Why do managers behave un-ethically?

Written by Adrian Gaskell - 11 July 2012

The ethical behaviour of our managers has been in the spotlight in the past few weeks as the drama at Barclays has unfolded.  That the behaviour of managers at the bank was not at all ethical seems hard to dispute, but if we want managers to start behaving better an understanding of why they break the rules is critical.

A new study conducted by the University of Washington, London Business School, Wharton and Harvard Business School sets out to shed some light on the matter.

The conventional wisdom is that whilst people may cheat and behave poorly, the guilt associated with their actions makes any benefits they may have gained purely material, and not something that delivers them any sense of enjoyment.

The report suggests however that this is far from the case.  Whilst most participants in the study believed they would feel bad before they had behaved badly, when asked again afterwards, nearly all actually felt pretty good.  The so called "cheater's high" is far greater than any sense of guilt or shame associated with breaking the rules and so the trade off is deemed worthwhile.  What's more, the high was found not to correlate with the amount of money involved.  That suggests people get an emotional benefit from cheating independent of the amount of money they make.

Also of direct relevance to the Barclays case is that this high was also evident when someone else was doing the cheating for them.  The research found that when another person breaks the rules to your benefit, hardly any of us are likely to confess and report the rule breakers.

Worryingly though, it gets worse.  A final study wanted to test whether people really believed the fake results gained by cheating.  Participants were asked to rate how reliable their ill-gotten results were and at the same time how smart they felt due to these results.  The researchers found that not only did cheaters feel better than the honest folks, but they also felt smarter.  This was the case even when they knew that people were onto their cheating!

“Our documented pattern of results helps to explain otherwise puzzling unethical behaviour, such as the finding that people often cheat even for trivial sums of money and that many cheating behaviours are fairly insensitive to the economic costs and benefits of cheating,” the researchers conclude.

With research like this, it's not surprising that many of our managers stray from the ethical path.

Adrian Gaskell

Adrian Gaskell

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