If you believe ethical catastrophes cannot happen to you and your company, you've already started building a breeding ground for unethical behavior.

According to organizational behavior experts, the "bad apple" theory is wrong. Most people are good, have a willingness to be honest, and are more or less moral day-to-day. Unethical behavior, they argue, is situational.

The experts--Francesca Gino, a business administration professor at Harvard Business School and author; Lisa Ordóñez, a fellow at the University of Arizona's Eller College of Management; and David Welsh, a organizational behavior professor at the University of Washington's Michael G. Foster School of Business, write in the Harvard Business Review about their studies on the provenance of unethical behavior in businesses:

"Unfortunately, the assumption that unethical workplace behavior is the product of a few bad apples has blinded many organizations to the fact that we all can be negatively influenced by situational forces, even when we care a great deal about honesty," the trio writes.

While citing high-profile scammers, grifters, and swindlers like Bernard Madoff, the executives at Enron, and the editors at News of the World, Gino, Ordóñez, and Welsh say the behavior changes bit by bit until a few years down the line you find yourself on the dark side.

"Few of us will ever descend as deeply into crime as Bernard Madoff, yet we all are vulnerable to the same slippery slope. We are likely to begin with small indiscretions such as taking home office supplies, exaggerating mileage statements, or miscategorizing a personal meal in a restaurant as business-related," they write in HBR.

The bad news is that unethical behavior is pervasive throughout U.S. corporate culture. In a study by ethics and compliance consultancy LRN, nearly three-quarters of workers said they encountered ethical lapses or illegal behavior in the workplace. One in ten of the respondents said the unethical behavior at their company is enough to "cause a scandal or business disruption."

As a leader, those numbers should be sobering. To help you prevent yourself and your employees from acting unethically, check out the reasons why employees break bad and how to stop it.

The gradual descent

Just like many other illicit activities--from drug use to crime--people do not start out with big, blatant transgressions. "People who are faced with growing opportunities to behave unethically are much more likely to rationalize [unethical] conduct than those who are presented with an abrupt change," Gino, Ordóñez, and Welsh write.

To test this theory, the three conducted a study in which they gave people a series of problem-solving tasks with the opportunity to cheat to a gradually increasing degree. They found that half of their subjects committed a small act of cheating in the first round, while 60 percent cheated bigger during the third and final round to get a greater monetary reward. To test if people are likely to go through abrupt changes in behavior, they had a control group who could not cheat during the first two rounds but had an opportunity to cheat during the last. Only 30 percent of the abrupt change group cheated.

"This suggests that employees might look at their slightly exaggerated mileage statements as 'rounding up.' But rationalizing minor indiscretions inevitably influences how they view progressively worse behaviors and may lead them to commit bigger offenses that they initially would not have considered," the trio says.

The gradual decline is ignored

Like Madoff, who started out misreporting to cover small losses and grew his Ponzi scheme over 15 years to $65 billion, most people go through a gradual moral deterioration, Gino, Ordóñez, and Welsh found. Similarly, they discovered, most people "overlook the unethical behavior of others when it deteriorates gradually over time." Gino conducted a study where her team made people act as auditors for a simulated auditing task. They found that the overseers, whose job was to report misdeeds, were less likely to report people who gradually inflated their numbers over time compared to people who made abrupt inflations--"even though the level of inflation was eventually the same."

The ethical nudge works

To combat unethical behavior taking root inside your company, you need to manage the situations into which you put yourself and employees. Gino conducted a study at a major U.S. insurance company where she had customers sign the statement "I promise that the information I am providing is true" before reporting their annual mileage. When the customers signed the statement, which was located at the top of the page, they were "significantly more honest in their reporting compared to those who reported first and signed at the bottom of the page." The team says "nudges," or gentle ethical reminders, work in lowering the instances of unethical behavior. Ordóñez and Welsh found that exposing employees to subconscious ethical content increased the employees' "moral awareness and prompted more ethical decisions," even if they were left unmonitored and were given high performance goals that had led others to cheat before.

 

Published on: Sep 5, 2014