The issue of ethics in business and public life today is recognized more and more as critical in determining success or failure in every sector of our economy.  Yet even with all of the emphasis on morality and spiritual values in business and professional life, our society sometimes appears to be spiritually rudderless.

            Multi-billion dollar business and government scandals are practically a daily item in the news.  Disgraceful scandals have already tarnished the reputations of (and sometimes ruined) talented people, great corporations, and government organizations.  And you don’t have to look far to find ethical problems.   Just look around you.  With the economy the way it is, where every dollar counts, businesses are tempted daily to charge more than they should, or short-change their customers in a variety of ways.

            One of my favorite jokes is the classic Henny Youngman line about ethics in business:

You own a dry cleaning place.  A guy walks in and gives you his suit to be cleaned.  When he leaves, you find a $100 bill in one of the pockets.  Now, the ethical question is this: Should you tell your partner?

All of us who are in business or in a professional practice are also customers.  And customers aren’t immune from ethical problems, either.  How many people who through a mistake are undercharged two dollars at the gas pump or at the grocery store or in a restaurant do anything to correct the error?

            Most of the attention is on ethical principles, guidelines, and codes of conduct, which are developed more and more by schools, professional associations, companies, and governmental bodies.  Every professional association has a set of ethical guidelines for practitioners.   Service organizations, such as Rotary, have long had statements of ethics designed for the everyday practice of business and professional activities.

            As a psychologist, I of course look at ethical problems from a psychological (rather than business, religious, or legal) point of view.  It seems to me that if we can better understand why people are motivated to behave ethically or unethically, then we will know better how to prevent or at least minimize unethical behavior.

The Reasons behind Unethical Behavior

            I believe it is crucial that you, as a manger or business owner, learn the different reasons why people violate or follow ethical guidelines, and how each of these must be handled differently.

            Generally, people will violate ethical guidelines for one (or more) of the following four reasons:

            Ignorance of ethical principles and guidelines.  Many violate ethical principles solely because they did not know about them.  Consider that many ethical choices are in areas that are not always clear.  This is why posting and other availability of ethical guidelines is crucial.

            Ethical lapses or lack of vigilance.  In some situations, people have lapses and may do or say something unethical that they would not usually do because they simply are not paying careful attention.  This is why frequent discussions and training sessions are so important for any organization or business.

            Desperation.  Some people are in such dire straits—financially, professionally, or personally—that they feel forced to compromise their usually strong ethical stance.   For these people, it is important to focus on what their needs are.  If you as a manger recognize an individual is in this situation and can help them solve their problems, your assistance might make the possibility of resorting to unethical behavior unnecessary.

            Immorality.  Unfortunately, there are people in every part of society whose values simply are unethical.  At their worst, they display the sociopathic behavior that is criminal (in every sense of the term).  These are the people who will lie, cheat, and steal.  No amount of short-term ethical training or posting of ethical principles on the office bulletin board will make a difference in changing the values of these people.  Only taking the appropriate formal action will protect the organization and its ethical functioning.

Ethical Compass Guides Majority

            If these are the reasons why some people do not follow ethical guidelines, what are the reasons that make most people follow ethical guidelines?  We believe that people fall into one or more of the following three categories:

            Fear of the consequences.  Some people will follow ethical guidelines not so much because they consider them important, believe in them, or even agree with them.  Some people follow ethical guidelines simply because the potential consequences of not doing so can be dire.  We see every day the legal, financial, and career-ending problems brought on by unethical behavior.  For some, this is enough to make the difference in their behavior. For this person, obviously, it pays to dwell on the consequences of not behaving unethically.

            Being a “good soldier” and following guidelines.  For some people, following ethical guidelines is not so much out of fear, but because they consider that ethical guidelines are simply rules to be followed, and that this is part of their job. For this person, simply making explicit the ethical guidelines and keeping them visible is important.

            Having an inner ethical compass.  For many people (and I’d like to think this includes the majority of us), following business and professional ethics is truly an outgrowth of a strong, inner sense of morality and ethical beliefs.  Most people, I believe, will behave ethically under most circumstances.  Most of us, no matter what our background or beliefs, share a basic morality in our approach towards others and towards our business and professional lives.  There are, of course, business and professional situations that are so complex or unusual that it is not always clear how to apply our inner moral compass.  And that is where having formal ethical guidelines and access to appropriate consulting can make a big difference

            It is better to anticipate potential ethical problems rather than react to them when they occur.  In our practice we always try to ask ourselves in every activity, “Is there another side to this?  What is on ‘the other side of the coin’?   If we’re looking at the advantages of a decision, what are the potential disadvantages?”

            I hope that this provides a framework for understanding why simply applying one approach to all ethical problems or needs may not be enough.