CEOs call for people over profits but workers can face backlash for ethics

Tuesday, September 10, 2019

Should the mission of a company focus only on the bottom line? Maybe not. Recently, the Business Roundtable, a group of nearly 200 chief executive officers from American corporations, declared that the needs of people need to be considered along with profits.

The CEOs said that companies need to consider their responsibilities to customers and their employees, as well as the communities they inhabit. The group’s statement said that the new mission is a departure from the past, when delivering results to shareholders was considered to be paramount.

The statement has impact because it comes from the leaders of the companies — the CEOs.

Speaking up about ethical issues is an important leadership behavior, according to an Arizona State University professor who studies ethics in business.

Edward Wellman is an assistant professor of management in the W. P. Carey School of Business.

“We know from research that unless people speak up, cultures develop within organizations where unethical things become kind of normative and taken for granted,” said Edward Wellman, an assistant professor of management in the W. P. Carey School of Business.

Unfortunately, calling out unethical practices is hard to do, he said. Wellman answered some questions from ASU Now about business ethics:

Question: Is it hard for people to speak up when they see unethical behavior?

Answer: Yes. There are pressures in organizations to remain silent, particularly about ethical things. People don’t always respond very well when others call them out for being unethical. It puts people in a threatened and defensive frame of mind and they react to that, to protect themselves, by pointing fingers and blaming the person who speaks up.

Q: What happens when workers speak up?

A: A lot of my research in ethics has focused on the downside of personal consequences of speaking up. My first paper that was published at ASU looked at people we called “moral rebels.” These are people who noticed something they think is unethical, said something about it and actively refused to participate in the practice.

We did experiments where there was a hiring task that stereotyped minorities in an unfair way. We exposed people to a prior participant, who was a confederate in the study, who either spoke up about that unethical aspect of the task or just went along with the task.

They viewed the person who spoke up more negatively than the person who went along with the task. I think that was because they had already done the task and if they acknowledged that the person speaking up had a point, they were also acknowledging that they had been implicit in unethical behavior.

That negative relationship between speaking up and being perceived as a helpful, warm person was less when the person speaking up had a leadership position. So when leaders spoke up, they said, “All right this is someone doing something expected because they’re setting the ethical direction.” When it was a nonleader, people said, “This person is out of line.”

Not only did people see the ones who spoke up more negatively, they were more likely to sanction them by putting them down or withholding support in subsequent tasks.

So that was kind of a sad finding for me. I was hoping to see a positive effect when the person spoke up.

Q: So is it all bad news?

A: I have ongoing research now, where, finally, we’re seeing a positive result.

This is a study where we looked at similar behaviors — speaking up about things you feel are unethical — but we used a theory of “employee voice” and how people can speak up more generally about things they’re unhappy with in the workplace.

That breaks down into two ways people can speak up — a promotive type of voice where you’re making a proactive suggestion for improvement, and a prohibitive voice, where you’re pointing out a problem. To that, we’re adding a third type called inquiry voice, where you’re inquiring as to whether a problem might exist.

We find that people who engage in all three of those forms of voice are liked more and are more effective in addressing an ethical issue than people who just go along.

Our working hypothesis is that in prior studies, people didn’t just speak up, they also refused to participate in whatever the unethical thing was. We think that was the reason why they were viewed more negatively — people felt like it was their job to go along with the practice.

People don’t have problems with people who voice objections AND go along with whatever the thing is. There are conditions, we’re finding, under which people can speak their minds about unethical things and not suffer these consequences. In particular, the promotive way, in our initial results, seems to be the most effective way to do that.

So if you can frame your concern as a positive suggestion rather than a criticism or a complaint, that seems to be the most effective and safest way, even more than inquiry.

Q: What are the implications for a company?

A: One implication is being aware of the problem. There are expectations in companies that people should go along with the status quo.

Organizations can change those expectations but it requires intentionality on their part to come up with a culture where speaking up and raising ethical questions is valued and encouraged rather than seen as a negative or getting in the way of profits and efficiency.

Sometimes there’s a false dichotomy that people create in their heads — “If we’re ethical, we can’t be profitable.” I think the most successful companies realize that being ethical is the best way to be successful and profitable, particularly in the long run.

Q: Is this attitude ingrained?

A: I also teach negotiations, and this is something I run into with my students all the time. They feel that it’s impossible to be both ethical and a really good negotiator at the same time — that being a good negotiator by necessity requires lying and manipulating other people and trying to get them to do things they don’t want to do.

That’s one of my biggest challenges in teaching is getting them to realize that’s not the case at all. The best negotiators have integrity and behave in a way they can articulate as being ethical. They don’t lie. Being an effective negotiator involves persuading people that what you’re proposing really is in their best interest rather than manipulating them to do something that really isn’t in their best interests.

Q: What else can companies do?

A: What we found is that when organizations do things that are ethical, engaging in socially responsible activities, doing things that benefit their stakeholders, the environment or the communities they’re present in, that can increase the extent to which their employees go above and beyond to help the organization. So there’s a virtuous cycle that can build up where people look at what the organization is doing, feel good about being part of that organization, and as a result, are more motivated themselves to help the organization.

And we found it to be an enhancing effect when the employees worked in jobs they felt were meaningful and significant.

Q: What do you think of the Business Roundtable statement?

A: I totally agree with it. It’s important for everyone at all levels of an organization to feel that this is something they have a responsibility for. Ethics is an easy thing to kick the (can) on because you can say, “I have no choice — this is what my boss says to do.”

But that’s not how change happens. Change happens when someone says, “Are we sure this is the right thing to do?” Or, “I have a suggestion on how we can do this better.”

It’s fighting against making ethics someone else’s problem. It’s a cognitive shift.

Top image by Pixabay