Get answers to your most pressing business ethics-related questions.

Expanding on our mission to curate and distill ethics research for the business community, Ethical Systems has launched a new initiative soliciting questions to submit to one of our esteemed collaborators.

Selected questions and answers will be featured here and in the subsequent month's newsletter. Use the form below to submit your questions and explore our schedule of experts and previous Q&A's below.

Month Collaborator Title, Research and Work Selected Questions
and Answers
July / August 2017

Robert Bloomfield

  • Nicholas H. Noyes Professor of Management and Professor of Accounting at Cornell University’s Johnson Graduate School of Management

 

Coming in July!
June 2017

Dave Mayer

Q1. I am in sales for a large firm and I read that one potential client in my territory has recently been cited for an FCPA violation. But, they want to place a huge order with me and I am the only rep in the
area. I am conflicted. What should I do if I have a personal objection to taking on a new client even though I know it will make my year and the firm would be happy to have their business?

A1. This is a challenging situation. On one hand, it would be great to have this new client for financial reasons. On the other hand, it may go against a core principle. When I am in these types of situations I try to not engage in what psychologists call motivated moral reasoning. Motivated moral reasoning means that when wrestling with an ethical dilemma, we often come to the moral conclusion that is in line with our own self-interest. So, whenever you feel like a particular moral conclusion also benefits you personally, it is useful to reach out to neutral others for feedback.

In terms of your specific situation, I would ask myself several questions. First, is the FCPA violation for something substantive? Is it common for large firms to have some violations or is this an outlier? If it is a large violation then you may consider avoiding a relationship with this client. Second, could there be reputational costs from being aligned with this firm? If this firm has a history of unethical actions what might be the spillover effect on your business? There is research on stigma-by-association suggesting their bad actions can rub off on you and/or your firm. Or, perhaps there is not much of a reputational cost. It is important to consider whether this firms’ actions may damage perceptions of your company’s core values. Third, are you setting a precedent? We know research on the slippery slope of ethical decision making tells us that a small unethical decision can lead to more costly unethical decisions in the future. Only you know the specifics of this firm, their violation and your business but by asking yourself these questions and avoiding certain moral biases you should be able to make the best possible decision for the long term.

 

Q2. I was CCed on an email containing salary information of my colleagues. I saw that one of my teammates is making more than I am but they have less responsibility than I do. Can I use this info to my advantage and renegotiate my compensation?

A2. Sometimes ignorance is bliss. It is tough when you find out a coworker is better compensated than you (and with less responsibility nonetheless). Your reaction is consistent with what we would expect
from equity theory which posits that people feel it is unfair when someone believes they contribute more but get rewarded less than another person. Fortunately, there is a large scientific literature on
negotiation to help you figure out what to do.

The first thing to figure out is your BATNA (best alternative to a negotiated agreement). Let’s assume you go to your boss and say this compensation is unfair and the conversation does not go well. Do you have a better option (e.g., a more lucrative job offer)? If you do not have a solid BATNA
then trying to negotiate for a raise is risky. A second key is for you to focus on what you contribute rather than what someone else is being paid. It is generally more persuasive to management when you argue for why your credentials, experience and performance warrant increased compensation. If you can calmly but confidently describe your contribution and also have some objective data that your compensation is below the industry or company norms this can be persuasive.

Finally, think more holistically about your compensation. Most people focus on salary. Salary is one piece of the puzzle but also consider things like bonuses, flexible work schedules, benefits, opportunities for learning, a better title, an office, vacation time, etc. If you broach the conversation with management, think more broadly about compensation—there is more than just salary.

 

Q3. I work in HR for a small financial services company. I have hired several people for prominent sales and backend positions that have gone on to violate our ethics or compliance rules; one did so
inadvertently by promising something we could not deliver and one was let go for attempting to offer a payment for retaining our services. How can I better screen unethical behavior or traits in interviews? Am I doing something wrong?

A3. We know we want ethical employees but how do we know they are ethical when we hire them? Of course, employees are always on their best behavior during the interview process. I wrote about this topic in my Fast Company column a few months back. One important step is to not only focus on whether someone might be unethical but also to consider how they might contribute to the collective. Try to find employees who positively energize others and who are humble. Research tells us that they are not only more likely to do good but less likely to be unethical.

A second key is to figure out whether applicants have developed habits around making sure their behavior aligns with their values. As Aristotle told us over 2,000 years ago, ethical behavior comes from good habits and it is important to see if applicants have habits, mantras and rituals that guide their conduct. Another important reminder is that sometimes unethical decisions come from a lack of knowledge or adhering to a company norm rather than malice. In your example, this employee may have had good intentions but learned a process from a more-tenured employee. It is critical to treat these actions as learning experiences and to correct the behavior at a systemic level. If the poor behavior continues, you’ll know then that it is not a training issue but is a selection issue and it may be time to part ways.

 

Q4. I read your piece on fairness in Fast Company and recognized a lot of my feelings when I think things don’t go my way. But I still think my company is basically unfair when it comes to promotions and raises. What is the best way to overcome my anger when I think I am being treated unfairly?

A4. Almost all people feel the same way when we perceive unfairness. Research tells us that anger is the most common emotion in response to feeling slighted. And that feeling can build up over time such that it leads to dysfunctional behavior. For example, research demonstrates that when employees feel unfairly treated their anger often drives them to engage in counterproductive behavior that hurts the organization and their own careers. Although easier said than done, it is important to harness your anger into productive actions.

I would first confirm that the basis of your anger is steeped in fact. Do your colleagues generally agree with you about the unfairness regarding the promotion and raise process? Next, I would then find an appropriate outlet for your anger. There are benefits of getting out negative emotions via writing in a journal or talking to a friend or partner (provided it does not go from complaining to rumination). If you have decided that the process is objectively unfair and used methods to quell your anger, you could consider speaking to a trusted manager in a pragmatic rather than cathartic tone. I would focus specifically on the criteria for pay raises and promotions and what you can do to grow and develop to meet the criteria. If ultimately the process is unfair you’ll have to think deeply about whether this is where you want to stay.

May 2017

Max Bazerman

  • Straus Professor at the Harvard Business School and the Co-director of the Center for Public Leadership at the Harvard Kennedy School
     
  • Ethical Systems Interview
  • ES blog mentions
  • Author of Blind Spots: Why We Fail to Do What's Right and What to Do about It.

Q1. I work at a mid-size manufacturing company and one of my co-workers in sales consistently promises early deliveries to our customers.  I worry that my operations team cannot meet the client's expectations. How can I make my co-worker understand that he is over-promising about our capabilities? I worry that this will lead to undue pressure on the team, with potentially bad consequences for the company.

A1. There are multiple possible explanations for your co-workers behavior.  When salespeople aren’t doing what others in the organization think they should be doing, I find it useful to look at what they are being rewarded to do. So, often, organizations create systems that encourage one behavior and hope for a different behavior. So, I would look at what happens in your organization when a salesperson books a sale, with promises that will not be met. Are they rewarded for that behavior?

Perhaps the broader group should meet to discuss problems associated with meeting promises that are made to customers.  I wonder whether your co-worker even understands the issues that s/he is creating? Finally, if these systemic approaches are not effective or viable, I think that the manager needs to confront this difficult conversation, preferably soon than later.  Too often, humans avoid conflict, even when avoiding the conflict will only make the challenges tougher.

 

Q2. I can’t stand my company. They are some of the most unethical people I have ever encountered and it is only a matter of time before we are in the media for ethical lapses. If I move to a different company, will I be tainted by scandal if I leave after the story breaks?

A2. First, I think you should assess whether these ethical lapses deal with important and illegal activity.  If so, I strongly suggest that you get legal advice.  There are a number of not-for-profit organizations that help people who are caught in difficult ethical/legal situations.  One I have used and recommend is the Government Accountability Project - www.whistleblower.org. Given the magnitude of the problems that you are describing, I think that all employees who are aware are accountable for what is happening.You ask whether you might be tainted by the scandal if it reaches the media. I would encourage you to think about whether you are partially responsible if you take no action. The answer to this question might guide you on your next steps.

 

Q3. I feel like my annual ethics training is a waste of time. I know how I will react and I know I am ethical. Can you tell me why I still need training? If you write me a note, can I get out of it?

A3. Based on the information that you provide, I have neither the authority nor the inclination to write you a note to get out of the training.

Thus, I encourage you to take the training, and to think about the experience more ethnographically and positively.  I would encourage you to think about what form of training would be more useful.  I would recommend being clear and systematic in this assessment.  Perhaps get some of your fellow employees to join your assessment. Then, provide human resources a positive plan about how the company can more effectively create an ethical organization.