accounting homework

The Ethical Executive

Traps that Impair Acting Ethically

By Robert Hoyk and Paul Hersey

Premise: most people most of the time want to be ethical, want to do the right thing. They often tend to look for what an ethical and honest way to proceed when faced with a challenge. So they have, therefore, a sense of what the right thing to do is.

A problem arises with respect to whether they will do the right thing when there are competing interests, often legitimate and even important ones. What these authors have done is catalogue these situations which they call traps. This brief paper describes what those traps are and gives examples of several of them.

What we wish to do in class is consider ways of dealing with such dilemmas in a manner that is consistent with our values.

Hoyk and Hersey divided traps into two types, Primary and Defensive. They are listed and defined here with examples given for the first few.

Primary Traps are circumstances or external pressures that entice us to abandon our values and ethical beliefs. They make a gradual path toward unethical behavior look rewarding and appealing. These traps sensitize our self-interest and encourage us to wander from ethical desires.

Trap 1: Obedience to Authority – Acting unethically because the actions follow hierarchal power in the organization. What the boss says goes. If you want to keep your job, you obey.

Example: Scott Sullivan, CFO of World Com ordered controller David Meyers to hide expenses.

Trap 2: Small Steps – As unethical behavior occurs in small steps, it gradually becomes more severe. Although the decision-maker may not act in this way all at once, he or she may become more tolerant as the behavior is broken into a series of unethical activities.

Example: Fastow of World Com began by breaking 2 regulations when he created a special

purposes entity on the balance sheet. Kept going downhill from there.

Trap 3: Indirect Responsibility – Distancing oneself from responsibility even if seemingly insignificant actions are contributing to ethical behavior.

Example: People who kept records for concentration camps.

“Doing paper work, not exterminating Jews.”

Trap 4: Faceless Victims – Disguising the true affects of unethical behavior by generalizing those who are affected. In its analysis of the Ford Pinto, the auto company often referred to “dead injured persons” as “units”.

Example: Laying people off by email, automated voice mail & the like.

B 52 Saturation bombing in Vietnam.

Treating death & injuries due to faulty gas tank on Pinto as statistics

within acceptable limits and calling victims “units”.

Trap 5: Lost in the Group – Distributing responsibility among several members of a group, limiting personal responsibility. In a group, accountability is diminished, making members more apt to harm others.

Example: “Everybody’s doing it.”

Trap 6: Competition – Believing that a business decision is a “zero-sum game”. If you win, the other loses, decreasing mutual benefit. Competition encourages the hiding of information, mistrust, and betrayal.

Trap 7: Tyranny of Goals – A form of self-interest that encourages decision-makers to move too fast and cut corners to achieve goals. This trap is driven by the false belief that the achievement of one or more goals will achieve happiness.

Trap 8: Money – A form of self-interest that directly ties money to happiness. Aspirations spiral out of control as money becomes a means of comparison with others.

Trap 9: Conflicts of Interest – Feeling forced to cheat or mislead in order to serve two masters and avoid being caught in the middle. May include the acceptance of bribes or playing one party against another.

Trap 10: Conflicts of Loyalty – Similar to conflicts of interest, one is pulled in opposing directions by conflicting influences. This trap tends to focus on money and the conflict between the company’s management and its shareholders.

Trap 11: Conformity – Pressure against becoming the dissenter in a questionable situation.

Trap 12: Conformity Pressure – Environmental demand to follow established norms to resist sharp opposition. This pressure often surfaces when managers use sarcasm or punishment to enforce “team play”.

Trap 13: “Don’t Make Waves” – Avoiding critical questions, the challenges of decisions, debate, and disagreement in order to keep the peace in a group setting. Practicing polite board room or meeting behavior, because dissent is viewed as detrimental or unneeded.

Trap 14: Self-Enhancement – The belief that oneself is superior or above average, stimulating the feeling of protection against depression or failure. Allowing blurred perceptions of personal abilities mentally diminishes belief that a situation can overpower ethical values.

Trap 15: Time Pressure – Minimizing ethical awareness due to time constraints. Taking short-cuts to achieve goals, despite the consequences of hurried decisions.

Trap 16: Decision Schema – Failing to make ethical decisions because mental schemas or behavioral patterns have not been formed. The unique nature of the situation increases the likelihood of reacting in a way that is inconsistent with beliefs and values.

Trap 17: Enacting a Role – The separation of the person from the work or decision, based on the belief that work life differs from reality. Compartmentalizing life to justify unethical behavior.

Trap 18: Power – Attributing the success of employees to one’s own leadership, devaluing the work and capabilities of employees. Creating emotional separation from employees as people and minimizing empathy. This trap may result in leading employees into unethical behavior.

Trap 19: Justification – Excusing unethical behavior and convincing oneself that the decision needed to be made to contribute to greater good.

Trap 20: Obligation – The fulfillment of a promise or commitment no matter the consequences or questionable activity fulfillment involves. Loyalty at any expense.

Defensive traps appear after a bad decision has already been made, serving as a catalyst to a downward spiral of unethical behavior. These traps attempt to minimize shame and guilt, justify unethical behavior, and falsely create reward or gratification for the action. Significantly involving emotions, defensive traps often establish an internal battle in which the decision-maker may ignore over time.

Trap 21: Anger – The squelching of empathy and guilt, allowing hostility to cover up vulnerability. Anger is a powerful emotion that quickly obliterates the tender emotions that accompany ethical behavior.

Trap 22: Going Numb – Shutting down painful feelings to diminish reaction. Extinguishing beliefs and thoughts that are uncomfortable or difficult to handle.

Trap 23: Alcohol – The management of bad feelings through substance abuse. Temporarily extinguishing feelings of guilt.

Trap 24: Desensitization – Committing a transgression over and over again to deaden the feelings of guilt and remorse.

Trap 25: Reduction Words – Making an unethical transgression seem smaller in order to minimize feelings of guilt and worthlessness. The decision-maker admits that wrong has been done, but fails to recognize the full extent of wrongdoing.

Trap 26: Renaming – The use of benign or benevolent words to replace words that have a negative connotation. Renaming influences our thinking and perceptions, helping maintain a positive view of ourselves.

Trap 27: Advantageous Comparison – The lessening of guilt by comparing the unethical transgression to something worse. Considering only those who have harmed others worse than oneself.

Trap 28: Zooming Out – Contrasting the big picture with the relative size of the unethical behavior. Seeing the transgression as trivial in comparison to the larger view.

Trap 29: “Everybody Does It” – Appeasing guilt by falsely assuming that it’s something that everyone does. Engaging in self-deception and actually believing it.

Trap 30: “We Won’t Get Caught”—Minimizing the importance of the transgression when the chance of punishment is low. Allowing the chances of punishment to dictate the seriousness of the behavior.

Trap 31: “We Didn’t Hurt Them That Bad”—Minimizing the harm done by one’s unethical behavior. Comparing the result of the activity to circumstances where harm was much more severe.

Trap 32: Self-Serving Bias – Following one’s tendency to take credit for success and attribute failure to external causes. Externalizing blame to the extent of actual belief. Guilt is annihilated in order to maintain a positive self view, often encouraging the blame of others for personal transgressions.

Trap 33: Addiction – The attempt to solve a problem through reliance on short-term pleasure, even if it makes the problem worse in the long term. Ignoring the long-term consequences of short-term benefits.

Trap 34: Coworker Reactions – Looking to coworkers to ignore, justify or condone unethical behavior in order to support one’s view that no harm was done. Clinging to the assumption that if no one whistleblows, the behavior must be acceptable.

Trap 35: Established Impressions – Refusing to change original perceptions of a boss or coworker, often resulting in the minimization of unethical behavior. Established impressions tend to endure even if we are convinced later that our impressions are wrong.

Trap 36: Contempt for the Victim – Dehumanizing others, allowing oneself to lose empathy and see them as objects without hopes or feelings. The loss of empathy for others makes it easier to harm them without feeling guilt.

Trap 37: Doing is Believing – Occurs only when one feels he or she has freely chosen to act. When we act unethically, we automatically begin to view our transgressions in a less negative way. What we do is what we become.