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posted on 21 September 2017

How Personal And Organizational Ethical Responsibility Is Easily Diffused

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An Investigator's Guide To Ethics, Part 6

If you came across an elderly, well-dressed man lying on the ground, what would you do? Would you assume the man had suffered come kind of medical emergency? What if the man wore raggedly clothes and was disheveled? Would that change your opinion of what to do?

man.lying.on.street


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What if the man had vomited all over the front of his shirt? Does seeing that change your decision-making process? If there were was a group of people walking by the same man, would that affect how you would react? Do you have an ethical responsibility to do anything in this situation?

When you read the preceding paragraphs, you were likely to grimace when you read the description where the man had vomited and whether you realized it or not, it probably would have an effect on your subsequent actions. In fact, all of the descriptions above created mental images in your head and allowed you to decide what was likely to have happened despite not knowing the circumstances of how the man came to be prone on the ground. Although you likely chose to do something when imagining yourself in those scenarios, one of the most powerful influences that could lead you to do nothing in this situation is the mere existence of a group of people who are seeing the same scene as you.

Psychologist Robert Cialdini has described pluralistic ignorance as the phenomenon where people come across a situation and look to other people for cues on how they should react.[1] If the people walking by the man on the ground were calm and ignored him, you were likely to follow other people’s behavioral cues. If someone were to stop, lean down, and try to give medical aid to the man, you were also just as likely to walk away.

The thing that would have made you feel more compelled to act is if the man would have called specifically to you for help. For example, if you were wearing glasses and a white shirt and the man asked for help from you by specifically referencing your glasses and white shirt, you would have likely felt a subtle compulsion to assist. What you have done in this situation where there are groups of people experiencing the same scene is assume that someone else will take care of the problem. You have effectively diffused your ethical responsibility by giving the duty of care to other bystanders who are near the same scene. By doing so, you are able to retain your positive ethical self-image while doing nothing.

Even in the other case where you are specifically referenced, you could diffuse your responsibility with excuses such as “this is not a safe neighborhood" or “this is a ruse to rob me", but you would have to rationalize these other excuses quickly to maintain your positive self-image.

The same type of diffusion can occur in the workplace. CGA Canada’s research suggest that there are 10% of people in the workplace who will always defraud their employer if they perceive opportunity, another 10% will never defraud their employer even in the presence of opportunity, and the remaining 80% of people in the workplace will defraud their employer only under certain conditions.[2]

In order for these 80% of people to commit fraudulent acts, they need to perceive a condition, which allows them to justify an action and/or decision. For example, an accountant at a small business asked the owner for a raise of $100 per week. The owner commiserated with the accountant by telling him that he deserved the raise, but that the business, in the owner’s opinion, simply could not afford to give the accountant the raise. For the next 25 years, the accountant defrauded his employer of exactly $100 per week. In the accountant’s mind, he was able to diffuse his theft by convincing himself that he was only taking what he deserved.


[Only] 10% will never defraud their employer even in the presence of opportunity


Diffusion of ethical responsibility can also be derived from the social comparison theory, which is when you judge your personal worth by comparing yourself to other similar or non-similar groups.[3] For example, how did you feel when one of your peers or colleagues received a raise and/or reward and you didn’t? Did your self-worth suffer in that moment and can you recall if that reward impacted your relationship with that colleague, at least in the short-term? You consciously and unconsciously compare yourself to others and when your peer or colleague receives something of value, it creates a potential condition where you justify a break from your traditional ethical base.

Group dynamics also plays an important role in how people diffuse personal responsibility while maintaining their positive self-image. In this type of diffusion, you are likely to hear excuses such as, “Everyone is doing it" or “I’m just following the example of the group." By including others, the offender is maintaining their ethical base by diffusing the act along a much broader base, which serves as a way to transform the unethical act into acceptable behavior via the behavior of a perceived majority.


The easiest way to diffuse responsibility in ethical issues, however, may be to just ignore the fact that the ethical violation is occurring.


Advantageous comparison is yet another method to diffuse personal responsibility for an unethical act. In these situations, the offender will often advantageously compare their act to something much more egregious because it makes their action, decision, and/or behavior less damaging. Investigators will often here an excuse such as, “Well I may have done this, but look at what he/she did!" This is the manifestation of the attempt by the interviewee to maintain their positive and ethical self-image he/she has given himself/herself in the face of making an unethical decision.

The easiest way to diffuse responsibility in ethical issues, however, may be to just ignore the fact that the ethical violation is occurring. Like an ostrich, people in these situations simply place their head in the ground and refuse to acknowledge what is happening around them. Frequently, blame for the ethical violation is diffused by first stating that you were not aware of the ethical violation and that the responsibility for the ethical violation lay with a third party, to which you have no organizational or personal authority. By placing blame on a third party, you effectively transfer responsibility for the action, behavior, and/or decision from yourself to another.

In 2008, California enacted a law that required trucking companies to replace all of their old trucks with newer models due to the amount of diesel fumes the outdated trucks were emitting into the environment. It was estimated that port trucking companies would have to spend approximately $2.5 billion to upgrade their fleets after this law passed. Port truckers are individuals who drive the short treks taking goods from seaports to nearby warehouses before they make their way across the United States to different stores. It is estimated that half of the United States’ container imports transfer from Southern California ports. Many of the items you purchase in a store or online are trucked by these same individuals to warehouses or rail yards before the goods are forwarded to a retailer or before being made available online.

With such a staggering cost, the port trucking companies developed an alternative to save themselves the cost of the new trucks:

“Instead of digging into their own pockets to undo the environmental mess they helped create, the companies found a way to push the cost onto individual drivers, who are paid by the number and kinds of containers they move, not by the hour."[4]

The solution came in the form of a lease to own contract that would be signed by the drivers and contain a number of one-sided clauses that benefitted the port trucking companies. If a driver did not sign the contract, the driver was told he/she would be fired.[5]


People engage in unethical actions on a daily basis, much more often than they care to admit.


In a USA Today report, the authors found that port truckers, mostly immigrants who spoke little or no English, were being forced to drive well beyond these limits every day. The USA Today reporters found, among other things:

· Some port trucking companies were forcing the drivers to work against their will with some drivers working 20 hours per day despite federal laws limiting driving time to 11 hours per day. If the driver refused, the contract stated that any money the driver had paid towards the purchase of the truck immediately reverted back to the company. For some drivers, this would mean a loss of tens of thousands of dollars.

· If a driver was fired, all of the money he/she paid towards the purchase of the truck reverted back to the company.

· If a driver became ill or couldn’t come to work for some reason, the driver would frequently be fired immediately losing all equity that he/she had in the truck.

· A culture of fear was created due to these contracts, which made drivers do whatever their managers said because they did not want to lose their equity. In some cases, drivers were allegedly told by their managers to falsify federal reports in order to show that they were complying with federal laws regarding driving hours.[6]

· Port trucking companies, when asked, defended their practices while also diffusing their responsibility by offering excuses such as blaming the problems on disgruntled drivers, unions, and other people.[7]

As USA Today investigative reporters conducted their research, they found a number of prominent United States corporations that utilized the same port trucking companies to transport their goods, albeit through third-party transportation and logistics vendors. Companies such as Home Depot, J Crew, Target, Costco, Amazon, and others were traced back to some of the port trucking companies investigated by USA Today. When USA Today reporters went to the spokespeople for some of these companies to ask for a statement regarding the mistreated workers from the port trucking companies, many of the corporations refused to comment. JC Penney responded to USA Today’s queries by stating:

“The company relies on its third-party transportation vendors to comply with all applicable laws and regulations."[8]

LG Electronics also replied to USA Today’s query:

“LG believes our responsibility starts when the goods arrive in our own warehouse."[9]

In their investigation, the USA Today reporters found that Goodyear was the only company that ended a relationship with a port trucking company after California courts ruled in favor of the port truck drivers and their allegations described above.[10]

In a way, the LG electronics statement signifies how easily people and organizations can diffuse their responsibility when unethical behavior occurs.

“People engage in unethical actions on a daily basis, much more often than they care to admit. At the same time, they strive to maintain a positive self-concept, both privately and publicly. In fact, people wish to view themselves as moral beings and take steps to maintain this belief when they behave immorally - even when these steps involve sacrificing gains or investing valuable resources."[11]

Because you are frequently unable to sort through personal interests, especially in times when you experience extreme emotion, you are more likely to commit unethical acts without even recognizing that you are doing so. Steps can be taken, however, to protect you from succumbing to actions, decisions and behaviors that can later prove to be regretful.

In 2002, venture capitalist Ben Horowitz spoke with a chief financial officer who advised him to optimize executive stock option incentives by post-dating the option price at the low for the previous month. To Horowitz, the advice seemed odd but, when questioned about the practice, the CFO advised Horowitz that this practice had been approved by outside counsel and outside auditors at his/her former company.

Horowitz was obviously interested in maximizing gains but he couldn’t get past his gut feeling that something didn’t feel quite right. Before authorizing the practice, Horowitz sought the advice of his own general counsel. After review of applicable laws, Horowitz’ general counsel came to the opposite conclusion as the CFO stating that the practice described seemed illegal. Horowitz decided to follow his counsel’s advice and felt extremely fortunate after the CFO who offered the idea of backdating was eventually convicted of fraud for participating in the backdating practice at the previous company.[12]

If Horowitz had followed his gut reaction, he could have easily been convicted as well. Instead, Horowitz decided to seek the advice from someone who had no beneficial interest in the transaction and this helped Horowitz to maintain his ethicality even in the face of a substantial personal gain. If you, as an investigator, have someone who you can speak with about your cases and this person can maintain independence or even take the role of a devil’s advocate, you are more likely to avoid regrettable mistakes. Doing so may just save you from an ethical violation that could destroy one of your cases and also save you from personal jeopardy.

References

[1] Cialdini, R. B. (2007). Influence: the psychology of persuasion. New York, NY: Collins.

[2] McCullough, M. (2012). Why We Don’t Feel Bad About Stealing From Work, Canadian Business, January 19, 2012. Taken from the Internet on June 21, 2017 at http://www.canadianbusiness.com/business-strategy/why-we-dont-feel-bad-about-stealing-from-work/

[3] Bender, J.; Diermeier, D.; & Ting, M. (2015). Inequality, Aspirations, & Social Comparisons, Columbia University, 2015. Taken from the Internet on June 29, 2017 at http://www.columbia.edu/~mmt2033/social_comparisons.pdf

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Jordan, J.; Leliveld, M.; & Tenbrunsel, A. (2015). The Moral Self-Image Scale: Measuring and Understanding the Malleability of the Moral Self, Frontiers in Psychology, December 15, 2015. Taken from the Internet on June 29, 2017 at https://www.google.com/#q=+positive+self-image+and+ethical+violatrions+psychology

[12] Carozza, D. (2017). Cultivating Humility, Not Confidence, in Ethics TrainingCan Keep Execs Out of Jail, Fraud Conference News, Association of Certified Fraud Examiners, June 20, 2017. Taken from the Internet on June 29, 2017 at http://www.fraudconferencenews.com/home/2017/6/20/cultivating-humility-not-confidence-in-ethics-training-can-keep-execs-out-of-jail?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BsPqqz4P9QWWBHITJMWnF0A%3D%3D

Previous articles in this series:

  1. Why Traditional Ethics And Compliance Training Programs Don't Deter Fraud(23 May 2017)
  2. An Investigator's Guide To Ethics, Part 2: Why Good People Do Bad Things(10 Jun 2017)
  3. The Ethical Dimensions Of Power (06 Jul 2017)
  4. Losing Your Ethical Way Through Competition And Rivalry (23 Jul 2017)
  5. The Rule Of Reciprocity (12 Aug 2017)

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