Why Is There So Much Unethical Behavior In Organizations?

The 2013 National Business Ethics Survey (NBES) showed that even though most misconduct metrics are down, they are still pretty alarming. 41% of participants of the survey reported that they observed misconduct, 63% reported what they saw, and 21% of those who reported the misconduct said they faced some form of retribution. What is equally worrisome is to consider who commits the misconduct. According to the report, 24% of infractions are committed by senior leaders, 19% by middle managers, 17% by first-line supervisors, and 40% by non-management employees or outsiders. So in 60% of cases, the culprit is someone from the management team.

The 2019 Global Business Ethics Survey (GBES) shows clearly that around the globe 60% or more of employees agreed that their direct supervisor would report observed misconduct, colleagues would report observed misconduct, their organizations would investigate, and if substantiated, their organizations would provide discipline action in response to the misconduct. That also means almost 40% disagreed. That is a significant number of employees who are questioning the ethics of the leadership in their company.

So why is it that so many people seem to be acting quite a bit unethically at work? And why is it that many people don’t care or are afraid to report such behavior? Ron Carucci talks about a couple of ways organizations create an environment where even good people go bad.

Lack of psychological safety – it is not what you say but what you do. If employees feel that it is not safe to speak up and worry about retaliation or just simple ridicule, they will be quiet. The second problem is that people may feel their complaints will not be heard or acted upon. What’s the point of reporting misconduct when nothing will change, no upside, and there is a danger of retaliation and significant downside?

Unrealistic goals – having ambitious goals is nice, but they still need to be achievable. The moment management expects the employees to achieve goals or targets that are far from realistic, it automatically leads to cutting corners and pushes employees towards unethical ways to achieve those goals. It will also lead to lies about the progress, hiding of issues, and even subverting offers of others, so there is someone to blame.

Sense of unfairness – the moment the employee feels that he or she is being treated unfairly as compared to others, they are more likely to act unethically. For example, if I believe that I’m underpaid while the person next to me who does nothing reaps all the benefits, I may decide to start stealing the office supplies to get what I deserve. And let’s face it, we all believe that we are better than those around us and that we deserve more.

Lack of positive examples – one of the biggest problems that lead to an unethical organization is a lack of examples and stories that illustrate the acceptable and unacceptable behavior. This is more about appearances than actual behavior. Leadership in the company must not only have good intentions but must ensure that their behavior is being interpreted correctly. If the team gets a feeling that even small lies are acceptable, then it can quickly spiral out of control. Hiding the truth from each other in the name of corporate harmony or worry about perceptions is a first step to the land of no ethics.

And it doesn’t stop there. Merete Wedell-Wedellsborg points out three types of psychological dynamics that lead even good people to behave unethically. She calls them omnipotence, cultural numbness, and justified neglect.

Omnipotence – this often applies to senior leaders who have a self-aggrandized sense of entitlement and believe that the rules don’t apply to them. For example, you feel that since you are a manager, you are entitled to more respect or better treatment than other people. It is often brilliant people who feel invincible and infallible. Their ego drives them to feel above others, and they tend to be condescending towards others. The remedy is to acknowledge that everyone has flaws and recognize that deep down, you are just a human as everyone else.

Cultural numbness – this gets in play when even a decent, ethical person adjusts to the rest of the group. Since all the others behave in a certain way, even if unethically, the person wants to fit in and acts the same dishonest way. For example, you chose not to speak up against an insulting joke so that you don’t spoil the fun and destroy the group’s harmony. The longer people stay with one organization, the bigger the chance that their world view will adjust to the culture of the team. Things that would trigger them couple years back become invisible today. They don’t even realize that something they or the team is doing may be seen as unethical.

The remedy is to regularly ask yourself what your core values are and whether what you do during your day isn’t in contradiction to them. Ask yourself when was the last time you stood for something only on the basis that it was the right thing to do. Ask yourself when was the last time you openly disagreed with the rest of the group because the plan or the action violated your values.

Since it is difficult to see this in ourselves, it might be worthwhile to regularly talk to the new employees joining the team and ask them about what they found surprising or unexpected since they joined. Hopefully, they will list some things that you take as normal, but that maybe shouldn’t be taken as given at all.

Justified neglect – this happens when a person understands that what is happening is unethical or morally wrong but chooses not to intervene as there is an immediate reward not to do so. For example, you don’t want to rock the boat and get on bad terms with your boss. It often happens in situations when people find reasons why not to do something as it would bring the wrath of their superiors. Or better yet, people may delegate the decision up to chain with the understanding that the higher it gets, the less likely the order comes back to them to fix the problem.

People often justify small infractions as exceptions or bending the rules in the name of the bigger good. In itself, an exception is fine. The problem is that there is never only one. Once you start with that line of reasoning, it quickly turns into an avalanche of other exceptions and justifications of why not to do the right thing.

To remedy this, you need to be diligent and not allow exceptions when it comes to ethics. Make sure that you personally and everyone on the team is committed to doing the right thing by rewarding ethical behavior and punishing unethical one.

When you think about these dynamics, you may realize that you fall into these traps and, therefore, may act unethically without even realizing it. What can you do about it? Start paying more attention to what you and the people around you are doing and saying. Don’t live on autopilot.

Hierarchy and ethics

Since the surveys I mentioned at the beginning indicated rather disturbing facts about management, let’s look at why managers are more likely to act unethically than other employees. Jessica A. Kennedy and Cameron Anderson studied the relationship between hierarchical rank and principled dissent. What they found out, perhaps not surprisingly, is that the higher the position in the organization you hold, the less likely you are to show principled dissent. Because you are more identified with the organization you lead, you take more personally any attacks on the organization, and you also are more likely to see the practices of your organization as ethical. So even though the expectation is that leaders will promote ethical behavior and will stop any unethical or morally objectionable activities, it is often people in the lower ranks who have to speak up as the leader doesn’t see it. Leaders’ moral attentiveness takes a hit with each promotion.

Kimberly Nei and Darin Nei collected personality data and supervisor ratings of ethical behavior, like integrity and accountability, on 3000 leaders from multiple large multinational organizations. They then examined the relationship between personality and ethical leadership, looking at a variety of situations. What they found is that leaders who are more conscientious, professional, and rule-following and less attention-seeking receive higher ratings of integrity and accountability. On the other hand, those with excitable, leisurely, mischievous, or imaginative personalities or those valuing aesthetics, hedonism, and recognition were seen as more likely to act unethically.

If you are in a managerial role, there are few recommendations the researchers have if you are trying to build an ethical organization.

Be humble – humility beats charisma when you want to be seen as more ethical. Even though people are generally attracted to charismatic individuals, too much charisma can lead to self-absorption, feeling that you can’t do wrong, and do what is good for you rather than what is good for the organization.

Be dependable – visibility and charisma can get you noticed and even promoted faster. But being reliable and responsible is much more critical for the team. The easiest way to lose the respect of those you are supposed to lead is to ignore them, break your promises, and act irresponsibly. By being prudent, acting with integrity, and follow the rules and principles of the organization, you will be seen trustworthy.

Be modest – modesty and temperance are essential. You want to be seen as a professional who is responsible, knows his or her job, and is clearly in charge. Any excessive behavior, be it inappropriate humor or anger, is working against you. It is fine to laugh with the team and to show emotions, but you shouldn’t become a clown or drama queen. You may want to feel like being one of the guys or girls, but ultimately, everyone needs to feel that you are a professional who is there for the benefit of the rest of the group. You are not one of them anymore, and you better remember it.

Be aware – when you move to a new role, it pays to increase awareness of what’s going on around you. Observe and listen. Be mindful of your interactions with others. And keep it up. There is always a danger that once you settle in your new role, it becomes a routine, and you stop paying attention. It can then lead to a higher chance of you not recognizing unethical behavior or even being the culprit yourself.

Be assertive – when you see unethical behavior, don’t wait for someone else to speak up but do it yourself. Lead by example, be assertive and proactive and help others see that what they are doing is not acceptable. Often, they don’t realize that what they do might be ethically questionable, remember cultural numbness and justified neglect?

Putting it all together

If you want to act ethically, the cards are stacked against you. Nature, human psychology, and organizational design are not making it particularly easy for you. It is often those who bend the rules and cut corners who reap the immediate benefit. However, that still shouldn’t discourage you from acting ethically and with integrity.

Be humble, dependable, modest, and aware of the environment. Have the courage to speak up when needed. Have the perseverance and dedication to work hard and don’t cut corners. Treat others with respect and fairly. Step up and help to create an ethical environment where you can be proud of working and living in.


What are your thoughts on the topic? What are the reason people and companies act unethically? What place does ethics have in the post-factual world of fake news? Do you see yourself as an ethical person?

Photo: janeb13 / Pixabay.com

Categories: Leadership, Life

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