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Why Employees Behave Unethically?

There are number of reasons why people act unethically at workplace. But what is unethical behavior? It
is defined as behavior that contradicts with the rules designed to maintain the justice, integrity and
decency in the organization. An example of unethical behavior is employees providing fake bills for money
redemption against approved funds. Behavior like this is motivated by various things such as:
1. Resentment feeling: When employees feel that they are not being treated fairly and are
not being rewarded substantially for the amount of effort they are placing into their work
they tend to cheat the company they are working for. Their most common perception is that
they should not worry about the organization and its well being when the organization is not
worrying about them.
2. Misguided loyalty: It is another reason for unethical conduct on the job. People sometimes
lie because they think in doing so they are being loyal to the organization or to their bosses.
Examples of this type of behavior are not hard to find. For example, managers at
automobile companies who hide or falsify information about defects that later cause
accidents and kill people or managers at pharmaceutical companies who hide information
about dangerous side effects of their drugs. No doubt these managers believed they were
protecting their employers. They may well have seen themselves as good, loyal employees.
3. Environment: Sometimes, employee acts unethically in business because his employer
condones the behavior. For example, in the stock market traders are supposed to cheat a
little to create the market hype necessary for its efficient working. This is unethical, but the
behavior is so common on the trading floor that it is never questioned.
4. Individual factor:Employees who obey authority figures unethical directives or act merely
to avoid punishment. They manipulate others for their own personal gain, fail to see the
connection between their actions and outcomes, and believe that ethical choices are driven
by circumstance.
5. Pressure: It can drive people to do things they wouldnt normally do. Pressure to succeed,
pressure to get ahead, pressure to meet deadlines and expectations, pressure from coworkers, bosses, customers, or vendors to engage in unethical activities or at least look the
other way.
6. Career Advancement: A person acts unethically because she believes it helps her career.
An unethical act is used as a means of impressing a superior or hurting the career of a
competitor. For example, a person sabotages a co-workers project as a means of making
him/herself to look better in comparison.
7. Issue-specific:Issues can vary in the degree of harm they impose on the victim, and on the
degree of agreement among peers. Sometimes, a particular issue requires unethical
behavior from the employee and there is not other option they can utilize.
8. Greed: Of course, some people do not just do something wrong in a weak moment or
because they are not sure about what is the right thing to do. Some people know exactly
what they are doing and why. Self-interest, personal gain, ambition, and downright greed
are at the bottom of a lot of unethical activity in business.
9. Ignorance: Ethical conflicts or violations are not always transparent, and its easy for an
employee to perform an unethical act without knowing it. For this reason, it is important for
companies to make employees aware both of the companys general ethics policy, and
specific examples of ethical and unethical behavior.

10. Insensitivity towards others: Unethical behavior also increases when employees feel that
their actions will not harm a potential victim and that their peers will not condemn their
actions. They will engage in more unethical behavior when the company promotes an
everyone for him or herself atmosphere instead of an environment that focuses employee
attention on the companys stakeholders.
While its important to deal with individual examples of bad behavior, its also crucial to understand the
root cause. If people are covering-up their mistakes, is this a sign of a blame culture that leaves people
afraid to be honest? If people are routinely phoning in sick, is there an underpinning issue with stress and
workload? In many cases these behaviors are symptomatic of wider cultural issues which once uncovered
can be effectively addressed to improve morale and organizational performance and ultimately help to
avert crises and better equip businesses for the future.

3 Reasons Employees Act Unethically

Employees ethics at work are driven by a complex set of individual, issue-specific, and environmental
factors. By recognizing the constellation of factors that shape employees ethical intentions,
employers can create an environment that encourages ethical behaviour.
Unethical intentions and behaviour can be driven by individual, issue-specific, and environmental

Bad apples (individual factors): Employees who obey authority figures unethical directives or act
merely to avoid punishment. They manipulate others for their own personal gain, fail to see the
connection between their actions and outcomes, and believe that ethical choices are driven by
Bad cases (issue-specific factors): Issues can vary in the degree of harm they impose on the
victim, and on the degree of agreement among peers.
Bad barrels (environmental factors): Environments that encourage individualistic behaviour as
opposed to a climate that emphasizes doing what is best for other employees, customers, and
the community.

When it comes to individual employee characteristics, the greatest predictor of unethical behaviour is
an employees emphasis on self-gain. That is, tendency to use interpersonal relationships
opportunistically and have less concern about consequences for others. Unethical behaviour also
increases when employees feel that their actions will not harm a potential victim and that their peers
will not condemn their actions. They will engage in more unethical behaviour when the company
promotes an everyone for him or herself atmosphere instead of an environment that focuses
employee attention on the companys stakeholders.
Although some studies suggested employees age, gender, and educational levels matter, there was
little systematic support for these relationships. The existence of a code of conduct does not curb

unethical actions, however enforcement of such a code does. Codes of conduct have become so
common that they have lost their potency; thus, only properly enforced codes influence ethical
Implications for Managers
There are several ways to reduce the likelihood that your employees will behave unethically:

Hire your employees based on rigorous selection tests. Base these tests on the bad apple
criteria to weed out potential hires who: obey authority figures unethical directives or act merely
to avoid punishment, manipulate others for their own personal gain, fail to see the connection
between their actions and outcomes, and believe that ethical choices are driven by
Link unethical behaviour to the harm it causes. Show employees the serious impact of unethical
behaviour on a specific victim that employees recognize.
Enforce a code of conduct that prominently reinforces and defines behavioural norms.
Leaders need to model good behavior and HR systems must reward such behavior in order to
create a strong ethical corporate culture.

Implications for Researchers

Researchers may investigate the extent to which self-interest is the key driver behind bad apples at
work. They may also examine the degree to which moral issues can be made salient to employees
(for example, via personal contact with potential victims). Finally, future scholars should explore how
managers can effectively enforce codes of conduct.
These findings come from the meta-analysis of 136 studies in the behavioural ethics domain. The
scholars who conducted this analysis compiled and coded the studies, included their dependant
variables, and then used two meta-analysis procedures for creating and cumulating correlations.

Why employees do bad things for companies they

Story Highlights

Most people think unethical business practices are primarily malicious acts.

But BYU research found that employees cross ethical lines to HELP their

People who believe in their company and that actions will be rewarded are
more likely to have ethical lapses.

Two studies explore surprising reasons for unethical business behavior

Employees who love their company and hustle to please their bosses sound like a
recipe for success. But two recent studies co-authored by a BYU business professor
found that those two factors can lead to a higher likelihood of unethical behavior.
Studying such pro-organizational unethical conduct flies in the face of the common
media accounts and most ethics research, which focuses on employees siphoning
funds or sabotaging bosses and co-workers, said John Bingham, assistant
professor of organizational behavior at BYUs Marriott School of Management.
But unethical behavior can also be done with very good intentions -- people can do
bad things with the intention to actually help the organization, he said. People lie to
placate customers, sell unsafe products or shred documents to cover up -- even
when these actions may jeopardize their own positions within the organization.
Bingham and colleagues explored this concept in a paper forthcoming
in Organization Science and tested it in a study recently published in the Journal of
Applied Psychology.
They surveyed hundreds of anonymous workers and analyzed the data with
complex statistical models to see if strongly identifying with your employer makes
you more prone to cutting ethical corners. They suggested that, for example, a
community activist who works for a product manufacturer that prides itself on its
social and community initiatives may be more likely to cut corners to help his or her
To their surprise, that wasnt the case. Simply buying into your companys mission
doesnt seem to be enough to nudge you across ethical lines. But combining that
trait with another common belief turns out to be a formula for rule-breaking.
The other half of this potentially toxic unethical reaction is a belief in reciprocity.
This is when I believe that if the company does something nice for me, I should do
something nice for them in return, Bingham said. Weve always looked at this as a
positive way to motivate employees and, until now, never questioned the moral
content of behaviors that employees perform in efforts to reciprocate.
The study results suggest that employees who feel strong commitment toward their
company, and who also generally believe that their companys positive treatment

should be rewarded with above-average performance by employees, are

significantly more likely to commit unethical behavior that helps their employers. So
the social activist at the product manufacturer, who believes he or she has been
treated well by the company and assumes that the companys efforts should be
rewarded in kind, is more likely to commit ethical lapses.
Very conscientious employees, people who are pleasers -- which weve always
thought about in desirable terms -- are much more likely to do unethical things and
justify them because they believe in their company and want to do what is best for
the company, Bingham said.
The researchers recommendations to leaders and managers are:

Recognize that not all unethical behavior is malicious. Consider the possibility
that your employees may be doing bad things thinking thats what your company

Certainly dont stop encouraging a strong identification with the company and
the belief that positive acts will be rewarded. Those remain proven motivators.

Couple such motivation with a culture that encourages ethical behavior and
focuses on the means, and not just the ends. Managers must lead by example
and reward only ethical behavior among employees.

In todays competitive business climate, some may privately wonder what harm is
done by behavior that helps a company, whether it is ethical or not. Beyond the
obvious morality argument, Bingham asserts that unethical behavior ultimately hurts
the organization.
Its bad business. If thats the culture around which business gets done, sooner or
later questionable behavior escalates to the point where it gets exposed and
employees and the business are punished, he said. Enron was getting away with
stuff for years, and it was a classic example of a high-functioning, high-mission,
strong-values organization. And we know what happened there.

The Root Causes of Unethical Behavior

Psychological Traps That Everyone Falls Prey to
Business literature is replete with stories of unethical behavior in executive suites and board rooms, yet everyone is
potentially capable of falling into the same traps. With a little insight into the psychological traps that increase the
probability that individuals will behave unethically, perhaps such behavior can be curbed. To date, the authors have
delineated a total of 45 traps, including Obedience to Authority, Need for Closure, The False Consensus Effect,
Lost in the Group, and Self-Enhancement, and they fully expect more to be discovered.*

What Are Psychological Traps and Why Do They Exist?

Psychological traps are the root causes of unethical behavior.
Psychological traps are similar to fish traps. A fish trap is comprised of a wire cage with an entrance shaped like a
large funnel that narrows toward the inside of the cage; the design of the funnel directs the fish to swim into the
trap. In the same way, an individual or organization is encouraged to move in a certain (unethical) direction once a
psychological trap is present. Later, the action turns out to be disastrous and there are usually no simple means of
reversing course.[1]
Because they are psychological in nature, some of these traps distort perceptions of right and wrong so that one
actually believes his or her unethical behavior is right. If people are not aware of these traps, they can act as
illusions or webs of deception. Once the traps are identified, however, they lose much of their power to ensnare,
and people can more easily circumvent them just as voyagers who know the location of quicksand can navigate
around it. When danger is clearly identified, one can prepare for it and avoid it.
Depending on their context, traps may be benign and can even exert a positive influence on our lives. For example,
empathy is often considered the cornerstone of good ethics but in some circumstances, this personality trait can
actually overpower our sense of fairness. This is because traps can incite tunnel vision; the pull to act on them is so
strong that people can become blinded to other behavioral options. Individuals that we respect and admire even
whole companies can descend rapidly down the path of corruption.
Traps exist because at any given moment in time people experience impulses that motivate them to act. These
impulses are reactions to internal or external stimuli. Sometimes, a stimulus is so powerful or triggers such
automatic behavior that the individual acts without recognizing that other options exist. At other times, he or she is
aware of other choices, but the stimulus impact overrides these potential actions.
The essential question the authors posed was: What prompts the individual or organization to begin to move in an
ill-fated direction? The diverse traps presented in this article provide descriptions of different internal or external
stimuli that compel people to begin this movement toward disaster. In addition, the article introduces three main
categories of traps: Primary, Personality, and Defensive.

Primary Traps
Primary traps are predominantly comprised of external stimuli. They are the main traps that impel people to move
in a certain direction without regard for ethical principles. Obedience to Authority is a clear example of a primary
trap. Children are primed to obey their parents their survival depends upon it and in school, this conditioning

continues. Students automatically know that they must show deference to their teachers. Consequently, later in life,
when the boss orders an employee to do something, many people quickly obey without thinking.
If a person of authority orders a subordinate to do something unethical, the compelling need to obey authority
serves as such a powerful external stimulus that the individual will likely obey the order without being aware of its
opposition to his or her own ethical principles. At other times, the subordinate might be aware that the order is
unethical; nonetheless, the impulse to obey is so strong that it overrides his or her judgment.

Personality Traps
Personality traps consist exclusively of internal stimuli in the form of various personality traits that can make people
more vulnerable to wrongdoing. An example of a personality trap is the Need for Closure, that is, the desire for a
definite answer on some topic, any answer, as opposed to confusion and ambiguity.[2] It is the tendency to jump
on the first opinion that comes to mind, rather than tolerating a state of uncertainty and taking the time to consider a
problem or judgment from many different angles.
The need for closure is augmented under work conditions that make processing information more difficult, namely
time pressure, fatigue, and excessive background noise. When such conditions exist, it is more difficult to tolerate a
state of confusion and ambiguity.
While the need for closure is influenced by situational factors, it is also a personality trait some people are more
able to tolerate states of ambiguity than others. Arie Kruglanski has developed a Need for Closure Scale to
measure this personality dimension those with a high tendency towards the trait are more apt to endorse items on
the scale, such as I usually make important decisions quickly and confidently, I do not usually consult many
different opinions before forming my own view, When Im confused about an important issue, I feel very upset, or
Its annoying to listen to someone who cannot seem to make up his or her mind.[3] Kruglanski and his colleagues
have established that those who score high on the scale are more prone to stay with established impressions in the
face of contradictory evidence.[4]
So, what does this mean in the real world? Let us say that a CEO has a high need for closure. Based on the CEOs
previous encounters with the CFO, he respects and likes him; however, the CFO has not been with his company
long. One day over lunch, the CEO learns from a colleague that the CFO has accepted a bribe. Impossible, says
the CEO. He is not like that. He would not do such a thing! Because of the CEOs high need for closure, he stays
with his established impressions and does not even consider the possibility that the CFO has acted illegally.
Within an organization, if coworkers ignore, justify, or condone unethical behavior, this supports the view of the
transgressor that he or she did not do anything wrong or, if they did, that it is not that big a deal. Coworkers with a
high need for closure can potentially cling to established impressions and, in so doing, discount unethical behavior.

Defensive Traps
Defensive traps are a very different category. Although some of them can, at times, be counted as primary traps,
defensive traps are basically attempts to find easy ways to reverse course after a transgression has been
committed. For the most part, defensive traps are maneuvers that are reactions to two internal stimuli: guilt and
shame. Guilt and especially shame are very painful emotions because they call into question the positive view that
people have of themselves.

Defensive traps are insidious because they are often very successful at annihilating or at least minimizing guilt and
shame. They help people deny their transgressions, thus setting them up for repeated unethical behavior. An
example of a defensive trap is the False Consensus Effect.
Consider this example: Thomas Gabor, professor of criminology at the University of Ottawa, interviewed employees
that had illegally stolen equipment and materials from their jobs. A common rationalization was exemplified by the
following employees statement: We are as good as management. They commit employee theft. Everybody does
it. If I dont take it, someone else will.[5]
Psychologists call this type of rationalization the False Consensus Effect. When people do something unethical,
they appease their guilt by falsely assuming that it is something everyone does, and thereby minimize their
transgressions Its not that bad; its something that happens all the time! The insidious thing about the false
consensus effect (as with most other traps) is that the person actually believes his or her own self-deception.
Gina Agostinelli conducted an interesting experiment at the University of New Mexico that validated the false
consensus effect.[6] Two-hundred-and-thirty-five subjects participated in her study, and these subjects were
randomly assigned to either two conditions: a failure condition or a neutral condition. Agostinelli administered a test
that was described as a decision-making problem that many career centers use to help companies hire
employeesa valid indicator of future job success that measured general problem-solving abilities under time
Following the test, subjects relegated to the failure condition were given false feedback: Your score is poor and
indicates that you are not good at solving problems under time pressure and cannot make important decisions
efficiently. Subjects in the neutral condition were given no feedback. All subjects were then given a questionnaire
that asked them to estimate how well the general public would do on the problem-solving test.
The magnitude of the false consensus effect was impressive. In the neutral condition, 40 percent of subjects
estimated that the public would be successful with the problem-solving test. In the failure condition, subjects
estimated that only 15 percent of the public would be successful! Subjects who failed the test estimated that a
large number of people would also fail the test, as in If I fail, most people would.

Executive Tactics
How can a company create a corporate culture in which psychological traps are less likely to nudge managers and
employees toward unethical behavior? Let us focus on the three traps that were used as examples: Obedience to
Authority, Need for Closure, and the False Consensus Effect.
Obedience to Authority
When trying to keep the trap of obedience to authority at bay, the most important thing an executive can do is to
hire a psychologist to be part of his or her ethics and compliance team. Psychology can explain the nature of traps
and often help structure the proper approach to avoiding or remediating them.
Joseph Badaracco, an ethics professor at Harvard Business School, conducted 30 extensive interviews with recent
MBA graduates who had faced ethical dilemmas in the business world.[7] Many of the Harvard managers
interviewed in Badaraccos study confronted the trap of obedience to authority they had been overtly told to act
unethically by their bosses. One manager was instructed to make up data to support a new product introduction.
When he objected, his boss cut him off and said, Just do it.

When ordered to act unethically, these entry-level managers experienced intense anxiety. If they did not obey, they
worried that they would lose their boss support, which was crucial to being perceived as a candidate for the fast
track and a team player. Ultimately, employees worried about destroying their careers and losing their jobs.[8]
The crucial problem these managers faced was the intense anxiety that resulted from the obedience to authority
trap. Emotions can bring people to their knees, and many of the traps incite powerful emotions that pull a person
toward wrongdoing. The managers were able to cope with their anxiety by reassuring themselves that they were
still young and their careers were just beginning. They told themselves that they could always find work in another
company if being ethical resulted in the loss of their jobs. For the most part, the managers were able to resolve
their dilemmas because of this flexibility.
The managers acknowledged, however, that had they been older, with families and invested status in the company,
finding new employment would have been a much less likely option. So, what about middle managers who do not
have this flexibility, who have spent years climbing the corporate ladder and have a family to support. What do they
do when intense anxiety hits?
If middle managers are in a company that has a psychologist as part of its ethics team, the psychologist can help
them cope with their anxiety when confronted with the trap of obedience to authority, as psychologists are well
trained to mitigate intense anxiety.
Need for Closure
Psychological traps are insidious because they are often invisible. Managers with a high need for closure, for
instance, are usually neither aware of having such a trait nor that it might lead them to disregard the unethical
behavior of their coworkers. If managers know that they have a high need for closure and are aware of its
implications, they are more likely to avoid being trapped.
To contend with the need for closure, the most important thing an executive can do is to have a psychologist
administer the Need for Closure Scale so that managers and employees are aware of whether they have a
personality trait that might incline them to act unethically.
False Consensus Effect
This trap is easily identifiable it basically sounds like: What I (or we) did is not bad; its something that everybody
does. Once the company is aware of the false consensus effect, it is a signal that a transgression has already
been committed. In such cases, established reporting and disciplinary procedures that are usually part of the
companys code of business conduct and ethics should come into play.

Because there are more traps than the three outlined in this article, there will likely be more than three tactics
developed to deal with these traps. Nonetheless, the authors have identified the following tactics as universally

Employ a psychologist to help coworkers contend with the strong emotions incited by traps;


Ensure that the psychologist tests coworkers to make them aware of potential personality traps; and


Recognize defensive traps as signs that transgressions have already been committed.

It should also be noted that ones behavior can be affected by more than one trap simultaneously. Developing
tactics to manage traps is an ongoing challenge, especially as more traps are discovered. But the fact that traps
accurately define the root causes of unethical behavior will make this task easier and the solutions more effective
and efficient.