Getting into Ethical Trouble

Temptation amid poor controls: Nobody’s “minding the store,” and so: It’s easy to slip that cash sale into your pocket without ringing it up. It’s easy to give your friends the employee discount. It’s easy to pocket small items from inventory. Has anyone had an experience like this?

Invisibility & lack of support: People find it difficult or impossible to speak up about workplace ethics issues when: They are isolated in their workplaces, when no one notices or appreciates them, When they are afraid and don’t know how to get help. Has anyone had an experience like this?

Conflicts of interest: auditors should not be auditing the management information systems they created; real estate agents should not be working for both buyer and seller; stockbrokers should not be torn between serving their clients’ interests and earning commissions. Has anyone had an experience like this?

Personal conflicts among firm employees: People who don’t get along, or who hate each other, can: Hide or misrepresent information Carry tales to the boss Spread rumors among co-workers Stall or refuse to cooperate on teams Has anyone had an experience like this?

Harmful externalities When companies offload some of the costs of production, people can be: poisoned Injured or killed Made ill Deprived of their livelihood Deprived of their quality of life Has anyone had an experience like this?

Stakeholder value clashes: Stakeholders typically want certain things from firms. But what if... Shareholders’ interests can only be met if the company moves off-shore, or if current workers take a big pay cut? Communities’ need for healthy air is achievable only at the cost of jobs? Has anyone had an experience like this?

Conflict of individual and organizational values: What would you do if: Your boss demanded that you fudge some numbers or look for another job? Your company sold the “morning after pill” but you were anti-abortion? You had to check out pork products, but you were a devout Muslim or Jew? Has anyone had an experience like this?

Lack of ethics language What would you do if: You had to perform a cost-benefit analysis that would be the sole decision factor in installing pollution controls or not? (must also think of harms, and consequences to stakeholders) You were told to lie to customers to get the sale? (must think of personal integrity and society’s need for honesty & trust) Has anyone had an experience like this?

Lack of incentives plus excess pressure: Your compensation is tied exclusively to company profitability. Your boss says, “I don’t care how – just make your numbers.” Has anyone had an experience like this?

Inexperience Your boss comes in, shuts the door, and says, “OK, now I’m gonna show you how it’s done in the real world.” You reach the customs agent in Banglanesia, who wants a $10,000 payment to release your shipment. You’d like to report an ethics violation, but you don’t know how. Has anyone had an experience like this?

Greed Greed can drive people to Look for loopholes Exploit potential conflicts of interest Cheat, lie, and steal Commit crimes even in the best of companies Does anyone have experience with greedy co-workers?

Psychological defense mechanisms: The human animal has many ways of defending itself against unwelcome information: Denial Rationalization La-la-la I-can’t-hear-you Deliberate twisting or misrepresentation of facts Feelings of entitlement Has anyone had experience with defense mechanisms?

Rationales for getting into ethical trouble: 5. Greed 4. It’s just business 3. Fear 2. Nobody told me not to 1. Oops!

Rule-Based Early Warning Signs: Could someone be hurt in this situation? Is anyone being coerced or threatened? Is anyone being manipulated, deceived, or lied to? Is there anything illegal going on?

“Smell” Tests Is someone denying you access to important information? Are you (or is someone else) denying an obvious meaning or interpretation for information you do have? Is someone else telling you there's a problem? Is someone telling you it's not your problem, when you believe that it is? Does the situation just feel wrong?

“Light-of-Day” Tests Would you readily tell your spouse or parents about the situation and your involvement in it? Would you mind if the full story appeared in the Wall Street Journal? What if the full story was in your hometown newspaper?

Stay Out of Trouble by Using: Awareness Fact-gathering Reason Principles