Article

Creating Conscious Capitalists

Business Schools and Companies Work to Stem the Tide of Unethical Behavior

By Peri Kinder | Illustrated by Pat Bagley

September 9, 2013

There are several dangerous situations that could foster unethical behavior. For instance, when a person starts to cut corners for ease or convenience, if a person refuses to delegate in order to control the situation, if an employee feels they deserve more reward or recognition, or if he or she is in a position with less supervision and a high level of trust.

For example, an employee at Zions was a star in her department. She had been there for several years and felt she had earned a promotional pay increase. When she didn’t receive what she thought she deserved, she gave herself a small loan to get the additional income. She had every intention of paying it back, but soon she added to the loan to take her friends to lunch, or buy a new outfit, or take a weekend trip. She lowered the interest rate on her loan to keep the payments small, but eventually she borrowed so much, she couldn’t even make the interest payment.

“She didn’t consider herself dishonest because she was going to pay it back. But she incrementally increased the amount until it became unaffordable,” Myers says. “It got to the point where she couldn’t buck the system anymore. I was surprised by her response when she was finally caught. She looked up at me and said, ‘Thank you. It had gotten to the point where I knew I had to stop and I couldn’t do it. You’re the first person who’s made me stop.’”

Being fired was the least painful part of the process for this employee. She met with federal authorities, lost her personal savings, her home, faced prison time and destroyed her reputation—and it all started with one small dishonest act.

Zions encourages its employees to speak up about unethical behavior through a chain of command. Additionally, technology now allows employees to speak up anonymously. By using a third party, the company can ask follow-up questions and have a conversation without having to divulge the identity of the employee. In many cases, employees don’t realize it’s their responsibility to speak up, especially when it involves their supervisor.

The company also highlights people doing things right and encourages employees to double check their behavior. If they think a situation might be unethical, they are asked to talk to a person in management.

“This behavior is not necessarily increasing, but it’s constant, ongoing,” Myers says.

He often gets told, “I’d never do your job.” But whenever he has to make tough decisions, he remembers the woman thanking him for stepping in to stop her downward spiral.

Knowledge is Power

So how can business students prepare for situations where ethics might be compromised? Certainly all business students aren’t scheming individuals, looking for the perfect opportunity to defraud or deceive.

Kristina A. Diekmann, a Bill Daniels professor of business ethics in the department of management at the University of Utah, has performed extensive research to investigate how individuals react in organizations, focusing on fairness, negotiation, social perception and ethics.

She says when there’s an emphasis on economics, people fall prey to making unethical decisions—sometimes unintentionally. The process of business creates a focus on rational, analytical, unemotional decision-making, and taking emotions or social elements out of the decision allows for maximizing self-interest. 

Diekmann cites a study performed by Long Wang, Deepak Malhotra and J. Keith Murnighan at Harvard Business School in December 2011 titled “Economic Education and Greed” that found business students kept more money in a deception game where they are rewarded for being dishonest. The results also showed the students had more positive attitudes toward greed.

“Being in the presence of money elicits a business frame where you lie or have unethical behavior,” she says. “It’s important for us in business schools to try to do things to change that. You’ve got to change the mindset. You create a culture where [cheating] is unacceptable behavior.”

At BYU, instructors use an ethics pyramid model to teach business students. The first level examines basic principles like respect, charity and justice, and students decide the importance of those values. The second level takes those principles and puts them into a professional practice. Students are given scenarios where those values are at odds or compromised. Discussions are held to come up with solutions that address the scenario ethically.

The third level conquers ethical courage like standing up for what’s right, even when your boss wants you to do something different. Students are taught how to deal with those ethical conundrums in the heat of the moment. And the fourth level introduces ethical leadership. How do you go about influencing others for good? How do you design organizations that actually create a culture where doing the right thing is empowered?

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