11:39 am
Tue August 7, 2012

Better Business Ethics

We've heard the stories of people acting unethically in their business dealings. Take, for example, Enron, a multi-billion dollar energy company that failed spectacularly in 2001, or the slew of bank and investment scandals- most recently Barclay's, which has been accused of manipulating lending rates.

How do we consciously or unconsciously slip from ethical to unethical? Kara Miller looks into ethics in the workplace and the kind of business culture that makes slipping down the slope of immoral behavior acceptable.

Max Bazerman, a professor at Harvard Business School, says once a person does one unethical thing, it’s easy to become a recurring behavior.

“A lot of unethical behavior occurs one step at a time, so going over the line one time certainly makes that more common,” says Bazerman.

Bystanders are guilty, too

Bazerman says perhaps that the person who goes over the line isn’t the only one to blame.

“What’s also interesting in these stories is that not only are there a small number of bad people who are acting in inappropriate ways, but there are lots of people who have access to the data, who see what’s going wrong, and fail to act,” Bazerman says.

Those are the people that also have a fault in the situation.

“We get this impression that the critical issue is the guy who did the wrong thing but I think all of us need to be thinking about the question do we still see these bad behaviors in our organizations and do nothing and then point the finger only at the bad guy later on. Are we responsible when we don’t act when we have the data to do so?”

Bazerman points out that the inaction is just as bad.

“We become a culprit in the story when we see egregious behavior and do nothing about it,” he says.

The belief that slipping up is ok

Francesca Gino, an associate professor at Harvard Business School, says that even though people cheat, they don’t feel particularly unethical.

“A lot of times when we see cheating or unethical behavior, we see that a lot of people cheat by a little bit. It’s interesting that they only cheat by a little bit because it seems that that helps them keep a good image of who they are as people,” says Gino. “They don’t need to revise what they think about themselves and they go on with their lives thinking that they’re actually competent and interesting and good people.”

Gino says studies she’s conducted revealed that when faced with ethical dilemmas, many people give into the temptation and cheat, especially in environmental and peer pressure situations.

“We think of ourselves as people who are able to make good or bad decisions,” says Gino. “In reality, our environment, in terms of our peer and also the situation we are in or the pressure under which we are affects our decisions. Seeing another person behaving unethically and getting away with it is a big influence on our decision on whether to cheat or not.”

New Norm?

The problem could be not coming down hard enough on offenders. With the recent bank scandals, it’s a question of whether or not this behavior is becoming the norm for companies and as a result, the consequences are not as tough as they should be.

“I think that what this tells us is the importance of reflecting on the first steps or transgressions we see in organizations and really trying to stop those,” says Gino. “Otherwise, very soon, it’s going to become accepted behavior.”


  • Francesca Gino: associate professor at Harvard Business School
  • Max Bazerman: professor at Harvard Business School
  • Iris Bohnet: Academic Dean and professor of public policy at the Harvard Kennedy School of Government