Steps to Strengthen Ethics in Organizations: Research Findings, Ethics Placebos, and What Works

Abstract

Research shows that many organizations overlook needs and opportunities to strengthen ethics. Barriers can make it hard to see the need for stronger ethics and even harder to take effective action. These barriers include the organization’s misleading use of language, misuse of an ethics code, culture of silence, strategies of justification, institutional betrayal, and ethical fallacies. Ethics placebos tend to take the place of steps to see, solve, and prevent problems. This article reviews relevant research and specific steps that create change.

KEYWORDS:

• ethics
• organizations
• ethics codes
• moral courage
• whistleblower
• ethics enforcement
• institutional betrayal

We live in an age rich with opportunities to make organizational ethics stronger. Striking betrayals of ethics and trust grab headlines:

• In 2014, General Motors (GM) admitted that since 2001 it had hidden a potentially fatal design defect. GM engineers, investigators, and lawyers knew, but the company decided that recalling cars would cost too much. Instead, they kept the flaw secret for more than a decade. They kept selling risky cars while the deaths and injuries piled up (Bennett, 2014a, 2014b, 2014c; Consumer Reports, 2014; Ivory & Abrams, 2014; Plungis & Higgins, 2014; Viscusi, 2015; Young, 2014).

• Famous for its football program’s integrity, Penn State covered up child abuse for years, allowing the abuser to continue committing crimes. The university-commissioned report stressed “the total and consistent disregard by the most senior leaders at Penn State for the safety and welfare of Sandusky’s child victims” (Freeh, Sporken, & Sullivan, LLP, 2012, p. 14).

• California had repealed its “compulsory sterilization laws [that] targeted minorities, the poor, the disabled, the mentally ill and criminals” (Johnson, 2014) that allowed the state to force sterilization on more than 20,000 citizens in state-run institutions (Stern, 2005; Wellerstein, 2011), but the California State Auditor (2014) reported that between 2005 and 2013 the state prison system had continued to sterilize some female prisoners, violating both the law and women’s right to informed consent.

• Many Veterans Administration (VA) executives pocketed hefty bonuses for making sure that sick veterans got prompt care, but it was a con. Hospitals reported that they were giving all veterans prompt care when needed but were shunting tens of thousands of veterans to secret waiting lists where they languished without care for months and some died without care (Bronstein & Griffin, 2014; Daly & Tang, 2014; Hoyer & Zoroya, 2014; Oppel & Shear, 2014; VA Office of the Inspector General, 2014; Wagner, 2014a, 2014b).

Studies suggest that many organizations violate basic ethical standards and betray our trust:

• Huberts (2014) noted that almost half of U.S. workers reported seeing one or more acts of wrongdoing (e.g., accepting kickbacks or bribes, offering bribes to public officials, lying to outside stakeholders, environmental violations) on the job within the past year.

• A study of full-time U.S. workers found that almost three fourths reported encountering ethical lapses at work, with one tenth believing that the lapse could create a scandal or business disruption (LRN, 2007).

• According to Stevens (2013), “Confidence in the ethics of the U.S. business executive remains fairly low on the Gallup Poll surveys and the U.S. has declined on the CPI (Consumer Price Index) and Edelman Trust Barometer” (p. 361).

• In the introduction to a special issue of the Journal of Law, Medicine & Ethics, Rodwin (2013) wrote that “today, the goals of pharmaceutical policy and medical practice are often undermined due to institutional corruption—that is, widespread or systemic practices, usually legal, that undermine an institution’s objectives or integrity” (p. 544). Elliott (2014) noted that in 2010 the pharmaceutical industry eclipsed the defense industry as the biggest defrauder of the U.S. government.

• A study found that campus judicial systems tend to give light sentences (e.g., writing an essay) for serious violations such as sexual assaults, physical attacks causing serious injuries, robberies, and other violent felonies, leaving many students reporting that “the system is unfair” and that the campus “has betrayed them” (Binkley, Wagner, Riepenhoff, & Gregory, 2014).

• Twenge, Campbell, and Carter (2014) reported that “confidence in institutions … reached historic lows among Americans” (p. 1920). They emphasized that the loss of trust and confidence extends across a wide array of institutions: “The trend is not limited to distrust in government; the declines also appear in Americans’ confidence in institutions unconnected to the government, such as medicine, religion, the news media, and TV” (p. 1921).

This article suggests three steps to strengthen ethics in organizations.

KEEP CODES IN CONTEXT

Organizations often point with pride to their ethics codes, highlighting high ideals and clear prohibitions of questionable conduct. Codes can communicate basic standards and admirable aspirations. But ethics codes—including those backed by good-faith enforcement—often fall short of fostering an ethically strong organization. Unethical acts may go unnoticed, noticed acts may go unreported, reported acts may not be fully and fairly investigated, and investigation findings may not be adequately acted on.

Enron’s famous 84-page organizational code illustrates the illusions that codes out of context can create. Enron required every employee to read and sign the code, which was widely praised for years as a model for other groups wishing to achieve Enron’s reputation for integrity, innovation, and profitability. Years later, Enron’s code of ethics shifted from fame to notoriety as prosecutors used it to cross-examine employees in trials that convicted 21 felons after the company collapsed into bankruptcy and caused investors to lose $74 billion, with losses due to fraud up to $45 billion (Arbogast, 2013; Axtman, 2005; McLean & Elkind, 2013; Pasha, 2006; Watkins, 2013).

Lease (2006) wrote that “the literature supports … the contention that an ethical organizational culture cannot be created through the imposition of a code” (p. 29) but that a code can play a key role if those at the top provide ethical leadership by modeling ethical behavior and creating a culture of commitment to ethics throughout the organization.

Kish-Gephart, Harrison, and Treviño’s (2010) meta-analysis found that the “mere existence of a code of conduct has no detectable impact on unethical choices, despite the considerable amount of statistical power that comes from doing a meta-analytic summary” (p. 21). However, the study also found “a strong, negative link … between code enforcement and unethical choice” (p. 13).

Weaver (2014) noted that “empirical research has been clear” that organizational codes per se have “limited, if any, influence on ethical behavior” (p. 293) but must be part of an organization climate in which ethical issues are discussed on an everyday basis and become an ordinary aspect of decision making and behavior (see also Nicholson, 2008; Weiss, 2014). The organization’s ethical culture becomes internalized as part of each individual’s personal values (Hill, Jones, & Schilling, 2014).

These and other studies suggest that most ethics codes are little more than an ethics placebo. Codes work to prompt ethical thinking and action when rooted in an ecology of strong ethical leadership, effective enforcement, and a culture of ethical concern. Ethics questions can rise for everyone to the level of daily concern often devoted to questions of profits, promotions, and will this meeting ever end? To make ethics stronger in any organization, a reasonable first step is surveying all employees, members, and other stakeholders about current leadership, enforcement, and culture; asking them about needed changes; and opening up discussions.

RESPECT THE TRUE COSTS OF BETRAYING ETHICS

When it comes to ethics, none of us is perfect. We all fall short, miss red flags, face risky moments of weakness and temptation. How do we mask, reinterpret, or justify our unethical acts to ourselves and, when needed, to others? Each of us likely has our own set of go-to strategies when we find it hard to pass up temptation. Pope and Vasquez (2011) discussed ways to recognize and avoid some of the most common means—including eight tricks of language, 22 cognitive strategies of justification, and 22 logical fallacies in ethical reasoning—of spinning ethically questionable or objectionable options into seemingly acceptable choices.

These ethical spins deny or downplay the true costs of our unethical acts. The costs of betraying ethics range from seemingly minor wrongs to people dying, as in the GM example. In betraying ethics, GM betrayed its customers, who trusted and relied on the company’s honesty, integrity, and good faith. As a result, some GM customers died. Others suffered needless catastrophic injuries. Families suddenly lost a mother, a father, a child, or another loved one. These are the true costs of deciding that fixing a design flaw is “not worth the cost” (Viscusi, 2015, p. 7).

Research supports the idea that betrayal per se can cause harm and may deepen the response to other bad acts. Rachman (2010) noted that betrayal’s effects may include “shock, loss and grief, morbid pre-occupation, damaged self-esteem, self-doubting, anger” and sometimes “life-altering changes” (p. 304). Koehler and Gershoff’s (2003) set of experiments “found that people reacted more strongly … to acts of betrayal than to identical bad acts that do not violate a duty or promise to protect” (p. 244; see also Beamish, 2001).

Research also supports the idea that when betrayal happens within organizational dynamics, it may cause institutional betrayal trauma (Freyd, Klest, & Allard, 2005; Smith & Freyd, 2013). Organizations often betray customers, students, parishioners, prisoners, and others who are not employees, but organizations can also betray their own employees. Kirschman, Kamena, and Fay (2013), for example, described organizational betrayal that many police officers experience. They wrote that when this betrayal occurs, it “complicates traumatic reactions by creating huge doubts about the future” (p. 73) and “makes everything else worse” (p. 57). Surís, Lind, Kashner, and Borman (2007, p. 179; see also Surís, Lind, Kashner, Borman, & Petty, 2004) found that when female solders were sexually assaulted within the context of the military organization (i.e., by officers or other military personnel), there were “additional negative consequences above and beyond the effects of [civilian sexual assault].”

Ethically strong organizations work to avoid the many tricks of language, cognitive strategies, and logical fallacies mentioned earlier that hide betrayals and their true costs. To appreciate the ability of such a common event as betrayal to stay out of sight, it may be helpful to remember that psychology itself was slow to recognize it as topic of study. The PsycNET database includes millions of articles in psychology journals dating back to 1900, but a study—or article of any kind—with the term betrayal in the title did not appear in a psychology journal until a single article was published during the 1960s, followed by an average of less than one each year for the next two decades. It was not until 1992, when a special double issue (Volume 8, Issues 3–4) of Psychotherapy Patient published seven articles focusing on betrayal, and 1994, when Freyd published “Betrayal Trauma: Traumatic Amnesia as an Adaptive Response to Childhood Abuse,” which was followed by Betrayal Trauma: The Logic of Forgetting Childhood Abuse in 1996, that a significant body of published research, theory, and thoughtful discussions began to appear.

The anonymous survey and open discussion recommended previously might include the following questions:

• How has the organization betrayed—or seemed at risk for betraying—ethical standards or aspirations, the organization’s employees or members, and others affected by the organization’s behavior?

• How has the organization denied or downplayed betrayals and their consequences?

• How has the organization failed to assume responsibility for its betrayals?

• What changes would be helpful, and who should make them?

ENCOURAGE SPEAKING UP, LISTENING CAREFULLY, AND ACTING WITH FAIRNESS

Prior sections suggest an anonymous survey as a starting point. Why? Because organizational culture often silences concerns that the organization’s leadership, culture, code enforcement, or behavior are questionable, somewhat flawed, or worse. Kish-Gephart, Detert, Treviño, and Edmondson (2009) wrote, “In every organization, individual members have the potential to speak up about important issues, but a growing body of research suggests that they often remain silent instead, out of fear of negative personal and professional consequences” (p. 163; see also Milliken, Morrison, & Hewlin, 2003). Detert and Treviño (2010) noted that many employees believe from the time they set foot in the door that part of their organizational role is to “‘tread lightly’ around those in power” (p. 264).

Sometimes the belief that speaking up achieves nothing compels those concerned to keep their mouths shut. In some organizations, people in power turn a deaf ear to unwelcome questions, concerns, or reports (see, e.g., Peirce, Rosen, & Smolinski, 1998; Pinder & Harlos, 2001).

Stakeholders may also lack confidence that ethics concerns or complaints will be met with fairness and justice (Cropanzana, Bowen, & Gilliland, 2007; Dunford, Jackson, Boss, Tay, & Boss, 2014; Qin, Ren, Zhang, & Johnson, 2014). Koocher (2014) provided a detailed report of an executive director of the American Psychological Association (APA) who acted secretly in regard to a formal ethics complaint against a prominent APA member, later “professed no knowledge” (p. 3273) to the Board of Directors about action that he himself had taken, and only years later told others of his “personal belief that an ethics investigation of a high profile psychological scientist at that time in APA’s history would have severely damaged the organization” (p. 3274). If members of any organization believe that there is one system of ethical accountability and discipline for high-status members and a different system for everyone else, it may create a climate in which high-status members trust that those in power will find creative ways to shield them from accountability or even investigations, and others learn that voicing ethical questions or concerns about those who enjoy high status will at best come to nothing.

Research suggests that those who choose to act as whistleblowers must overcome concerns that they will face retaliation or that the risks they take will be in vain (Mayer, Nurmohamed, Treviño, Shapiro, & Schminke, 2013; Mesmer-Magnus & Viswesvaran, 2005; Miceli, Near, & Dworkin, 2013). These concerns are often well placed. Dyer (2014), for example, reported that “more than half the whistleblowers who contacted the UK charity Public Concern at Work for advice in 2012 were sacked or resigned after raising concerns about wrongdoing, risk, or malpractice” (p. 6285). An additional 22% were disciplined or punished in other ways. Only 6% reported that their speaking up led to improvements in the workplace.

Rothschild and Miethe (1999) found that whistleblowers tend to “suffer severe retaliation from management, especially when their information proves significant” (p. 107). McDonald and Ahern (2000) found that nurse whistleblowers tended to suffer severe consequences, whereas those who kept silent experienced few negative effects. The

official reprisals included demotion (4%), reprimand (11%), and referral to a psychiatrist (9%). Whistleblowers also reported that they received professional reprisals in the form of threats (16%), rejection by peers (14%), pressure to resign (7%), and being treated as a traitor (14%). Ten per cent reported that they felt their career had been halted. (McDonald & Ahern, 2000, p. 313)

Sherron Watkins (2013), formerly of Enron, described how blowing the whistle on questionable activities can derail a career. The media provided positive coverage of her insider disclosures of Enron’s wrongdoing and her testifying as a key prosecution witness in the criminal and civil trials. She shared the cover of Time with two other whistleblowers from other organizations as Time’s “Person of the Year.” The corporate world, however, took a dimmer view. A decade later she wrote that “the label Enron whistleblower means I will not work in Corporate America again” (p. ix).

Jackall (1988) gathered the rules of organizational silence into a series of five warnings:

(1) You never go around your boss. (2) You tell your boss what he wants to hear, even when your boss claims that he wants dissenting views. (3) If your boss wants something dropped, you drop it. (4) You are sensitive to your boss’s wishes so that you anticipate what he wants; you don’t force him, in other words, to act as boss. (5) Your job is not to report something that your boss does not want reported, but rather to cover it up. You do what your job requires, and you keep your mouth shut. (p. 115)

A culture of silence and silencing can close off many routes to better organizational ethics. An anonymous survey might begin by asking the following: If you were to raise concerns about ethics or blow the whistle on unethical behavior, how do you think your colleagues and those higher up in the organization would respond, what would happen to your concerns, and what would happen to you? But if the organization’s culture lacks trust, those asked to fill out the survey may wonder: Will they recognize my identity in some way? Are the forms coded? If I go to all the trouble of filling it out, will anyone even read it? Take it seriously? Treat it fairly? Use it to make things better?

In some cases, it may make more sense to simply start looking for ways to change the culture and dynamics of silencing. What immediate steps would encourage and support speaking up and show that valid criticism is heard, valued, and acted on with fairness and justice? Can the costs of speaking up be eliminated or at least minimized?

CONCLUSION: ONLY IF WE ACT

Any steps to make organizational ethics stronger can succeed only if we actually take the steps. Taking action requires us to leave our role as passive bystanders (aka enablers) when we learn of questionable or unacceptable behavior, especially when the welfare of others is at stake. We must often teach ourselves how to leave the comfort and safety of “it’s not my problem,” “someone else will take care of this,” “it’s probably not as bad as it looks,” or “speaking up won’t make any difference.” However, formal programs show promise in teaching and encouraging bystanders to take action in a range of situations such as theft, sexual harassment, interpersonal or systemic racism, bullying, or sexual assault (Chiose, 2014; Guerette, Flexon, & Marquez, 2013; Kleinsasser, Jouriles, McDonald, & Rosenfield, 2014; Nelson, Dunn, & Paradies, 2011; Nickerson, Aloe, Livingston, & Feeley, 2014; Palm Reed, Hines, Armstrong, & Cameron, 2014; Salmivalli, 2014; van Bommel, van Prooijen, Elffers, & van Lange, 2014; Wonderling, 2013).

Serrat (2010) described moral courage: “At its most basic, moral courage helps cultivate mindful organizational environments that, among others, offset groupthink; mitigate hypocrisy and ‘nod-and-wink’ cultures; educate mechanical conformity and compliance; bridge organizational silos; and check irregularities, misconduct, injustice, and corruption” (p. 2; see also Hannah, Avolio, & Walumbwa, 2011; Osswald, Greitemeyer, Fischer, & Frey, 2010; Simola, 2014). It often takes moral courage to take action—whether action means using a survey to find out what changes might make organizational ethics stronger, trying to help bring about those changes, or blowing the whistle inside or outside the organization.

Finally, even if we are concerned about, committed to, and focused on taking steps to prevent questionable or objectionable practices on an individual and organizational level, our lives may be so textured with tight schedules, heavy responsibilities, and constant distractions that we miss chances to make a difference. Darley and Batson (1973) conducted an experiment showing how a lack of attention to our immediate surroundings—the here and now—can lead to missed opportunities. Princeton Theological Seminary students participated in an experiment in which they were given time to prepare a brief talk in one locale and then had to give the talk in another building. As the students walked through an alley between the buildings, each found someone pretending to be a victim in need of help—slumped over in a doorway, eyes shut, head down, unmoving. The victim coughed and groaned. Half of the students prepared a talk on the parable of the Good Samaritan, and yet many did not stop to help the victim. Those who were about to talk about the importance of acting like the Good Samaritan were no more likely to stop to help than those who were assigned to talk about another topic. To save time, some stepped over the victim rather than going around.

As we go about taking steps to make ethics stronger in organizations, this study reminds us that a chance to make a difference can come at an inconvenient time and catch us off guard by appearing in forms we did not expect, that we can pass by it without noticing, and that we need to pay attention to what shows up unannounced at every step.

ACKNOWLEDGMENTS

Special thanks to Raymond Arsenault, Loralie Lawson, and Karen Olio, who provided helpful comments on a previous draft of this article.