely to comply with the outcome of the procedure" (p. 170). Hence, the union in negotiations with the employer in the insurance matter will not feel like the process was fair procedurally unless honesty prevails.

What is the difference between ethical concealment and unethical concealment?

Fairness in negotiations relates to the avoidance of lying in negotiations, that is, avoidance of unethical withholding of information. There are "alternatives" to being guilty of blatant lies. If you are asked your bottom line, "say you're not ready to reveal it" (which is true and not a lie); if you claim you don't have the authority, "then don't seek authority"; in other words don't lie about the facts, "limit the discussion to opinion[s] of [the] facts" (Carrell, 8-13). To flatly lie about the bottom line in order to position one's self for a better outcome is unethical.