Why Ethical People Make Unethical Choices

Source: Harvard Business Review

Most companies have ethics and compliance policies that get reviewed and signed annually by all employees. “Employees are charged with conducting their business affairs in accordance with the highest ethical standards,” reads one such example. “Moral as well as legal obligations will be fulfilled in a manner which will reflect pride on the Company’s name.” Of course, that policy comes directly from Enron.  Clearly it takes more than a compliance policy or Values Statement to sustain a truly ethical workplace.

Corporate ethical failures have become painfully common, and they aren’t cheap.  In the last decade, billions of dollars have been paid in fines by companies charged with ethical breaches. The most recent National Business Ethics Survey indicates progress as leaders make concerted efforts to pay holistic attention to their organization’s systems. But despite progress, 41% of workers reported seeing ethical misconduct in the previous 12 months, and 10% felt organizational pressure to compromise ethical standards. Wells Fargo’s recent debacle cost them $185 million in fines because 5300 employees opened up more than a million fraudulent accounts.  When all is said and done, we’ll likely learn that the choices of those employees resulted from deeply systemic issues.

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