Why do managers behave un-ethically?

ethics and moneyThe 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 behavior, such as the finding that people often cheat even for trivial sums of money and that many cheating behaviors 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.

Adi Gaskell is Head of Online at the Process Excellence Network

Comments

We need to be a bit careful not to confuse 'breaking the rules' with behaving unethically. Much of the recent unethical behaviour was within the rules and, indeed, justified on that basis.

Unethical behaviour is about putting oneself, first regardless of the impact on anyone else.Which includes twisting rules to one's own benefit. Remember the MPs expenses scandal? That was largely 'within the rules' as laid down.

You can sometimes behave ethically and break the rules - for example whistleblowers, resistance fighters during wars etc.

Having got that off my chest, I have to say that this report is very disturbing.

I can't help wondering if people will be more willing to behave unethically if the they don't have to face directly the people they impact. Or if they are working in a highly competitive environment, which makes them see everyone as an opponent to be beaten.What do you think? Has society got too large and diverse for ethics?

I think some people will cheat, behave unethically or break the rules if they believe they will never have to face the consequences of their actions, or inaction.  Others behave this way because they believe the "rules don't apply to me".  I regularly witness senior managers/directors creating mandatory rules for staff and promptly ignoring them as they go about their own activities - nothing severe or major however not a a great message for staff. 

Expenses scandals, interest rate fixing, acceptance of bribes and many other examples does create the impression of an endemic trait in society with diminishing examples of good ethical behaviour.  Or is it that, like most news stories, sensational unethical behaviour or rule breaking gets everyone talking but the majority of us who try to follow the rules and behave as ethically and morally correct as possible doesn't really interest anyone. 

Regardless of the size of society and its diversity I think that the majority of people will behave correctly - perhaps that is what the cheats and liars rely on?

I remember being told on a training course many years ago that 5% of people will always be scrupulously honest, 5% will always be completely dishonest - and the remaining 90% will be as honest as the controls force them to be...

Trouble is, one little iddybiddy dishonest action leads to another slightly less honest one!

How many people can say, honestly, they haven't taken an office pen or pencil home? And then, maybe a pad or a disk............the odd personal photocopy...........

The truth is that we are all a bit dishonest, but most of us have a fairly similar moral compass that stops us being excessively so. However, when we're part of a grouping/culture where the compass is skewed relative to the majority outside of that group, we will appear honest to ourselves and dishonest to everyone else. Anyone heard the protests of 'but everyone does it!'

I think Jacqui is right about the inate moral compass the majority of us have and research on how group behaviour can very quickly, and disturbingly, skew that compass is fairly evident and outside of the controlled research it is very evident in normal working and social environments.

Work environments are particulalry subject to this type of behaviour...all of the examples Jacqui uses plus...expenses claims, MP's or not, excessive bonus structures while redundancies are underway, rate fixing for personal and corporate gain, procurement scandals and more.  Is it getting worse?  I think, unfortunatley it's always been around and always will be.  It's the scale that is increasing and our 24/7/365 media that makes it appear more prevalent.

Adrian, thank you for highlighting this issue to once again. This issue of ethical behavior has become a serious issue in professional circle. I am concern about professionals because ethic earnestly underpins the every existent of any profession. Be it Accountant, Medicine, Engineering, Teaching, Nursing, name it, integrity and honesty is the pillar.

What I see as key in this derailment in professional misconduct is the unfriendly role of employers to consistently set unrealistic targets for employees. This drives them crazy and in the process tries to satisfy employers through falsification of data. Employers need to be careful in this regard.

As a result, employers should emphasize institutional empowerment within the organization rather than building individual who will in most case celebrate targets achievement at any cost carving out customers and shareholders satisfaction.

Worst still, most leadership position in key organization all over the world have been dominated by youth with inadequate experience thereby making them vulnerable to weak decision that underpins frequent collapse of standard ethical behavior in major organization. We need to check this trend because there is positive correlation between age, experience and level of integrity and honesty.

Well, breach of ethics is dismissal offence.

Edemivwaye Anthony wrote:

Adrian, thank you for highlighting this issue to once again. This issue of ethical behavior has become a serious issue in professional circle. I am concern about professionals because ethic earnestly underpins the every existent of any profession. Be it Accountant, Medicine, Engineering, Teaching, Nursing, name it, integrity and honesty is the pillar.

What I see as key in this derailment in professional misconduct is the unfriendly role of employers to consistently set unrealistic targets for employees. This drives them crazy and in the process tries to satisfy employers through falsification of data. Employers need to be careful in this regard.

As a result, employers should emphasize institutional empowerment within the organization rather than building individual who will in most case celebrate targets achievement at any cost carving out customers and shareholders satisfaction.

Worst still, most leadership position in key organization all over the world have been dominated by youth with inadequate experience thereby making them vulnerable to weak decision that underpins frequent collapse of standard ethical behavior in major organization. We need to check this trend because there is positive correlation between age, experience and level of integrity and honesty.

Well, breach of ethics is dismissal offence.