The Ethical Executive

Becoming Aware of the Root Causes of Unethical Behavior: 45 Psychological Traps that Every One of Us Falls Prey To

Robert Hoyk, Paul Hersey

• Publisher: Stanford Business Books
• Year: 2010
• ISBN:
  9780804776134
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

In this book, Hoyk and Hersey describe 45 "unethical traps" into which any one of us can fall. These traps, they say, can erupt in any organizational environment. Some of these traps distort our perception of right and wrong—so we actually believe our unethical behavior is right. Many of them are psychological in nature, and if we are not aware of them they are like illusions—webs of deception. In the authors' analysis, these traps significantly contributed to the large-scale corporate disasters we witnessed in recent years.

Hoyk and Hersey take account of these realities and offer a "real-world" method that will predict, preclude, and, if necessary, "get us out of" these traps. Given the increased scrutiny under which all executives and mangers operate today, this book is a 'must read' for anyone who is charged with achieving an organization's mission—whether that mission is increasing profit, serving the common good, or both.

PART I:

PRIMARY TRAPS

This section will describe and explore twenty traps that cause people to behave unethically. These are the main traps that pull us in; the traps that provoke us or trick us into illegal or unethical transgression.

TRAP 1:

OBEDIENCE TO AUTHORITY

AFTER THE SECOND WORLD WAR, scientists were driven to understand the insanity of the Holocaust. Citizens of Germany had committed immoral acts, torture and murder, against millions of human beings. How could normal people behave so atrociously? In 1960, Stanley Milgram at Yale University was one of the researchers who wanted to understand how such a horror could ever happen.

IMAGINE. You’ve volunteered to be a subject in a scientific experiment. You’ve read an ad in the local newspaper that a professor at Yale University is conducting an experiment and needs subjects. The experiment has to do with learning and memory. You’ll be compensated $4.50 for an hour of participation. In 1960, $4.50 had much more value than it does today. You’re a high school teacher just out of college. You have an interest in psychology so you decide to sign up.

You’re scheduled to participate in the experiment on a Saturday morning. You have a little trouble finding the laboratory on the campus of Yale, but you make it on time. You meet with a professor of psychology, Dr. Milgram, who is wearing a gray laboratory coat. Dr. Milgram introduces you to Mr. McCourt, another subject who has also volunteered. Mr. McCourt is softspoken and has an Irish accent. With a lively smile, he gives you a firm handshake. It is only later, after the experiment is finished, that you will be told that Mr. McCourt is actually an accomplice, a professional actor, someone trained for the part. But at the time, you don’t know this. You think he is another volunteer like yourself. You meet in a waiting room around a rosewood reception desk.

Dr. Milgram begins by stating that psychology still lacks a comprehensive understanding of how punishment influences learning. Psychologists have conducted numerous experiments with animals to explore the relationship between punishment and learning but there have been very few experiments that have used human subjects. You ask Dr. Milgram what he means by punishment. The ad in the paper said nothing about punishment. He replies by saying, “We’ll get to that a little later.” Dr. Milgram holds out a hat with two folded pieces of paper inside. “I’d like you each to pick a slip of paper to decide which one of you will play the teacher role and who will play the student role.”

You don’t find out until after the experiment is over that both pieces of paper have written on them the word “Teacher.” Mr. McCourt will always play the role of the student.

Mr. McCourt and you are then led into an adjoining room, and Mr. McCourt is asked to sit in an “electric chair apparatus.” Dr. Milgram straps Mr. McCourt to the arms of the chair and attaches an electrode to his right wrist. “It’s important,” Dr. Milgram explains, “that his arms are immobile during shock so he won’t disconnect this electrode. I’m applying some electrode paste to avoid blisters and burns. This electrode is connected to a shock generator. I’ll show you the generator shortly.”

You notice that Mr. McCourt’s face is taut and he’s blinking rapidly. He looks up at Dr. Milgram. “This isn’t dangerous is it? I mean, I have a heart problem.”

Dr. Milgram shakes his head. “Although the shocks can be extremely painful, they cause no permanent tissue damage.”

You’re then led to the adjoining room and take a seat in front of the shock generator. The generator has an instrument panel with thirty switches in a line from left to right. Directly above every switch is engraved a voltage level. Levels are printed in ascending order. The lowest level is 15 volts and the highest is 450 volts. There are also word labels above the numbers ranging from “Slight Shock” all the way to “Danger: Severe Shock.” You have no visual contact with Mr. McCourt. You communicate via intercom. At this point, Dr. Milgram attaches an electrode to your wrist, “I’d like you to experience a shock of 45 volts so you can get an idea of what it’s like for the student.” You sit back in your chair and Dr. Milgram presses the third lever on the instrument panel. You jump forward with a yelp! You had no idea 45 volts was that painful. You make light of it by saying, “I’m sure glad I’m the teacher.”

Dr. Milgram then instructs you on how to give the memory test and tells you to shock Mr. McCourt if he expresses a wrong answer. You’re also instructed that with each successive error, you are to increase the voltage to the next level.

You begin the memory test by reading into the intercom a list of words paired together. You later recite one of the words in each pair, and Mr. McCourt’s task is to recall the other word in the original pair.

At the beginning of the experiment, things go well. But as the memory test continues Mr. McCourt begins to make more and more errors. You have to increase the level of shock substantially.

At 75 volts, you hear Mr. McCourt groan loudly over the intercom. At 120 volts, Mr. McCourt shouts that the shocks are very painful. When you administer a shock of 150 volts, he shouts, “Stop! Release me! I refuse to continue!”

At this point you take a deep breath and push your chair away from the generator. You rub your hands together and notice that your palms are sweaty. You begin to rapidly jiggle your left leg. You turn to Dr. Milgram and say “I don’t like this, I’m not sure I want to go on. I’ll hurt his heart!”

Dr. Milgram looks straight into your eyes and says, “It’s absolutely essential that you continue. You have no other choice, you must go on.” And what do you do? You continue to be obedient. You continue to shock Mr. McCourt all the way to 450 volts, all the way to “Danger: Severe Shock.”

Of course, during the experiment subjects actually think they’re shocking Mr. McCourt and don’t realize that he’s only acting. This experiment was repeated over a hundred times. Sixty-five percent of the subjects who participated continued to administer shocks up to the highest level. Stanley Milgram concluded that obedience is an “impulse overriding training in ethics, sympathy, and moral conduct.”¹

Out of all the subjects who participated in Milgram’s experiment, there was only one subject who upon hearing what his task was as the teacher refused to play his role and walked out before the experiment started. Who was the subject?—a Holocaust survivor.

IF SUBJECTS IN A ONE-TIME EXPERIMENT with a stranger, a professor whom they will likely never see again, cannot resist the impulse to obey, imagine how much harder it would be for employees in a corporation who have their jobs, futures, and families’ welfare potentially at stake.

A corporation is a hierarchical organization similar to the military. What the boss says goes. If you want to keep your job, you obey. In such an authoritarian environment, it’s difficult to disobey a manager who demands that you do something unethical. The stronger the authoritarian structure of the organization, the more the members are primed to be obedient and not to challenge their leaders.

For example, in the third quarter of 2001, the CFO of WorldCom, Scott Sullivan, had ordered the controller, David Myers, to hide expenses that totaled $800 million in the accounting books to create the illusion that the company had a high rate of earnings. Myers obeyed the order.²

As we’ll see when we look at the next trap, it’s especially hard to disobey a manager if at first he or she asks you to do something unethical that seems minor.

TRAP 2:

SMALL STEPS

IF YOU PUT A FROG in a pot of boiling water, it will frantically try to scramble out. But if you put a frog in a pot of room temperature water it will stay. If you slowly heat up the water, something happens that is quite amazing. As the temperature rises from 70 to 80 degrees, the frog stays put. If you continue raising the temperature little by little, in small steps, the frog will become groggier and more torpid until it is incapable of climbing out of the pot. It will eventually die.

Often, unethical behavior happens little by little, in small steps, and progressively becomes more and more severe. After awhile, one is able to tolerate a certain severity of one’s own unethical behavior. One would not, however, tolerate this level if it occurred all at once in a large dose at the very beginning.

In February of 2002, Enron’s board of directors formed a committee to investigate the CFO of the company, Andrew Fastow. The report released by the committee describes Enron’s “slow journey into accounting hell.”

In the beginning, Fastow began by making relatively small steps down the road of corruption. Fastow broke two regulations when he created a special purpose entity (SPE). An SPE is basically another company. Fastow used the SPE to keep financial debt off the books. The SPE would have been legal if at least 3 percent of its capital was not linked to Enron. Fastow engineered the SPE so that it seemed to have the required 3 percent. In reality, the 3 percent equity was provided by Michael Kopper, Fastow’s right-hand man. This inside investment was buried in a complex financial arrangement. Further, Fastow needed authorization from the board of directors to establish the SPE. He never obtained the necessary permission.¹

TRAP 1, obedience to authority, becomes more treacherous when it is combined with Trap 2, small steps. It seems less innocuous if we obey an order from our boss to do something unethical that is relatively minor at first. If our boss increases, little by little, the magnitude of the transgressions he or she directs us to do—over a long period of time—we can become desensitized to our own unethical behavior.

Milgram’s experiment on obedience (Trap 1) also incorporated the trap of small steps. You may remember that the subject administered a memory test to the “student” (confederate) and shocked him when he expressed a wrong answer. The subject was instructed that with each successive error, he was to increase the voltage to the next level. There were 30 voltage levels ranging from 15 volts to 450 volts.

When the subject pressed the first switch, it was a mild shock of 15 volts. By the time the confederate began to verbally protest by groaning, the subject had already shocked the confederate five times and the level of intensity had increased to 75 volts.²

SIDESTEPPING RESPONSIBILITY

ONE OF THE BEST INSTRUMENTS used to predict moral behavior is the Ascription of Responsibility Scale developed by Shalom Schwartz at the University of Wisconsin. Those who rate high in “ascription of responsibility” endorse such items on the scale as, “If I hurt someone unintentionally, I would feel almost as guilty as I would if I had done the same thing intentionally” or “Being very upset or preoccupied does not excuse a person for doing anything he would ordinarily avoid.”¹

When our sense of responsibility is weakened, we are more apt to behave unethically.

TRAP 3: INDIRECT RESPONSIBILITY

During the Second World War, many civil servants in Germany were willing to do clerical work for the Holocaust. Their readiness amazed the Nazi command. The civ...