Ethical behavior, simply put, is doing the right thing. Unethical behavior is the reverse. In the workplace, unethical behavior certainly includes any deeds that violate the law, such as theft or violence. But unethical behavior can involve much broader areas as well, such as deliberate violations of company policies, or using hard-sell sales practices that may be legal, strictly speaking, but that take excessive advantage of human frailties. Examples of unethical behavior can be found in all types of businesses and in many different areas.
Deliberate deception in the workplace includes taking credit for work done by someone else, calling in sick in order to go to the beach, sabotaging the work of another person and, in sales, misrepresenting the product or service to get the sale. There are other examples of deliberate deception, but these show how damaging deception can be by using a person's trust to undermine his rights and security. In a workplace environment, this results in conflict and retaliation. In a sales function, it can result in lawsuits from deceived customers.
Your sales manager calls you into his office and threatens to fire you unless you sell 50 large toasters. You know the large toasters are inferior products and have been selling the small toasters to your customers, instead. To keep your job, you must violate your conscience and recommend that your customers buy the large toasters. Your boss is engaging in unethical behavior by forcing you to do something you know is wrong, and also risking the ire and potential loss of valuable customers to meet a product sales goal.
He may be engaging in unethical conduct because top management has forced him by threatening his job, too. Coercion is also the basis for workplace sexual harassment and results in lawsuits. Unethical behavior often causes more unethical behavior.
Your boss promises you an extra day off if you rush out an important project by a certain date. You work late hours and finish the project before the deadline. Ready for your day off, you mention it to your boss who responds "No, we have too much work to do."
Your boss engaged in unethical behavior that has virtually guaranteed your future distrust and unwillingness to extend yourself to assist in department emergencies. In addition, you are likely to complain to your co-workers, causing them to distrust the promises of the boss and be unwilling to cooperate with his requests.
Padding an expense account with non-business expenses, raiding the supply cabinet to take home pens and notebooks and passing around unregistered or counterfeit software are examples of unlawful conduct in the workplace. The person who steals from the company by padding her expense account or taking supplies for personal use risks losing her job. If a company decides to overlook such theft on the basis of maintaining employee morale by not firing a popular employee, other employees will also steal so they can feel they are getting the same deal as their co-worker. Passing around counterfeit software, if discovered by the manufacturer, can cost the company through lawsuits and fines.
On a grander scale, Enron-style accounting fraud – "cooking the books" – involves a coordinated, deliberate and illegal effort to misstate company earnings and mislead investors as a way of manipulating the company's stock price. This is the type of unethical behavior that sends company executives to jail.
An employer is understandably concerned about avoiding lawsuits and angry customers because those things negatively affect profitability. Most employers clearly state company policies against deception, coercion and illegal activities. They also strive to convey an image of trustworthiness to their customers and employees.
Corporate trustworthiness helps retain customers and valued employees, and the loss of either also negatively affects company profitability. To disregard company policy is unethical because it has the potential to harm the company and other employees.
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In most organizations, leaders are expected to monitor – and stop – unethical practices taking place under their watch. But history is full of examples of high-ranking leaders who turned a blind eye to illegal or unethical behavior. For example, Stewart Parnell, a Georgia peanut company CEO, was sentenced to 28 years in prison for knowingly shipping peanuts tainted with dangerous levels of salmonella to customers. The contaminated peanuts killed nine people and sickened hundreds.
Psychological scientists Jessica A. Kennedy (Vanderbilt University) and Cameron Anderson (University of California, Berkeley) found evidence that obtaining a higher rank within an organization may prompt people to overlook unethical behavior.
“When unethical practices occur in an organization, high-ranking individuals at the top of the hierarchy are expected to stop wrongdoing and redirect the organization to a more honorable path—this is, to engage in principled dissent,” the researchers explain.
But Kennedy and Anderson hypothesized that occupying a high-ranking role within an organization might cause people to identify more strongly with their organization and thus “they fail to see unethical practices as being wrong in the first place.”
For several reasons, studying principled dissent (and consequently unethical behavior) in the real world is incredibly difficult. But the researchers were able to obtain a unique set of data: a large sample of whistle-blowing data provided by over 11,000 government employees. The US Merit Systems Protections Board conducted a private, anonymous survey across 22 federal government agencies in 1992. The survey included a broad range of questions on whether employees had engaged in whistleblowing, or had reported any unethical or even illegal activities by their coworkers and colleagues.
Overall, around 16% of participants indicated they had reported illegal or unethical activities involving their agency to at least one party in the previous year. And rank seemed to matter when it came to who was making these reports.
“Employees in high-ranking positions were less likely to report unethical practices than those in low-ranking positions,” Kennedy and Anderson write. “This relationship held up even after controlling for a host of variables that also had a significant relation with principled dissent, including gender, ethnicity, education, tenure with the organization, age, and knowledge of protections from retaliation.”
Moreover, Kennedy and Anderson report, the link between hierarchical rank and principled dissent was strong, suggesting the highest-ranking employees had 64% lower odds of principled dissent than those in the lowest rank.
A second pair of experiments carried out in the lab helped to establish a causal link between principled dissent and organizational status.
In one study, participants were assigned to either a high-, middle-, or low-ranking position within a small group of four, ostensibly based on points assigned by other group members. In reality, each person’s leadership position within the group was randomly assigned by the experimenters. Participants also responded to a series of positive and negative statements designed to either encourage or discourage identification with their group.
Participants were then presented with a business school ethics case study: As employees for Plasma International, a blood supply company for hospitals, they had to decide whether to increase the price of a pint of blood from $50 per pint to $100 per pint after a major disaster dramatically increased the need for blood. While seated separately at computer terminals, participants saw a series of chat room messages either unanimously calling to take advantage of the heightened demand by raising the price, or unanimously calling to maintain the current price. Participants were told they were chatting with their teammates in real time, but these chat messages were actually standardized responses composed by the researchers.
The chat conversation revealed that high-ranking individuals were not apt to use their power to quash unethical behavior.
Instead, the results showed that “high-ranking individuals engaged in less principled dissent in part because they identified with the group more than those with low-rank.” Interestingly, leaders simply didn’t see an ethical issue; high-ranking individuals were less likely to perceive their group’s behavior as unethical relative to lower ranking group members.
“Consequently, although high-ranking individuals are better enabled psychologically and politically to engage in principled dissent, they may fail to do so because they see no problem with their organization’s unethical practices in the first place,” the researchers conclude.
Reference
Kennedy, J. A., & Anderson, C. (2017). Hierarchical rank and principled dissent: How holding higher rank suppresses objection to unethical practices. Organizational Behavior and Human Decision Processes, 139, 30–49. doi: 10.1016/j.obhdp.2017.01.002
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Reprint: R1104C
Companies are spending a great deal of time and money to install codes of ethics, ethics training, compliance programs, and in-house watchdogs. If these efforts worked, the money would be well spent. But unethical behavior appears to be on the rise. The authors observe that even the best-intentioned executives may be unaware of their own or their employees’ unethical behavior. Drawing from extensive research on cognitive biases, they offer five reasons for this blindness and suggest what to do about them.
Ill-conceived goals may actually encourage negative behavior. Brainstorm unintended consequences when devising your targets.
Motivated blindness makes us overlook unethical behavior when remaining ignorant would benefit us. Root out conflicts of interest.
Indirect blindness softens our assessment of unethical behavior when it’s carried out by third parties. Take ownership of the implications when you outsource work.
The slippery slope mutes our awareness when unethical behavior develops gradually. Be alert for even trivial infractions and investigate them immediately.
Overvaluing outcomes may lead us to give a pass to unethical behavior. Examine good outcomes to ensure they’re not driven by unethical tactics.
Companies have poured time and money into ethics training and compliance programs, but unethical behavior in business is nevertheless widespread. That’s because cognitive biases and organizational systems blind managers to unethical behavior, whether their own or that of others.
All these serve to derail even the best-intentioned managers:
- Goals that reward unethical behavior
- Conflicts of interest that motivate people to ignore bad behavior when they have something to lose by recognizing it
- A tendency to overlook dirty work that’s been outsourced to others
- An inability to notice when behavior deteriorates gradually
- A tendency to overlook unethical decisions when the outcome is good
Surveillance and sanctioning systems won’t work by themselves to improve the ethics of your organization. You must be aware of these biases and incentives and carefully consider the ethical implications of every decision.
The vast majority of managers mean to run ethical organizations, yet corporate corruption is widespread. Part of the problem, of course, is that some leaders are out-and-out crooks, and they direct the malfeasance from the top. But that is rare. Much more often, we believe, employees bend or break ethics rules because those in charge are blind to unethical behavior and may even unknowingly encourage it.
A version of this article appeared in the April 2011 issue of Harvard Business Review.