Goal setting is often a subject of discussion about behavioral ethics and internal programs. We’ve seen in recent cases such as at Wells Fargo and Volkswagen how cheating and lying become the norm when performance goals are not reasonably achievable. Recent evidence in a paper by Niki den Nieuwenboer, João da Cunha, and ES collaborator Linda Treviño shows the internal dynamics and processes that lead directly to cheating behaviors.
The researchers, one of which was embedded inside the company, observed managers and sales staff over 15 months at a large (10,000 employees) telecommunications company. The company had established goals for its desk sales teams designed to motivate productivity, including a target for sales as well as sales-related work, such as making cold calls to customers, and gathering information about potential customers, among other planning activities.
Interview with Ron Carucci, author, leadership consultant and cofounder / managing partner at Navalent
What are your main areas of research/work?
My colleagues and I at Navalent spend our days working with organizations pursuing dramatic change. That could be changes in strategy, re designs of organizations, or strengthening of leadership capability. Our writing and research focuses on those same areas – we see our intellectual capital as the opportunity to learn on behalf of the clients we serve.
How does strengthening leadership help reduce ethical misconduct in companies?
If you think about the nature of many ethical misconduct, they can often emanate from previously undiscovered character flaws that get exposed when leaders are pressured in broader roles. Preparing leaders early in their careers to assume increasingly bigger jobs can help reduce the likelihood that the challenges of power and resources, political rivalries, or intensified performance pressures won’t drive leaders to make short-sighted, unethical choices.
Interview with Robert Bloomfield, Nicholas H. Noyes Professor of Management and Professor of Accounting at Cornell University’s Johnson Graduate School of Management
My research reinforces a maxim long emphasized by accountants: it is most useful to view ethical behavior as a result of institutional choices, rather than as a result of moral character. It isn’t that a manager’s character has no effect on the ethicality of their decisions, just that it tends to be swamped by institutional forces—and in general, people are far too prone to attribute ethical actions to character when they are actually driven by environment; this bias is so well documented it has been named the Fundamental Attribution Error. Also, we rarely know a person’s character, and even if we do, we don’t know much about how to change it.
We ordinarily think of people as honest or dishonest, a broad-brush description which implicitly assumes that honesty is a personal characteristic that generalizes across decision domains. If so, a student who cheats on an exam is also more likely to shoplift or lie to a friend or partner. Does knowing that a corporate manager is opportunistic in one decision domain tell us much about whether the manager will misbehave in some other domain? In other words, are some managers just `bad apples’?
Recently, in the paper “Opportunism as a Managerial Trait: Predicting Insider Trading Profits and Misconduct” Usman Ali, Portoflio Manager at MIG Capital, and I study these questions by examining whether corporate managers who profit by insider trading in their firms’ stocks engage in other forms of misbehavior as well.