Unethical behavior in organizations can harm the organization's image and reputation, especially if the media or social media get wind of it. But employees and other stakeholders such as customers are also likely to suffer when employees behave unethically. Research suggests that the societal cost of unethical behavior or even crimes by organizations or their employees dwarfs that of street crime (Ashforth & Anand, 2003). As an example, the United States Government Accountability Office (2013) estimated that the losses from the diminished output associated with the 2007–2009 financial crisis likely ranged from a few trillion dollars to over 10 trillion dollars in the United States alone, a cost that does not even include other economic losses associated with the other crises that were triggered by the US economic meltdown, in Europe and beyond. Therefore, managing employees in a manner that is aimed at reducing unethical or illegal behavior is extraordinarily important. This task usually falls to those in the ethics and compliance field for organizations large enough to have such specialized employees. But in other organizations, the task may fall to human resource managers who are generally responsible for the systems that hire employees, that orient and train them, that manage them through performance management systems, and that discipline or terminate them when problems arise. Therefore, it is unsurprising that anecdotal evidence suggests that approximately two-thirds of the calls to ethics and compliance helplines or hotlines are about human resources-related issues. So, at a minimum, ethics and compliance officers and human resources managers should be partners in (reducing) crime.
Research on employee ethical and unethical conduct, or behavioral ethics research, dates back to the 1980s (see Treviño, Weaver, & Reynolds, 2006) and covers a broad range of topics. In this chapter, we will focus on research that has the potential to inform human resources management and that examines mostly unethical behavior but also ethical behavior (e.g., voicing) by people within organizations. We define unethical behavior as behavior that is ‘contrary to accepted moral norms in society (e.g., lying, cheating, stealing)’ and ethical behavior as behavior ‘that meets the minimum moral standards of society (e.g., honesty, treating people with respect)’ (Treviño, Den Nieuwenboer, & Kish-Gephart, 2014a: 636–637). The literature also identifies ‘extraordinary ethical behavior,’ defined as behavior that extends outside the bounds of one's formal role and that exceeds the moral minima that society imposes (e.g., whistleblowing). However, less recent research has studied such behavior and more work clearly needs to be done. Note that the yardstick for measuring whether behavior is unethical or not relies on societal, not organizational, norms. This is important because organizational norms may sometimes ‘normalize’ or promote unethical behavior (Ashforth & Anand, 2003).
Despite the obvious overlap in topics of interest between human resources management and behavioral ethics, the two research domains have evolved relatively separately. Yet there are many areas where cross-fertilization could and arguably should occur. We therefore intend for this chapter to inform human resources audiences of the most important (and more recent) research findings and topics that have emerged from behavioral business ethics research that are relevant to human resources management. In particular, we aim to inform researchers and practitioners about the causes of unethical behavior in the hopes that our work might inspire action that leads to the prevention of ethical lapses in organizations and that can perhaps help further a solid working relationship between human resources professionals and those responsible for ethics and legal compliance in organizations. With the burgeoning of research in the field of behavioral ethics over the last decade and a half, it has been disheartening to find that scandals such as the one at the large US bank Wells Fargo continue to occur. The Wells Fargo scandal, amongst others, involved workers who were pressured by their managers to reach impossible performance goals set by higher levels within the organization. Succumbing to performance pressure, employees created millions of fraudulent bank accounts without customers’ consent, faking signatures and harming customers in the process. The company's reputation was damaged and senior managers lost their jobs. Research has long suggested that overly challenging goals and performance pressure can cause people to engage in unethical behavior. This knowledge, unfortunately, did not help prevent the scandal from occurring. Perhaps sharing what we know in a systematic fashion can contribute to reducing such behavior in the future.
Before we proceed, we wish to alert readers to a large number of review papers that have appeared in recent years on various related topics. Important qualitative reviews that provide a general overview of the state of behavioral ethics research are Treviño et al. (2006) and Treviño et al. (2014a). An important milestone review is the meta-analysis by Kish-Gephart, Harrison, and Treviño (2010), where the results of numerous studies in the field are combined to summarize research results published to that date. Further, the December 2015 issue of Current Opinion in Psychology includes various reviews of behavioral ethics topics, on specific variables such as moral disengagement (Moore, 2015), ‘blind spots’ where individuals are unaware of the fact that they are engaging in unethical behavior (Sezer, Gino, & Bazerman, 2015), as well as on field research (Pierce & Balasubramanian, 2015) and about the increasing depth and breadth of the ethics phenomena studied (Tenbrunsel & Chugh, 2015). Other important reviews are by Tenbrunsel and Smith-Crowe (2008) on ethical decision-making, Moore and Gino (2013) on social influences on unethical behavior, Bazerman and Gino (2012) on moral judgment and dishonesty, and Zhang, Gino, and Bazerman (2014) on simple fixes for our ‘moral bugs.'
Given these multiple available reviews, in this chapter we focus on relatively recent empirical studies and research streams in behavioral ethics as they are relevant for human resources management. We also offer thoughts about questions for future research, as well as questions that organizations might ponder as they attempt to positively influence their employees’ ethical behavior. We have organized the discussion to some extent by the different phases in employment, starting with recruitment, and including training and other issues that are relevant to human resources management.
Many organizations have adopted the practice of screening potential employees during the recruitment phase for a range of personality traits or individual differences that have been found to influence job performance (Tett, Jackson, & Rothstein, 1991; Tett & Burnett, 2003). Arguably, to attenuate risk, organizations could benefit from screening potential employees not just on traits that influence task performance, but also on the dispositional propensities that research has found to influence ethical or unethical behavior. Early behavioral ethics research focused on unearthing individual differences associated with an increased propensity to engage in unethical behavior (or with a greater likelihood of making ethical decisions and behaving ethically). For instance, the meta-analysis by Kish-Gephart and colleagues (2010) found that, across multiple studies, individuals with higher cognitive moral development (Kohlberg, 1969) and those who hold an idealistic moral philosophy were less likely to make unethical choices. Conversely, holding a relativistic philosophy, scoring higher on Machiavellianism, and having an external locus of control were associated with more unethical choices.
A more recent addition to the list of dispositional factors that are positively associated with individuals’ likelihood of engaging in unethical behavior is dispositional moral disengagement (cf., Moore, Detert, Treviño, Baker, & Mayer, 2012). Bandura and colleagues described humans as self-regulating beings who have internalized moral standards (Bandura, Barbaranelli, Caprara, & Pastorelli, 1996). But these moral standards can be disengaged, and Bandura (e.g., 1999) identified eight mechanisms people use to do so. Some that are particularly relevant to organizations are displacement of responsibility where the responsibility for the outcomes of behavior are displaced to authority figures (e.g., ‘my boss made me do it') or diffusion of responsibility where the responsibility is diffused within a decision-making group (e.g., it was a group decision – I had only one vote). Another is euphemistic language which abounds in many organizations. For example, managers may talk about ‘rightsizing’ rather than layoffs, which makes it seem a less harmful practice. As another example, the military talks about ‘collateral damage’ rather than civilian deaths. Some people have a higher propensity for moral disengagement, which means that they are more likely to engage these cognitive mechanisms that allow them to feel less guilty for engaging in unethical behavior. Research consistently finds that this results in higher levels of (various types of) unethical behavior (cf. Bandura, et al., 1996; Detert, Treviño, & Sweitzer, 2008; Barsky, 2011; Duffy, Scott, Shaw, Tepper, & Aquino, 2012).
Yet another relevant individual difference (on the positive side) is moral identity. Aquino and Reed (2002) defined moral identity as ‘a self-conception organized around a set of moral traits’ that may include being caring, compassionate, fair, friendly, generous, helpful, honest, and kind. For those high in moral identity such moral traits is integral to who they are. In a review of the moral identity literature, Shao and colleagues (Shao, Aquino, & Freeman, 2008) reported research finding that people with a stronger moral identity engage in less unethical behavior. Aquino and Freeman (2012) noted that, in addition to being an important individual difference, moral identity can also be triggered by the organizational context via rewards, norms, and role models among others.
However, possessing a certain trait or disposition does not always mean that its influence is positive or negative. For instance, studies have found that individuals who score high on Machiavellianism are actually more conscientious – which is related to higher job performance (cf., Kessler, Bandelli, Spector, Borman, Nelson, & Penney, 2010). Studies have also found that high Machiavellians are coolheaded and do not let their egos get in the way of winning (e.g., winning deals) (Sakalaki, Richardson, & Thépaut, 2007), and that they can be very productive salespeople (Ricks & Fraedrich, 1999). The opposite is also true as other research has found that those higher in moral attentiveness, under certain circumstances, engage in more – not less, as one would expect – unethical behavior. For instance, Van Gils and colleagues (Van Gils, Van Quaquebeke, van Knippenberg, van Dijke, & De Cremer, 2015) found that when highly morally attentive followers perceive their leader to be less ethical (or, to score low on the ethical leadership scale developed by Brown, Treviño, & Harrison, 2005), they respond with more organizational deviance. Van Gils and colleagues argue that this is because highly morally attentive followers will view a leader's lack of upholding moral norms as a violation of the relationship they have with the leader. Or, being more attentive to a less than ethical leader may give them license to be unethical themselves.
So, the dispositional approach is complex in part because organizational context is likely to interact with these individual differences to influence outcomes (Treviño, 1986). Rather than screening employees in or out based upon these individual differences, we would suggest potentially using this information as the basis for coaching or training, or to help with decisions about what assignments might be more or less appropriate for a particular employee, or which employees might need increased supervision, at least for a time. For example, it may be important for an employee who works largely unsupervised in a corrupt business environment to have higher cognitive moral development, moral attentiveness, and moral identity and lower Machiavellianism. It is also important to insure that the context and the recruit are adapted to one another. For instance, a meta-analysis found that the association between Machiavellianism and unethical behavior (as well as job performance) is moderated by contextual factors such as culture or by having an authority position – those in authority displaying fewer of the negative behaviors associated with Machiavellianism, and performing better overall, than those who do not have authority positions (O'Boyle Jr., Forsyth, Banks, & McDaniel, 2012). In other words, it may be okay to hire Machiavellians, as long as they are hired into positions and contexts that bring out the best in them. Understanding these complexities will help human resources managers protect their organization by insuring that the right people are hired into the right positions.
Performance management has been implicated in several major corporate scandals, not just at Wells Fargo, but also at Enron and in the Sears Automotive scandal. It is therefore concerning that ethics and compliance officers rarely are involved with performance management. Because of the extent to which performance management influences employee ethical/unethical behavior, it is important that human resources professionals understand their role in preventing unethical behavior. It would also be beneficial if better connections are forged between human resources and ethics and compliance officers, so that the two can work together to develop and sustain performance management systems that support ethical behavior and discourage unethical behavior.
Individual performance is defined as the ‘things that people actually do, [the] actions they take, that contribute to the organization's goals’ (Campbell & Wiernik, 2015: 48). Managing performance therefore involves the identification of the actions that are relevant to achieving an organization's goals (which will vary across jobs and hierarchical levels within an organization), as well as defining what (a lack of) proficiency is in those tasks. Importantly, as part of performance management, managers routinely set goals, often with incentives tied to them, for groups, units, and individuals, and monitor performance against those goals (Campbell & Wiernik, 2015). The consequences of not reaching goals, however, usually go beyond missing out on a bonus or a raise, and may include negative employment repercussions such as a slower advancement or even termination. Performance management, including goal-setting, is a crucial instrument that managers use to motivate performance, which explains the abundance of research into the antecedents of performance and the workings of goals (Locke & Latham, 2013; Campbell & Wiernik, 2015). Unfortunately, research has also found that faulty performance management and bad goal-setting can have negative consequences and lead to unethical behavior.
The behavioral ethics literature has examined how goals contribute to unethical behavior, something the founders of goal-setting theory also warned about (Latham & Locke, 2006). In a study on the relationship between goals and unethical behavior, Schweitzer and colleagues (Schweitzer, Ordóñez, & Douma, 2004) found that in comparison with those who were merely asked to ‘do their best,’ participants with high performance goals were significantly more likely to overstate their productivity on an experimental task. This was true especially when they were very close to, as opposed to far removed from, reaching those goals. Our own research (Den Nieuwenboer, Vieira da Cunha, & Treviño, 2017) adds a hierarchical multi-level perspective to potential problems with goal-setting. For example, goal-setting research normally finds that people lose motivation to achieve goals when goals seem unachievable. However, in our study on deceptive performance in a sales unit, we found that while many front-line employees did lose their motivation to pursue their out-of-reach sales goals, middle managers (who were incentivized based upon their subordinates’ performance) did not lose theirs. In our setting, middle managers pressured subordinates into deceptive performance by developing and enforcing unethical means for employees to make it appear as if they were reaching their goals. These middle managers did so for several reasons. Feeling pressured by upper management to produce performance, managers noted that their subordinates lacked the jobs skills to reach goals in an ethical way. Employees were also required to do a large amount of administrative work that left little time for pursuing sales ethically. Middle managers ‘solved’ this performance problem by searching for vulnerabilities in the organization where unethical performance could be created and concealed from upper management. They coerced their subordinates into taking advantage of these vulnerabilities mostly by shaming them about low performance.
Further research by Welsh and Ordóñez (2014) found that the same mechanism that is theorized to underlie goal achievement – self-regulation – is also at play when goals lead to unethical behavior. There is actually some amount of research that finds an important role for self-regulatory resources and their depletion in ensuring behavior remains ethical (Baumeister & Alghamdi, 2015). The underlying idea is that self-regulatory resources are finite and can be depleted under a variety of conditions, and that their depletion leads to more unethical behavior. For example, Welsh and Ordóñez (2014) found that in the face of consecutive high performance goals, individuals’ persistent efforts to reach those goals gradually deplete their self-regulatory resources, and that this can eventually lead to increasing dishonesty over time. Further, Barnes and colleagues (Barnes, Schaubroeck, Huth, & Ghumman, 2011) found that a lack of sleep led to diminished self-regulation, which in turn led to more unethical behavior. In a similar vein, Kouchaki and Smith (2014) found that because self-regulatory resources are depleted even during a normal and unremarkable day, individuals tend to engage in more unethical behavior when performing the same task in the afternoon than they do in the morning. Cumulatively, such research findings have great practical implications in situations of shift work or in contexts where people are asked to put in more time than usual (e.g., when important deadlines near). Organizations should be aware that when employees get exhausted, their ability to behave ethically is impaired, and organizations should manage such situations proactively.
More research should be done regarding how self-regulatory resources can be replenished. For example, what can organizations do to ensure that employees get replenished throughout the day, in particular for those who in the course of their jobs have a greater ‘ethical liability,’ or are more likely to face ethically challenging situations? And, to echo some of Barnes et al.'s (2011) suggestions for future research, employees also endure other types of exhaustion, depending upon their jobs, such as emotional exhaustion (e.g., in roles that require emotional labor including customer-facing service roles) or in physically demanding jobs (which might be as varied as jobs in the military, but also jobs in the food industry or in any occupation where one is on one's feet a lot). We might also ask whether those who experience challenges in their work–life balance are more inclined to engage in unethical conduct. Research should investigate whether unethical behavior is more likely in such situations, and what organizations can do to mitigate that.
Related to performance management, an entirely different realm of research that is critically in need of further development is that of the measurement and weighting of ethical performance goals. Ethical behavior is often considered the ‘standard’ and is thus usually overlooked when setting goals or allocating rewards. Setting goals for behavior that is congruent with the organization's values and weighting those equally to bottom-line production goals should go a long way toward solving this problem. The specifics would depend on organizational values. Examples might be goals pertaining to whether employees have trusting and respectful relationships with their customers/suppliers/coworkers. Or, whether a leader treats people with care and respect, or goals regarding whether the leader puts visible efforts into supporting diversity. All of these are ethical goals that can be measured via 360° performance reviews and other means. But there is cause for concern that using money to incentivize ethical behavior might be problematic. Especially, public forms of prosocial behavior (behavior aimed at promoting the welfare of others, cf., Brief & Motowidlow, 1986) are negatively affected by financial rewards as they crowd out people's ‘image motivation’ for such behavior (Ariely, Bracha, & Meier, 2009). Making money salient has also been found to lead to more unethical behavior (cf., Gino & Pierce, 2009). In all, more research is needed to understand the potentially complex relationship between incentives and ethical behavior.
Our previously reviewed work (Den Nieuwenboer et al., 2017), also points toward a danger of goal measurement with inadequate monitoring. That is, in our research setting, upper management relied mostly on formal performance reports to monitor goal achievement by the lower levels of the organization, not on in-person monitoring. However, performance reports can be – and in our setting were – manipulated by the people who produce them. In our study, middle managers, for instance, had subordinates report orders as sales that counted towards sales targets, as well as lie about numbers of sales calls made to reach targets. These faked data fed into the performance reports that were communicated to upper management, and created deceptive performance. Moreover, middle managers instructed subordinates about how to make the data flow in the sales administrative system look ‘normal,’ which helped cover up the deceptive performance. Because upper managers rarely monitored in person, and because lower levels ‘rehearsed’ and practiced the visits that did occur so that they had their stories straight, the deception went undetected for at least two years (during all 15 months of our data collection period, and at least one more year thereafter). Thus, adequate monitoring and supervision is a serious issue that needs to be studied more.
Importantly also, in our study, the production of the right performance measurement became the goal, rather than actual, real, performance. Nelson Espeland and Sauder (2016: 3) warn us that performance measures can ‘create new incentives and power dynamics’ that may lead people to try to blindly deliver the ‘right’ numbers, even by unethical means. This clearly was the case in our study. Within behavioral ethics, however, not much research has focused on these measurement dynamics. More research is therefore needed to understand what to measure and how to measure, as well as how to monitor or report performance, or even how to best incentivize performance. Although we can only speculate, we wonder whether a different way to incentivize goal achievement would have reduced the temptation to engage in unethical behavior. That said, it is important to note that in our study (Den Nieuwenboer et al., 2017), performance bonuses only motivated some to participate. The incentive to participate for most, similar to what was reported about the Wells Fargo scandal, is the informal performance pressures put on employees by their managers as well as the threat of termination.
Training is an important tool in human resources management that, when used effectively, benefits the organization by bolstering employees’ knowledge, skills, and abilities (Blume, Ford, Baldwin, & Huang, 2010). In the behavioral ethics context, training is typically considered an essential part of ethics and compliance management – along with ethical codes and other ethical systems and structures (Treviño et al., 2014a). The US Sentencing Guidelines for Organizations has led many US organizations to require annual ethics trainings for their employees, although annual training is not actually mentioned or required in those guidelines (Treviño, Den Nieuwenboer, Kreiner & Bishop, 2014b; also see Chandler, 2014). Despite the millions of dollars that organizations spend on ethics training, little research evidence exists for its effectiveness. While ethics training appears to have a positive effect on ethical intentions, evidence that it positively influences ethical behavior remains limited (Tenbrunsel & Smith-Crowe, 2008; Treviño et al., 2014a). Organizations may be reluctant to learn that what they are doing is not particularly effective. But it is also difficult to test the effectiveness of ethics training. The occurrence of unethical behavior does not necessarily mean that training was faulty given that there are many other influences on behavior in organizations. Wells Fargo had ethics training that clearly prohibited the behaviors that employees engaged in. But they engaged in them anyway, likely because of the daily performance pressures that management exerted. Training simply cannot compete with such pressures and threats of termination. Also, it is impossible to prove if training prevents unethical behavior from occurring as we cannot accurately measure behavior that was prevented or did not occur. Numeric measures for training success are usually also too ambiguous to be useful. For example, an increase in calls to an organization's ethics hotline may mean that people know better when to call and are more willing to make a call. But it may also mean that there are more instances of unethical behavior in the organization.
We also do not know much about what kind of ethics training or mode of delivery is effective. One idea worth pursuing is to design ethics training based upon the latest behavioral ethics research. For example, one goal of training ought to be to encourage employees to make ethical decisions and to help them to do so. An idea that can be taught is that framing decisions in particular ways affects decision outcomes. For our purposes, perhaps the most relevant research in this area is work related to whether issues are framed in business terms versus ethical terms. Research suggests that employees are less likely to make unethical decisions if the issues are framed in ethical terms (see Tenbrunsel & Smith-Crowe, 2008). One reason for this may be that framing issues in terms of the bottom line leads to thinking that is narrowly focused on financial outcomes, reducing compassion (Molinsky, Grant, & Margolis, 2012), and excluding ethical considerations (Greenbaum, Mawritz, & Eissa, 2012). Another reason is that framing issues in ethical terms increases ethical awareness which is associated with increased ethical decision-making (Tenbrunsel & Smith-Crowe, 2008). We are not aware of solid evidence that employees can be taught to frame issues in ethical terms or to beware of issues that are framed solely in business or bottom-line terms. But research on awareness training related to other types of cognitive biases suggests that this approach holds promise (Bazerman & Moore, 2006).
The limited information on training effectiveness is likely not going to deter most organizations from continuing to expend resources on ethics training. This is because those who plan and organize ethics training (generally ethics and compliance officers) are often responding to external legitimacy pressures (Chandler, 2014; Treviño et al., 2014b). This means that the value of ethics training for organizations, similar to the value of the ethics and compliance officer role itself, might lie to a large extent in the symbolic meaning of training in the eyes of outsiders. Nevertheless, it remains important to study the effectiveness of training (what to train, how often, what works, what does not) as it otherwise may amount to wasted resources. Worse yet, there is a chance that ethical training initiatives might backfire and lead to more unethical behavior if employees perceive the training to be mere window dressing or an attempt to protect top management in case they are caught engaging in criminal conduct. For example, evidence suggests that when employees perceive ethical codes to be window dressing or designed to protect top management from blame, they respond cynically and engage in more unethical behavior (Treviño et al., 2014a). While it is a question for future research whether some ethics training might produce similar results, our conversations with MBA students about their perceptions that ethics training is useless in their organizations is cause for concern.
One possible alternative area of interest that organizations and researchers might explore further is that of mindfulness training. Mindfulness is defined as a state in which one has (an especially enhanced) attention to and awareness of the things that are taking place in the present moment, or attention to and awareness of the current experience and present reality (Brown & Ryan, 2003). Importantly, it is a mindset that can be trained and that has been found to have positive influence on a range of outcomes related to well-being, psychological as well as physical. And, some initial research suggests it also enhances individuals’ ethical decision-making. In an experimental study, Ruedy and Schweitzer (2010) argued that individuals who scored higher on mindfulness are more morally aware as well as are more self-aware. Because of this, the authors argue, more mindful people should be less likely to engage in unethical behavior, and the unethical behavior that they do engage in should be of smaller scale or magnitude. The results of their study generally supported these arguments.
A similarly non-ethics-specific training topic is that of the general (not ethics-specific) skill and knowledge that one possesses to do one's job. This topic has been overlooked in the behavioral ethics field, which tends to focus on explicitly ethical or unethical phenomena. However, in our previously discussed study on deceptive performance in a sales unit (Den Nieuwenboer et al., 2017), managers were motivated to induce employees into deception in part because they found that many of their subordinates lacked the sales skills required to do their jobs effectively. The findings in that study therefore suggest that ensuring that workers have sufficient job skills is an important requirement if they are expected to reach performance goals ethically. Indeed, it is a finding most dramatically corroborated by Zimbardo's (2007) examination of the torture and abuse that took place at the hands of American Military Police who were acting as prison guards in the Abu Ghraib Prison, who similarly lacked proper training for their guard jobs. Ethical training initiatives should therefore not just focus on ethics-relevant knowledge, but very importantly also take into consideration whether employees have the requisite job skills and knowledge. In all, training is an area that has received comparatively little research attention in the behavioral ethics literature and more research is needed.
One of the biggest concerns plaguing ethics and compliance officers is employees’ reluctance to speak up about problems or to report any unethical or illegal conduct they observe. This is particularly important because employees are on the front line and often know about problems before management does. This leaves management in the dark about these problems, and delays action to stop these problems from getting out of hand or creating scandals. Indeed, the 2016 Global Fraud Study ‘Report to the Nations on Occupational Fraud and Abuse’ by the Association of Certified Fraud Examiners found that of the 2,410 cases of occupational fraud that it examined, 39.1% were uncovered through a tip, far exceeding the number of frauds that were uncovered through other means, such as internal audits (16.5%), management review (13.4%), external audit (3.8%), or surveillance/monitoring (1.9%). Employee voice, in other words, is one of the most important and powerful detection methods for unethical behavior within organizations.
Research has uncovered two primary reasons for why people are reluctant to speak up in organizations, even about routine problems. Speaking up about ethical or legal concerns is considered to be even riskier. In general, employees refrain from speaking up out of concern that nothing will be done, and/or out of fear of retaliation from coworkers or management (Mesmer-Magnus & Viswesvaran, 2005). Speaking up in organizations is perceived to be risky. Employees therefore often decide that it is safer to keep their heads down and just go about their business. But that leaves management in the dark. So, what can management do? Obviously, management can teach employees that they can and should report problems, through anonymous hotlines if necessary. But management also needs to insure that employees trust that they can remain anonymous and that they will be protected from any retaliation. Some organizations go to great lengths in both of these areas. For example, organizations try to provide information back to the caller about progress and actions taken. If the caller wishes to remain anonymous, s/he gets a case number and simply uses that when calling to check in. Boeing, the large airplane manufacturer, has for years posted the stories of the many calls to its hotline (stripped of identifying information) along with information about what action was taken. Shortly after it began this intranet site, Boeing logged tens of thousands of hits to it per month, suggesting that employees want to know that action is taken in these cases. Other organizations track the career progress of those who have reported problems to insure that they are not being retaliated against. So, there is much organizations can do to improve the likelihood that employees will feel safe to speak up.
Research has also found that employee perceptions of leadership are crucial to ethical and unethical behavior in organizations. Since 2005 (Brown et al., 2005), research has focused on the beneficial effects of ethical leadership. Ethical leaders care about their people, they are fair, principled, and trustworthy, and they are perceived to behave ethically in their personal as well as their professional lives. Importantly, they also lead on ethics, meaning that they role-model good behavior, they set and communicate high ethical standards, and they hold themselves and their followers accountable to those standards through rewards and discipline. Research has found that ethical leadership is associated with a variety of positive attitudes, but, more importantly, with reduced unethical behavior and increased citizenship behavior, voice, and even job performance (for a review see Treviño & Brown, 2014). Human resources managers are involved in leadership identification and development practices and should invest in efforts to select, develop, and identify ethical leaders. Importantly, research has found that ethical leadership is important at multiple levels in the organization and ‘trickles down’ from senior management through middle management ranks, affecting unit cultures and employee behavior (Mayer, Kuenzi, Greenbaum, Bardes, & Salvador, 2009). It is important to employees that the messages coming from multiple levels of management are consistent. However, the most important ethical leader is at the supervisory level. This is the leader the employee sees most often, the one who sets goals and conducts performance reviews, and makes crucial decisions about the employee's future. Therefore, employees are most likely to be influenced by the supervisory leader and most research on ethical leadership has been conducted at the supervisory level.
On the darker side of the leadership spectrum, abusive supervision represents a type of leader who expresses hostile and aggressive (although not physically abusive) behavior (for a review see Tepper, 2007). Estimates suggest that about 10% of employees are exposed to abusive supervisors who create toxic workplace environments, which causes negative attitudes, reduced employee well-being, increased employee withdrawal and deviance, and reduced citizenship behaviors. Abusive supervisors being so very corrosive to the workplace environment, how do they manage to survive? Ethics and compliance officers have told us that abusive supervisors tend to be good at ‘managing up,’ so upper management may be unaware of their abusive behavior unless employees complain, which many fear doing. It would likely be helpful to increase use of 360° evaluation methods in order to identify abusive supervision and intervene early.
Weaver and Treviño (2001) took a fairness perspective on the role of human resources in ethics and compliance management. The authors argued that human resources professionals have a crucial role to play in corporate ethics programs. They argued that the effectiveness of ethics programs crucially depends on whether employees believe they are treated fairly. This often involves situations or issues that have a human resources component, such as fairness in performance appraisals, in disciplinary processes, in training as well as in hiring and compensation. Unfortunately, according to the authors, very often ethics programs lack such a human resources orientation. While human resources departments should not assume sole responsibility for an ethics program (indeed, the authors argue that many organizational functions should participate in ethics and compliance for it to be effective), they do have an important role to play. In later work, Treviño and colleagues (2014b) indeed found that various ethics and compliance officers pointed toward a need to cooperate more with human resources departments. As predicted, ethics and compliance officers cooperate with human resources because the investigations that occur after reports or incidents of unethical behavior have human resources implications, but also because the ethics and compliance officer is not always a subject matter expert, and relies on the expertise of human resources managers to help conduct investigations or determine appropriate sanctions.
Recent research in a related field has taken a ‘restorative justice’ approach to discuss issues around rehabilitation and reintegration of offenders of harmful (unethical or criminal) behavior, restoring victims (e.g., attending to their material, emotional, and moral needs) and facilitating healing of the community, which may be a department or a team (Goodstein & Butterfield, 2015). It shifts the focus away from the causes or prevention of unethical behavior at work, toward the aftermath of an ethical transgression (Goodstein & Butterfield, 2010). Importantly, very often perpetrators of unethical behavior (if not egregious) are not fired from the company. Therefore, finding ways to overcome the harm done and restore trust such that working relationships become productive again is an important area of research. The idea of redemption and reintegration of offenders is key. Unfortunately, while a productive literature on this topic exists among criminology researchers, the organizational sciences have only recently begun to study restorative justice issues, such as forgiveness and offender reintegration (Bies, Barclay, Tripp, & Aquino, 2016).
Extending this idea of offender reintegration, one important ethical consideration for organizations and their human resources practices is whether or not to hire ex-offenders who have paid their debt to society. Hiring practices such as asking about or checking criminal records and convictions have made it exceedingly difficult for ex-offenders to find employment. This raises questions around human dignity, and may contribute to increased (or at least not reduced) recidivism. At the same time, organizations have a duty to ensure that they do not increase the risk of unethical or criminal behavior occurring within their own ranks. So, this remains a tricky area and more research is needed.
It should be apparent that human resources management and ethics management are closely related and dependent on each other. We hope that our review of relevant research is helpful to the human resources community as members consider how they can promote ethical conduct and help create and sustain ethical cultures within their organizations, and how they could work synergistically with ethics and compliance professionals.
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