By Urs Müller and Ulf Schäfer
This article presents some of the most influential drivers of unethical behaviour in business and suggests counter-strategies. Reviewing the literature from relevant disciplines, the authors draw the attention to twelve factors that frequently lead to moral failures of normal people in reputable organisations. The article concludes with questions for managerial reflection to reduce the probability of ethical misconduct.
Volkswagen’s use of fraudulent software for diesel engines led to a massive outcry about immoral corporate behaviour – and will cost the company many billions of euros. This is just one of many recent cases, with others such as banks being caught manipulating Libor and firms from different industries and regions getting caught in corrupt practices or establishing cartels.
Why do reputable companies that are led by decent managers and that employ ordinary people end up in ethical disasters that threaten the existence of the entire organisation while other firms seem to be less exposed to such risks?
2,500 years of moral philosophy and more than 50 years of moral psychology seem irrelevant, as executives from around the globe are still frequently caught off-guard by serious ethical transgressions within their organisations.
The limited power of science or research is exemplified by the fact that researchers from different academic disciplines, e.g., ethics, (social) psychology, and behavioural economics, have discovered a plethora of possible aspects that drive ‘normal’ individuals and organisations off-track. How could managers possibly monitor this enormous body of literature and identify the truly relevant aspects?
We propose that managers should pay close attention to drivers that are particularly effective in derailing the moral compass. We have extensively studied the relevant literature from different academic fields, carefully examined several of the latest corporate scandals, and asked hundreds of managers to describe decisions with ethical aspects. Through these conversations and frequent interactions with practitioners, we have condensed a list of twelve drivers that every manager should know in order to significantly reduce the probability of ending in moral failure: “The Dirty Dozen”1.
These drivers lead to problems at three stages of ethical decision making and acting:
Stage 1. Moral awareness: People fail to see that there are any ethical issues
Stage 2. Moral judgment: People come to moral judgements that are indefensible from an independent perspective
Stage 3. Moral action: People ignore to translate their own ethical judgment into moral action
These three stages are logically separated, but may not be sequential as they do not represent a psychological process. Awareness, judgment, and action often occur simultaneously. At times, the process might be the other way around. The separation of the stages helps us to differentiate three important elements of immoral behaviour: not knowing, not wanting, and not doing.
The Dirty Dozen have self-amplifying long term-effects that can lead individuals, groups, and organisations into a downward spiral: After rationalising unethical behaviours applying the Dirty Dozen, people are increasingly less attentive for the detection of ethical concerns (moral blindness) and will find it ever easier to derive at unethical judgement (moral dulling). Accordingly, managers need to pay special attention that the Dirty Dozen do not turn into habits.
The Dirty Dozen can (simultaneously) operate at three different levels of relevance: the individual level, the group level, and the organisational level.
The Dirty Dozen
Framing as business. Business is often understood as amoral, as an autonomous and value-free domain in which everything seems allowed that is not illegal, because it contributes to an overall good through market forces. Business is thought of as a field in which market norms rule, where firms compete for scarce resources and profit, and where according to liberal or libertarian ideology “survival of the fittest” has normative value, ensuring liberties and creating the most wealth for society. Or, quote Milton Friedman, the “social responsibility of business is to increase its profits”. When people apply a business frame to an issue, they can liberate themselves from moral standards, and they can effectively fade out the ethical dimensions of a decision: “Nothing personal, just business!”
Assuming to be invisible. Plato describes the mythical “ring of Gyges” that makes its bearer invisible. Would such a ring make its bearer more unethical? Moral psychology provides us with a clear answer: When people consider themselves invisible, when they believe they cannot be caught and their reputation cannot suffer, they are more prone to distance themselves from the moral standards that they uphold as long as others are around. Studies show that unethical behaviour increases as participants in experiments are assured or made to believe that their actions are undetectable. In contrast, when primed with being watched, e.g. via wall posters displaying human eyes, people refrain from unethical behaviour. Morality is a social enterprise; without others there would be no need for morality guiding and prescribing how people behave towards each other. In the absence of others, the motivation to adhere to moral norms diminishes. The question of detectability provides us with a powerful test: Would people choose the same course of action if they knew that their actions would become public?
Relying on passivity. People judge acts of commission (people are actively involved in unethical behaviour) more harshly than acts of omission (people passively permitting unethical outcomes to happen). When people rely on passivity, they effectively minimise their own agency. Thus, people become bystanders, accepting the status quo, and even looking away when they see others engaging in unethical behaviour.
Fulfilling role expectations. People take on different roles. Roles are sets of norms that define how people in a given social position are expected to behave. In organisations, people are provided with explicit role descriptions, and they implicitly add to these based on their perceptions and assumptions about what others expect. People will behave differently when they are asked to fill the roles of judge, prosecutor, or defender. And in business, people are likely to apply different norms and show different behaviours depending on whether they are responsible for sales, accounting, or compliance. Even the same individual, fulfilling multiple roles, might come to different, conflicting moral assessments, e.g., as a manager of a tobacco-firm and also a parent when faced with the question of marketing the firm’s products to adolescents. Roles provide clear perspectives on ethical issues because they help us to (over-)simplify ethically relevant contexts. Roles provide people with moral leeway by allowing them to distance themselves from moral agency and personal moral standards: “I’m just doing my job” – “this is what I am paid to do”.
Chasing goals and incentives. Setting goals and measuring goal achievement to manage individual and collective performance has become standard. Research suggests that goal setting works, but may have negative effects that lead to unethical behaviour. Goals provide focal perspectives which assist in blinding out ethical considerations. Goals have been shown to promote risk taking, reduce cooperation, and increase stress which together deplete self-regulatory forces. People have a strong psychological need for acceptance through praise and recognition. To fulfill this need, people comprise their moral standards. Goals also promote the logic that “ends justify means”. And goals provide people with another possibility of distancing themselves from moral agency, shifting responsibility for their actions to goal-setters or goals directly. Another feature of modern goal-based performance management is its close link with monetary incentives. Money has the power to transform debates, social practices, and institutions by providing market norms that “crowd out” social norms.
Using motivated moral reasoning. Questions of morality typically provide sufficient ambiguity to allow for flexibility in argumentation. People may not be able to label their reasoning according to philosophical lingo, but they are very well trained to argue their case by borrowing arguments from opposing schools of thought. When it serves to support their side of the argument, people may emphasise that “it is a matter of principle” (deontological reasoning), only to vehemently state in the next debate that consequences justify “ethically difficult” actions (utilitarian reasoning). To support their case, people flexibly and eclectically select and present only those arguments that confirm their assessment. And people can be very creative in constructing moral justifications that allow them to view themselves as doing the right thing. When people engage in moral reasoning, they are motivated to provide arguments that support their side only. They are no longer judges trying to objectively assess both sides.
Mis-constructing consequences. In order to make decisions and actions appear more ethical or less unethical, people are psychologically motivated to re-construct the consequences. People minimise or even fully deny damage and harm to victims. The outcome is “not so bad” or “normal”. And as many consequences will materialise with delay or probability only, people are able to downplay consequences further. Misconstruction of consequences may serve to reject claims by affected parties; its prime purpose though is to convince ourselves that what we did was okay.
Diffusing responsibility. People are able to diminish guilt and remorse resulting from unethical action by clearing away their agency. One most effective way to do this is to diffuse responsibility. Whenever others are involved in ethical transgressions, people can effectively shift blame to them. The division of labour, found in all modern organisations, offers the opportunity to diffuse responsibility, suggesting that one’s individual contribution is minor and in itself insufficient, and thus does not provide a basis for being charged with ethical misconduct. Large and bureaucratic organisations provide an ideal environment for diffusing responsibility. Structures and processes provide anonymity and complexity that allow people to fade away personal responsibility.
Blaming the victim. An effective strategy to diminish guilt and remorse from unethical behaviour is to put the blame on the victims. Affected parties are constructed as accomplices or even the ones really culpable: “Customers could have known if they had only wanted”, or “they should have better informed themselves”. Another mechanism supporting the strategy is to use derogative language when referring to victims. When people shift blame from themselves to the victims, they may not only effectively liberate themselves from moral blame, but they may also construct their doing as serving righteous motives, giving adversaries what they deserve.
Giving yourself moral license. Moral (self-) licensing describes a subconscious phenomenon that allows people to disengage from their moral standards when they have high confidence in their self-concept as a moral person. Studies demonstrate that people asked to remember episodes of their life where they have shown ethically principled behaviour are subsequently more prone to engage in unethical behaviour. Seeing themselves as good persons in some domain of life, gives people license to refrain from strict adherence to ethical standards in other domains. On an organisational level, self-licensing may find its equivalent in CSR activities, when a company reassures employees, management, and the public of its ethicality by supporting or sponsoring often unrelated worthy causes.
Identifying with groups and organisations. Humans are social beings and have a strong need to belong to groups, including organisations. Group and organisational identification, however, have the potential to lead people to behave unethically when acting “for the sake of the group or organisation”. Such pro-group and pro-organisational unethical behaviour reflects peoples’ perception of explicit or implicit expectations from the group or organisation. It also offers an opportunity to signal commitment and loyalty to the group and the organisation. How strong (perceived or real) social pressures are, is long known. The famous experiments by Salomon Ash demonstrated that people will commit themselves to outright nonsense if they perceive the threat of exclusion from the group. The fear of isolation from the group can sufficiently motivate people to engage in behaviour that conflicts strongly with their internalised moral standards.
Obeying to authority and hierarchy. Authority and hierarchy can be found in social institutions in all cultures and domains of life, including business organisations. And obeying to (legitimate) authorities is part of our cultural norms: People do, what authorities request them to do – even if this involves ethical transgressions. When people engage in unethical behaviour that they associate with authorities’ demands, they find it easy to displace agency and responsibility for their behaviour and its outcomes. Because they are not the true agent of their doing, they do not subject themselves to self-condemning reactions. Two phenomena related to this driver of unethical behaviour, especially in the context of corporate scandals, are noteworthy: First, people charged with unethical behaviour in organisations often are not able to exculpate themselves by presenting explicit orders but instead refer to implicit demands from their authorities. Second, authorities deny having ordered or requested unethical acts. Typically, demands of authorities are framed as requests to solve a problem, simultaneously expressing lack of interest in knowing how the goals are achieved.
The Dirty Dozen are vicious mechanisms that derail individuals, groups, and organisations morally. What can managers do to confine them? Decision biases can only be slightly reduced through awareness. More importantly, executives need to change their managerial behaviour and the organisational design to actively counter the Dirty Dozen:
Managers should critically reflect about their own vulnerability regarding the Dirty Dozen: Every once in a while they should have a look at the list and ask themselves: “Am I susceptible to the Dirty Dozen? (Yes!) How does it work in my case?”
Managers should educate their teams and peers about the Dirty Dozen: They should share and discuss drivers of immoral behaviour with their teams and within their professional and private networks.
Managers should rigorously reflect about their own contribution to potential problems: To facilitate this reflection process, we have compiled a table of the Dirty Dozen, and suggested questions that help to critically assess leadership behaviour that increases or decreases the probability of moral failures. We encourage you to revisit this list occasionally and to eliminate potential risks as soon as they appear.
Bandura, Albert (2016). Moral Disengagement: How Good People Can Do Harm and Feel Good About Themselves. New York, NY: Worth Publishers.
Kish-Gephart, Jennifer, David A. Harrison and Linda Klebe Treviño (2010). “Bad Apples, Bad Cases, and Bad Barrels: Meta-Analytic Evidence About Sources of Unethical Decisions at Work.” Journal of Applied Psychology. Vol. 95 (2010), No. 1, 1-31.
Moore, Celia and Francesca Gino (2013). “Ethically Adrift: How Others Pull Our Moral Compass From True North, and How We Can Fix It.” Research in Organizational Behavior. Vol 33 (2013), 53-77.
Umphress, Elizabeth E. and John B. Bingham (2011). “When Employees Do Bad Things For Good Reasons: Examining Unethical Pro-Organizational Behaviors.” Organization Science. Vol. 22 (2011), No. 3, 621-640.
About the Authors
Urs Müller ([email protected]) is a lecturer in business ethics at ESMT Berlin and the program director of ESMT’s flagship open enrollment program “Executive Transition Program”. He is an award-winning and bestselling author of numerous case studies in the field of business ethics and currently researches about the effect of creativity on moral decision making.
Ulf Schäfer is a program director at ESMT Berlin. He teaches leadership and change in ESMT’s executive education programs and is currently researching moral disengagement in organisations.
1. We do not claim that the Dirty Dozen is either without overlaps (mutually exclusive) or complete (collectively exhaustive). Several of the drivers will frequently be simultaneously at play and mutually reinforcing. And there are many other factors that lead to ethical transgressions, but we have picked those twelve drivers that, according to our observation, can be particularly relevant when it comes to understanding how ‘good’ people in reputable organisations end up doing bad things.