How Unethical Behavior Becomes Habit
by Francesca Gino, Lisa D. Ordóñez and David Welsh | 11:00 AM September 4, 2014, Harvard Business Review
When a former client’s secretary was arrested for embezzlement years before his own crimes were uncovered, Bernie Madoff commented to his own secretary, “Well, you know what happens is, it starts out with you taking a little bit, maybe a few hundred, a few thousand. You get comfortable with that, and before you know it, it snowballs into something big.”
We now know that Madoff’s Ponzi scheme started when he engaged in misreporting to cover relatively small financial losses. Over a 15-year period, the scam grew steadily, eventually ballooning to $65 billion, even as regulators and investors failed to notice the warning signs.
Many of the biggest business scandals of recent years — including the News of the World phone hacking scandal, billions in rogue trading losses at UBS, and the collapse of Enron — have followed a similar pattern: The ethical behavior of those involved eroded over time.
Few of us will ever descend as deeply into crime as Bernard Madoff, yet we all are vulnerable to the same slippery slope. We are likely to begin with small indiscretions such as taking home office supplies, exaggerating mileage statements, or miscategorizing a personal meal in a restaurant as business-related. Nearly three-quarter of the employees who responded to one survey  reported that they had observed unethical or illegal behavior by coworkers in the past year.
“The safest road to Hell is the gradual one — the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts,” wrote C. S. Lewis. Our research backs up both Lewis’s intuition and the anecdotal evidence: People often start their misconduct with small transgressions and then slide down a slippery slope.
Two of us (Dave, Lisa, and our team) found  that people who are faced with growing opportunities to behave unethically are much more likely to rationalize this conduct than those who are presented with an abrupt change. We predicted that if we could get people to cheat a little in one round, they might be willing to cheat a bit more in another round, and finally cheat “big” in a third round.
This is precisely what we found: When given a series of problem-solving tasks, 50% of our subjects cheated to earn $.25 per problem in the first round, and 60% cheated to earn $2.50 per problem in the final round. However, the people in the abrupt change group who could not cheat during the first two rounds were much less willing to cheat big for $2.50 per problem during the final round (only about 30% did).
This suggests that employees might look at their slightly exaggerated mileage statements as “rounding up.” But rationalizing minor indiscretions inevitably influences how they view progressively worse behaviors and may lead them to commit bigger offenses (e.g., billing their employers for personal travel expenses) that they initially would not have considered.
To make matters worse, people are more likely to overlook the unethical behavior of others when it deteriorates gradually over time. For example, one of us (Francesca) found, with colleague Max Bazerman, that people who played the role of auditors in a simulated auditing task were much less likely to report those who gradually inflated their numbers over time than those who made more abrupt changes all at once, even though the level of inflation was eventually the same.
Unfortunately, the assumption that unethical workplace behavior is the product of a few bad apples has blinded many organizations to the fact that we all can be negatively influenced by situational forces, even when we care a great deal about honesty. Yet approaches to warding off the slippery-slope problem need not to be drastic. In their book Nudge: Improving Decisions about Health, Wealth, and Happiness,  Richard Thaler and Cass Sunstein illustrate how a small and unobtrusive nudge in the right direction can lead people to eat better, save more for retirement, and conserve energy.
Our research similarly indicates that ethical nudges can help people avoid the types of indiscretions that might start them down the slippery slope. For example, in a study  conducted with a major U.S. insurance company, Francesca and colleagues found that customers who signed the statement “I promise that the information I am providing is true” prior to reporting their annual mileage — that is, at the top of the page — were significantly more honest in their reporting compared to those who reported first and signed at the bottom of the page.
In a different study, Dave and Lisa found that even subconsciously exposing people to ethical content increased their moral awareness and prompted more ethical decisions. Perhaps with this in mind, some organizations have incorporated ethical nudges into images, symbols, stories, and slogans. For example, the University of Arizona’s Eller College of Management recently created posters featuring the image of a fire alarm to call attention to cheating. And at International Paper, employees are given a wallet card with a set of ethics-related questions to consider when making business decisions.
When moral standards are unclear or unenforced, it’s easy for employees to feel emboldened to engage in questionable behaviors that are readily rationalized. Environments that nudge employees in the right direction, and managers who immediately identify and address problems, can stop ethical breaches before they spiral out of control.
Francesca Gino is an associate professor of business administration at Harvard Business School. She is the author of the book Sidetracked: Why Our Decisions Get Derailed, and How We Can Stick to the Plan.
Lisa D. Ordóñez
Lisa D. Ordóñez is the Levine Family Faculty Fellow at the University of Arizona’s Eller College of Management.
David Welsh is an assistant professor of organizational behavior at the University of Washington’s Michael G. Foster School of Business.
New research from LRN finds that ethical lapses and questionable behavior in the workplace are common occurrences for working Americans and these lapses distract them from their work. Potential scandal or business disruption also exists in many companies today, according to employees.
Nearly three in four of the surveyed Americans working full time said they encountered ethical lapses in the workplace; more than one in three have been distracted by them; and one in 10 believed a current issue at their company could cause a scandal or business disruption.
These results are among the key findings of the LRN Ethics Study on workplace productivity, the latest in a series of omnibus research studies from LRN. This study shows a connection between lawful, ethical conduct and productivity in the workplace. In sum, the results suggest companies need to strengthen their focus on developing corporate cultures that value responsible conduct and clearly define appropriate behaviors for their workers.
In particular, the study indicates American companies are experiencing significant levels of ethical lapses that lead to worker distraction. A number of respondents even believe serious incidents are already occurring in their company that could cause a scandal or business disruption if revealed. At the same time, the study shows workers are not comfortable reporting ethical lapses to their companies.
These findings call into question how well companies are facing the challenge of educating their workforces on ethical business conduct and principled performance. Organizations should view these results as a warning that more work is required to inspire employees to higher standards of behavior and to develop trust and confidence that reported incidents of unethical behavior will be acted upon appropriately and confidentially.
The Slippery Slope
[ First Posting ]
The Slippery Slope: How Small Ethical Transgressions Pave the Way for Larger Future Transgressions.
Welsh, David T.; Ordóñez, Lisa D.; Snyder, Deirdre G.; Christian, Michael S.
Journal of Applied Psychology, May 26 , 2014, No Pagination Specified. doi: 10.1037/a0036950
Many recent corporate scandals have been described as resulting from a slippery slope in which a series of small infractions gradually increased over time (e.g., McLean & Elkind, 2003). However, behavioral ethics research has rarely considered how unethical behavior unfolds over time. In this study, we draw on theories of self-regulation to examine whether individuals engage in a slippery slope of increasingly unethical behavior. First, we extend Bandura’s (1991, 1999) social-cognitive theory by demonstrating how the mechanism of moral disengagement can reduce ethicality over a series of gradually increasing indiscretions. Second, we draw from recent research connecting regulatory focus theory and behavioral ethics (Gino & Margolis, 2011) to demonstrate that inducing a prevention focus moderates this mediated relationship by reducing one’s propensity to slide down the slippery slope. We find support for the developed model across 4 multiround studies. (PsycINFO Database Record (c) 2014 APA, all rights reserved).
Nudge Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein,
Apr 08, 2008, 304 p., 6 1/8 x 9 ¼, 16 b/w illus., ISBN: 9780300122237, Cloth: $30.00 sc
Selected as a finalist for the 2008 TIAA-CREF Paul A. Samuelson Award, given by the TIAA-CREF Institute.
Named one of the best business books of 2008 by The Financial Times
Silver medal winner of the 2008 Book of the Year Award in the category of Business & Economics, presented by ForeWord magazine.
Winner of the 2010 Kulp-Wright Book Award, given by The American Risk and Insurance Association
Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain in this important exploration of choice architecture, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself.
Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful “choice architecture” can be established to nudge us in beneficial directions without restricting freedom of choice. Nudge offers a unique new take—from neither the left nor the right—on many hot-button issues, for individuals and governments alike. This is one of the most engaging and provocative books to come along in many years.
Richard H. Thaler is the Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics and the director of the Center for Decision Research at the University of Chicago’s Graduate School of Business. Cass R. Sunstein is Karl N. Llewellyn Distinguished Service Professor of Jurisprudence, University of Chicago Law School and Departent of Political Science.
Signing at the beginning makes ethics salient and decreases dishonest self-reports in comparison to
signing at the end. Lisa L. Shua, Nina Mazarb, Francesca Ginoc, Dan Arielyd, and Max H. Bazerman
Research in the field of behavioral ethics has traditionally viewed ethical decision making as rational and deliberate. However, some recent research has proposed a dual process model of ethical decision making that has both conscious and subconscious components (Reynolds, 2006). We extend current theory by using subconscious ethical and unethical priming to test the effects of subconscious processes on ethical behavior through an automatic process of schema activation and implicit association. Studies 1 and 2 extend self-concept maintenance theory (Mazar, Amir, & Ariely, 2008) by exploring the mediated process through which subconscious ethical and unethical primes trigger the activation of moral standards, thereby influencing categorization and subsequent responses to morally ambiguous situations. Study 3 demonstrates that both subconscious ethical and unethical priming reduce dishonesty even when participants are unmonitored and are given difficult performance goals that previously have been shown to lead to unethical behavior.