Recent charges laid against former Bloomberg executives for construction fraud and Huawei's finance chief for bank fraud; Goldman’s deepening 1MDB scandal; the jailing of Carlos Ghosn, ousted as chairman of Nissan and Mitsubishi; and the number of people on the Trump team who are accused of being complicit in wrongdoings all cap a year in which allegations of corruption, fraud, abuse, harassment, cover-ups and lies have dominated the news.
The Global Ethics & Compliance Initiative (ECI), in its March 2018 report, warns that unless companies
“take steps that improve their workplace cultures, conduct among employees will decline.”
What they found was, in North America,
“more employees feel pressure to cut corners than ever before, and rates of retaliation for reporting have doubled in the past two years.”
“little progress has been made across the country … mitigating wrongdoing.”
Organizations have yet to build strong ethical cultures.
The problem is huge. The ECI found, in 2017, 47 percent of respondents personally observed misconduct and 67 percent of those said the wrongdoings consisted of multiple incidences or were part of an ongoing pattern. Sixty-three percent reported the misconduct they observed was committed by someone in management.
The numbers mirror results of a survey that we ran with the Yale Center of Emotional Intelligence and the Faas Foundation, as part of the Emotion Revolution in the Workplace initiative. We sampled 20,000 North American workers, across all sectors and occupations, and found about 40 percent of employees witness unethical behavior in the workplace, such as not adhering to safety procedures, cheating, lying, stealing or bullying.
But the problem may even be bigger. Research suggests that people normalize unethical behavior because of moral disengagement. They justify their actions with the means (e.g., “Sometimes you just have to do bad stuff to get to good outcomes”) or find ways of avoiding responsibility (“People are not accountable for what an authority figure asks them to do”). Many employees might not even recognize that what they do is ethically wrong.
Ethics in the workplace has become a challenging societal issue — first, because every segment in society has been exposed, and second, because when people normalize these behaviors at work, where they spend most of their waking hours, they likely will normalize them outside the workplace. American psychologist Stanley Milgram provided a sober implication on this when he wrote,
“Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process,” noting that “relatively few people have the resources to resist authority.”
Given this, it behoves every organizational leader to assess or reassess their culture.
There is no question that organizations have invested heavily in cultural initiatives, yet these initiatives have little impact — primarily because they’re usually put in as a legal or public relations shield.
To bring about a real difference and build a strong culture founded on ethics, and to protect the organization and our societies from the risk of harm and collapse because of wrongdoing, leaders need to shed light on what they have ignored for too long: emotions, the way people in their business feel.
Our work with the Yale Center of Emotional Intelligence shows that too many people feel miserable at work. As a result of the anger, disgust, fear and unnecessary stress they experience, they do things they know they should not be doing — and likely rationalize it as normal over time. But if people feel positive, if they feel respected, safe and encouraged at work, occurrences of unethical behavior are a lot less likely.
It is not all about happiness and positivity, however; to the contrary, when employees do wrong, they should feel upset, guilty and worried. Rather than giving them a free pass that can encourage further unethical behavior, these employees need to be held accountable and shown a way to make amends, in part to relieve their negative emotions.
Emotion is not often a topic at the top of the agenda of organizational leaders — but our research suggests it should be, because it is how people feel that drives what they do.
In our survey for the Emotion Revolution in the Workplace initiative, we found that when employees had a supervisor who exhibited low emotional intelligence, they were three times as likely to report incidences of unethical behavior in their units. They also reported feeling considerably more negative and less positive emotions.
But a supervisor’s emotional intelligence is not a panacea. When job security is low, or when performance management is unfair, there is more unethical behavior even if the supervisor is emotionally intelligent.
Supervisors make a difference, but are themselves embedded in an organizational culture. The leadership of an organization needs to recognize the pivotal role of emotions and build a culture that prevents emotions that lead people astray.
We urge organizational leaders to learn from what occurred in 2018 and resolve in the new year to reassess and strengthen their cultures, to engage their employees and reduce the risk of wrongdoing.