Morality is a personal set of beliefs, and that it’s the core of who we are as individuals. Ethics is expressed in terms of the expectations and the sanctions that are defined and enforced by a certain culture and society.
Most of us hold ourselves to a high ethical standard at work, and we expect our company and coworkers to do the same. But ethical behavior is easier said than done. From Wells Fargo to Enron to the guy down the hall who steals office supplies, you likely can pretty easily name several examples of workplace malfeasance.
What if your boss asks you to act unethically? Refusing could put your job at risk. Better to figure out how to avoid being asked. Displaying a moral symbol, such as a poster of a spiritual figure like Gandhi, or an ethically relevant quotation, can serve as a kind of amulet against corruption in the workplace—a necklace of garlic, so to speak. We want people to feel that no matter what, they have control over their situations, and that there are things they can do to prevent questionable behaviors from others.
What is to be done about that unethical boss, even if he leaves you alone? Can his bad behavior be checked? Both having and lacking power affects people’s psyches. He found that encouraging power holders to think about how they should act can help curb unethical behavior. We all have expectations of how those with power should behave, which often differs from how we think powerful people really do behave. In a series of experiments, the researchers found that when people focused on the expectation that power should be used ethically, they were more likely to behave ethical.
It’s Kathy’s last day at the office. How likely is he to steal a stapler on his way out? More likely than he was a week earlier. Yet this cheating at the end is not motivated simply by a likely lack of consequences. Instead, the behavior is spurred by an urge to avoid future feelings of regret at passing up a last opportunity for personal gain.
This is particularly relevant for managing risk among short-term employees in the gig economy. We tend to want to squeeze the last drop of productivity we can, particularly from part-time workers who aren’t coming back. But that’s a mistake. Instead, loosen contractor commitments near the end of an engagement. Consider letting people go home at one o’clock on the last day instead of keeping them until 5 p.m. When you give them a little bonus like that, they’re less likely to try and take some other kind of bonus for themselves on the way out.
Beyond ensuring those staplers stay put, what is the advantage of establishing an ethical corporate culture? A lot. When employees truly believe their company values integrity, that company will have higher profits and other indicators of strong performance. This is not the case for companies that simply tout their integrity to outside audiences. Additionally, there are not any correlations between the cultural values that a company advertises and what its employees perceive from the inside once they’re working there.
What’s completely confounding today is that the world has never been so interconnected, but what we forget is that the ethical positions or decisions or expectations occur within a given period of time in a certain cultural silo. That is why many of us are completely disconcerted by what we think is so obviously right and wrong when other people don’t believe that.
Something as fundamental as what you expect from a business contract becomes extremely vague and amorphous even after you’ve signed it because there’s a belief that it’s a continuation of a dialogue and not the culmination of one.
We’re not born with ethics or morality. A great deal of it is acquired. Some part of it has to do with skills. Your brain is constantly evolving. The frontal lobes, which are the part of the brain that puts things in perspective and allows you to be empathetic, are constantly evolving.
But it is less likely to evolve and develop those skills if you are in front of a screen. In other words, those skills come into play when you have a face-to-face interaction with someone. You can observe facial gestures. You can hear the intonation of a voice. You’re more likely to behave moderately in that exchange, unless it’s a just a knock-down, drag-out fight.
Now, the average time spent in front of a screen is nine hours. That’s a demarcation that’s fairly obvious, and that has to do with technological changes that are not going to retreat. In other words, this is the deal. What we’re seeing politically in this country and around the world does challenge the idea that morals and politics can work together.
It may seem obvious that if you want to foster a corporate culture of honesty and integrity, you should avoid hiring people with criminal records. That turns out to not necessarily be true. The turnover rate for ex-offenders is 15% lower than average, which translates into a significant savings for companies in turnover costs. And for employees in customer service positions, those with criminal records are no more likely to be fired for misconduct. However, in sales positions, employees with a criminal record have a 30% higher risk of being terminated for misconduct than coworkers without records.
Enron. Wells Fargo. Volkswagen. It’s hard for good, ethical people to imagine how these meltdowns could possibly happen. We assume it’s only the Ken Lays and Bernie Madoffs of the world who will cheat people. But what about the ordinary engineers, managers, and employees who designed cars to cheat automotive pollution controls or set up bank accounts without customers’ permission? We tell ourselves that we would never do those things. And, in truth, most of us won’t cook the books, steal from customers, or take that bribe. But many of us face an endless stream of ethical dilemmas at work. More often the dilemmas are the result of competing interests, misaligned incentives, clashing cultures. There are a number of obstacles and contradictions we see most often impact the ability to act ethically.
Business transformation programs and change management initiatives. Companies can warp their own ethical climate by pushing too much change from the top, too quickly and too frequently. Leaders have to implement staff reduction targets, dispose of big businesses in major markets, and lead mergers and acquisitions. Some of these activities include inherent conflicts of interest; others simply cause leaders to have to act counter to their values. Many leaders feel poorly prepared for the dilemmas they face and feel compelled to take decisions they later regret.
Incentives and pressure to inflate achievement of targets. People do what they are rewarded to do, and most leaders are rewarded for hitting targets. Take Wells Fargo as an example. Managers were rewarded for the number of accounts they opened and managed. As a result, apparently, many felt driven to open accounts that customers didn’t request or approve. The lure of incentives is a problem in boardrooms too: Bonus payments and executive share schemes are often based on short-term business metrics, which can be counter to long-term success.
Cross-cultural differences. Businesses have rapidly globalized over the last 10 years and ethical issues can be profoundly difficult when operating across different cultures. It is challenging to decide whose cultural rules were paramount when making business decisions. For example, closing a sales office in Japan, breaking a verbal promise made during after-work drinks in China, or ignoring sleeping business partners in a Saudi Arabian deal, all of which have cultural and ethical components.
While these obstacles stand in the way of making ethical decisions, they aren’t insurmountable. Here’s what we learned from the leaders in the study about what worked for them in improving the ethical climate in their organizations:
Know where you stand. The senior leaders in the study told us that, in contrast to what corporate compliance officers would like us to believe, their organizations’ codes of conduct and ethics training wasn’t particularly helpful when it came to managing ethical dilemmas. Rules and regulations often don’t cover the majority of ethical issues, especially those around people and resource trade-offs. Even the law, they said, is limited as it’s usually geared to big transgressions.
Instead, you need to understand what matters to you. Companies become ethical one person at a time, one decision at a time. If you don’t know where you stand, or if you can’t accurately read your organization’s underlying culture, you’ll find yourself blowing in the wind at best. Emotional intelligence can help you here. Self-awareness enables you to build and strengthen that inner compass. Organizational awareness enables you to identify the forces in your company’s culture and processes that could drive you and others to do the wrong thing. You also need emotional self-control: it takes courage to step away from the crowd and do the right thing.
Learn what really matters in your organization. To be prepared to challenge the unwritten rules of your organization — and the systems that support them — you need to learn to listen to weak signals about what the organization truly values. There will usually be lip service to doing the right thing, but what happens in practice? You can, for example, pay more attention to:
How people are paid. Does your compensation scheme reward the right things? Is the focus on short-term results or long-term sustainable success? Are the right staff included? Long-term schemes should include shop floor workers, supervisory staff, and different demographic groups. This ensures that the entire workforce is focused on longer-term sustainable goals.
Who gets promoted and why. Is there a true meritocracy in your company, or are certain people treated better than others? Are people who reflect on ethical issues, who speak up and challenge accepted ways of doing things, truly valued? Perhaps people are promoted according to unwritten rules that will ensure compliance with the status quo. In an ethical organization, talent management is a transparent and objective process — everyone gets a fair shake.
How employees feel about the company. We want to work for businesses we can be proud of. If your engagement surveys show that people don’t trust managers, or that employees are disengaged and ashamed of the company, you might have a widespread ethical problem on your hands.
Build a strong and diverse personal network. The most useful resource that leaders have when faced with an ethical dilemma is their own personal network. This provides an informal sounding board and can highlight options and choices that the leader may not have considered. When making ethical decisions, it’s important to recognize that your way isn’t the only way, and that even mandated choices will have consequences that you must deal with.
The challenge is that most leaders have networks full of people who think and act like them and many fail to seek out diverse opinions, especially in highly charged situations. Instead, they hunker down with people who have similar beliefs and values. This can lead to particularly dire consequences in cross-cultural environments.
To overcome this, you need another core emotional intelligence competency, empathy, which allows you to learn how to read others and truly understand what matters to them and what they care about. This will, in turn, help you connect with people and gather their thoughts, opinions, and help when you need them.
Speak up. If, after consulting your network, you believe something’s going wrong, it may be time to be brave and speak up. Leaders repeatedly highlight the positive consequences of speaking out and at least trying to resolve their ethical dilemmas by remaining true to their own personal values.
If you find you need to speak up, there will be a number of choices to be made. Do you talk to the boss? Consult with peers? Work with advisory functions such as legal, compliance or human resources? You can draw on your personal network for support and guidance on the right way forward within the context of your unique situation.
The consequences of taking proper actions are increased self-respect, improved confidence in their ability to address future dilemmas, and a more ethical work climate. And perhaps more importantly, taking brave action make people happier at work.
Traits of prospective employees including duty orientation and proactivity can help predict ethical behavior at work. Hiring committees should look for people who will notice when something unethical is happening, and people who show conscientiousness and moral attentiveness are more likely to do so, the article says.
People with a strong sense of duty orientation tend to be motivated to take action when they see a problem, while employees who show customer orientation tend to be more ethical, because they value the others’ needs as highly as their own and create fewer conflicts of interest.
Assertiveness, while sometimes grating, helps to build ethical cultures because it can break through groupthink, while people demonstrating proactivity feel less constrained by situational forces and are quicker to blow the whistle on unethical acts.
Screening based on these traits can help companies develop a blueprint of the kind of employee they are looking for who will endorse, shape and push an ethical culture, the article says, but whether they will speak up ultimately also depends on the extent to which the broader organization legitimizes their behavior.
There’s a very long-standing philosophical debate about whether organizations like business firms have a moral responsibility as firms themselves, or whether it’s only the individuals in the firm or organization who have moral responsibility. This has been a long-standing problem and a number of people have contributed to it, but it’s not really been resolved for decades.
If you think about the BP oil spill, which is the worst environmental disaster that the United States has seen, it turns out that what caused the oil spill was a number of relatively small errors for which there are individuals who are guilty. But they’re guilty just for their small contribution. If we were to hold each of them responsible, punish each of them in accordance with their contribution, we really would not end up with the kind of response that matches up with the amount of harm that BP created.
There is this felt sense of a responsibility deficit. This idea that holding only individuals responsible fails to fully account for all of the harm that occurred, and we need to do something else if we want to respond appropriately. It often takes the form of punishing the corporation or blaming the corporation or holding the corporation responsible.
The legal proceedings you have with VW and with these other cases shows you — practically — why this philosophical issue matters. Is it enough to just have a big judgment against VW as a company and make them pay a huge penalty? Individualists and ethical theorists would say, “No, that’s completely not OK because you are essentially letting all these people who really did the bad acts off the hook and sort of pretending that by punishing a big auto company we’re getting that.”
Another good example of this, and this is mentioned by Craig Smith in his introduction, is the financial crisis and what happened after that. Very few, if any, actual human beings, were convicted of crimes or punished for various allegations of financial fraud. But you had very big penalties paid by banks and other financial institutions that admitted to crimes and admitted to wrongs and paid huge amounts of damages. The question is, does that really help anything? Does that really help to deter moral bad behavior if you’re just putting the onus on the shareholders of the banks and you’re letting the bank as an entity take the hit and not actually going [after] individuals?
There has been an actual policy change on that. Former acting Attorney General Sally Yates, who has become famous for other things since then, has an influential memo that changed policy within the Department of Justice and that said we are not as a matter of policy going to do that anymore. We’re not going to pursue or settle cases just with the corporation. We must have individuals on the hook. For our purposes, that’s one of these reasons this practical question of moral responsibility matters, because it goes back to the moral foundation of the problem to decide how the law should treat this issue.
There are lots of good, legal reasons why there are limitations on being able to seek out the individual people who did the act. In an organization, it’s often easy to hide when you’re doing something you might know is wrong. You make sure there’s no paper record or you’re telling an underling to do the act, knowing that underling will take the fall if anything goes wrong or if it’s discovered. There are lots of problems in holding individuals responsible. But you’re absolutely right, there’s one other thing.
There’s a sense that everybody wants to find someone to blame. You have a name called Wells Fargo and everybody goes on that, and then somehow if you succeed in getting them to pay a bunch of money and admit to some wrongdoing then maybe that is enough. It might be enough for the public sentiment, but if you look at the moral consequences, you might be letting a lot of people off the hook and making it easier to deal with the problem when you’re not really providing the right incentives and deterrents going forward.
A lot of people want to place blame, but blaming the corporation may not always be the right situation. Blame is, in part, seeking to induce the experience of guilt. Corporations don’t have a capacity for emotion, which means they can’t experience guilt. What sense is there in blaming this entity that can’t experience guilt?
Blaming the corporation is very similar to the reaction to Wells Fargo — that Wells Fargo is a stand in, it’s a placeholder. We know that there are individuals within the corporation who deserve blame, we just don’t know who they are. So, we express our blame as if it’s directed toward Wells Fargo, but what we really mean is there are some real people here and they deserve blame.
Understanding the practice of corporate criminal liability in that way makes a lot more sense and makes the practice compelling to those of us who have this conception of the corporation as just a nexus of contracts. If it’s the kind of entity that can act on its own behalf, it doesn’t rise to the level of being the kind of entity that is an appropriate target of what are called the moral reactive attitudes.
Everyone believes that ethics matters. There are some who might say financial responsibility is the only thing a firm should care about and forget about moral responsibility. It’s a common view within the field of business ethics that you don’t check your morals at the office door when you go in. And so one way or another morals matter.
Companies every day do huge amounts of good in the world in terms of productivity supply and basic economic financial functions. But there are lots of positive duties and responsibilities that firms might take or have as well. One of them might be what’s called a duty to rescue.
If you are a firm in the health care industry and particularly able to deal with some rare disease, like the Merck case with respect to river blindness, then there is a moral argument that the firm should take the extra step to handle that issue even if there would not be an immediate financial return.
It’s certainly true that we know that deregulation in the 1990s and early 2000s allowed for a lot of the activity that then precipitated the financial crisis. A lot of what happened, as damaging as it was, wasn’t contrary to the letter of the law. It’s a general problem that it’s really hard for the law to restrain actors in a lot of contexts, and maybe especially actors in the financial context because those actors tend to be very smart and have so many incentives to try to skirt the law where they can. You can almost think about them as these rapidly mutating bacteria who become immune to the latest antibiotics very quickly. The law seems to be very frequently one step behind.
But we should also not neglect the idea that the law is just one way of responding. In many ways it is the most powerful, but public outrage is another way of responding. We can be outraged even at acts that are not illegal because we recognize that they’re immoral.
There were a number of bad actions and illegal actions that were taken by very large financial institutions, and they pled guilty or took responsibility. One of the criticisms of those agreements was that even though the banks were agreeing that they had violated the law, and this included deceptive practices with respect to mortgage securitizations and originations, there was a lot of pressure at the mortgage origination stage — they weren’t really checking the information that should have been checked.
The criticism from academics and others about what happened there is that individual people were not held responsible. One of the reasons is that it’s really hard to pin these kinds of complicated financial misdeeds on individual people, especially when you have very large and well-financed legal defenses that are going for them. There is a tendency for prosecutors to say, “Let’s just settle for a multimillion-dollar or higher settlement. We get credit. We can say we solved the problem. We meet the public outrage in part.” But you actually didn’t get to the problem, so the unintended signal is that this is OK as long as you don’t get caught or get into a situation where you can’t hire a very good legal defense to get you off the hook.
The word “lie” conveys not only a factual judgment but also a moral one. But we also are living in a society now that is far more comfortable believing something just because it’s the opposite of what somebody else believes. We’re going to have to do a little more heavy lifting, and many citizens have not the appetite for that. My truth might be different than yours because I’m entrenched in certain beliefs. You can’t open your mouth without being accused of any number of things, and it’s far more emotional than it is rational.
Just a few tech companies control our digital life. You think of the internet as this rather ephemeral, atmospheric opportunity to create communities and outreach and gather information, and it is all of those things. But it’s important to remember that it’s also owned by a few extremely lucrative tech companies. These are businesses. These are publicly owned companies, and their first and foremost obligation is the return on investment. Now they’re being held to account on some degree, and they finally have admitted that they are more than simply content providers, so they should become responsible to a degree for patrolling or curtailing some content that’s very incendiary. But the point is that all of these are money-making ventures.
Part of this overall concern about what is happening is there is a diminution or lesser opportunity to build the skill set of how to deal with people. We are social animals, so something as simple as communicating has now become fraught with not only our polarized ideas, policies and politics, but also it is exacerbated by the way we communicate. A lot of it has to do with, whether right or wrong, your financial wherewithal. But it’s difficult to know where the line is drawn.