How CEOs Can Stop Good People Doing Bad Things
How CEOs Can Stop Good People Doing Bad Things
Scandals at companies such as Wells Fargo demonstrate how performance targets can encourage employees to make bad decisionsAFP/GETTY IMAGES
Amid all the talk of mission statements, purpose, values and the like, it is easy to lose sight of the fact that the business world is never too far from scandal.
Less than a decade after the financial crisis brought on in part by the subprime mortgage affair, the US banking group Wells Fargo in 2016 found itself embroiled in a scandal that has cost it well over $1 billion in fines.
Meanwhile, the German car company Volkswagen has had to pay much more in fines and other costs after the discovery that it had rigged diesel cars to cheat on emissions tests.
And only in the past few days it has emerged that the Indian IT company Infosys is in a battle with whistleblowers describing themselves as “ethical employees” who allege unethical practices by senior executives.
The general response to such situations is that it is a case of a few “bad apples” contravening policies and codes of practices set out by their employers. However, this is challenged by Guido Palazzo, professor of business ethics at HEC Lausanne, University of Lausanne in Switzerland.
With colleagues Franciska Krings and Ulrich Hoffrage, he has developed an approach to examining scandals in corporations, labelled “Ethical Blindness”. Some 100,000 managers around the world have been exposed to this concept as part of their compliance training.
The idea has also been used as a starting point for an innovative online course on the Coursera Platform called “Unethical Decision Making in Organizations”. This has been taken by more than 30,000 people around the world and is also integrated in the master’s program at HEC Lausanne.
