The popular press often reports about ethical lapses in business by focusing on employees and managers who are “loose cannons,” deviating from organizational rules and norms to produce bad consequences for society and business. However, sometimes unethical behavior is not just ignored by organizational leaders but actively encouraged by the company’s motivational structures. In fact, one survey found that 56% of U.S. workers experience pressure from their superiors to behave in an unethical manner. Craig E. Johnson sums up the problem, noting, “Examine nearly any corporate scandal – AIG Insurance, Arthur Andersen, Enron, Health South, Sotheby’s Auction House, Fannie Mae, Hollinger International, Marsh & McLennan, Quest – and you’ll find leaders who engaged in immoral behavior and encouraged their followers to do the same.”
How do managers create pressure to behave unethically? Management scholar Ben Tepper notes that structures in place in organizations often encourage unethical behavior. Incentives might go to individuals who maximize sales without regard to whether they achieved these ends honestly. Lawyers often are paid in such a way that tacitly encourages them to overbill their clients. Or perhaps rewards might be offered for producing products at low cost without considering the social and environmental impacts of production decisions. In all these cases, the reward systems in place in organizations can serve to motivate unethical behavior.
So what can you do as a manager or employee to confront these powerful motivations to behave unethically? First and foremost, decision makers should consider the unintended consequences of reward systems. Second, top management should foster an organizational culture of honesty and fair dealing and disseminate it through all levels of the organizational hierarchy. Finally, organizations might even consider finding ways to explicitly reward those employees who engage in “above and beyond” instances of ethical behavior.
Source: B. J. Tepper, “When Managers Pressure Employees to Behave Badly: Toward a Comprehensive Response,” Business Horizons 53, No. 6 (2010), pp. 591-598; C.E. Johnson, Meeting the Ethical Challenges of Leadership: Casting Light or Shadow (3rd ed.), Sage, San Francisco (2009)..