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Unintended Consequences and Perverse Incentives

16 Jan 2013
Written by James D. Meacham

In the perfect, abstract world of traditional economics, everyone behaves in a way that maximizes his or her benefit and no one acts against his or her self-interest. Unfortunately, as the emergent field of behavioral economics has shown, human beings are remarkably unpredictable and given to myriad biases and random, non-rational (and irrational) influences.  This complicates the compliance and ethics professional’s job, especially with respect to incentives and discipline. Even more dishearteningly, even when we are able to predict initial effects, unintended consequences frequently exacerbate the very problem we were trying to solve.

A Cheating Culture? It Has To Start Somewhere…

27 Sep 2012
Written by Mary Snyder

I was struck by today’s New York Times article on “Elite School Students Describe the How and Why of Cheating.” The article discusses what appears to be an accepted standard for behavior at Stuyvesant High School – “New York City’s flagship public school.” What is striking is how rational the students are when making their decisions:

The Olympics are Back… but So is the Corruption

09 Aug 2012
Written by Jamie McKillop

Over the past week the Olympic Games have once again captured the world’s attention. According to its charter, the goal of the Olympic Movement “is to contribute to building a peaceful and better world by educating youth through sport practiced in accordance with Olympism and its values.” Part of that movement includes promoting ethics in sports. While there have been multiple displays of this mission in action over the past week, there have also been a few incidents that remind us that corruption can come in many forms and occur in many different arenas.

In a recent presentation, Sam Sommers, an award-winning psychology professor at Tufts University, commented on the important role that context plays in our decisions and actions. Among other things, he talked about how unethical behavior is incremental, contagious and not always the result of selfishness or ill intent. We do follow the leaders in our organizations—unethical behavior can easily spread. Importantly, instructions to simply follow our conscience—to do what we think is right—is not enough, since choices are often complicated.  And, we are good at finding ways to explain/justify what we do. Everyone exaggerates their billable hours a bit, right?  Why should we pay our nanny on the books if nobody else does? 

Ethics vs. The Law

19 Apr 2012
Written by Andrea Falcione

When I first heard about the Secret Service scandal, I also learned that the behavior in which certain agents may have engaged is apparently legal in Cartagena, Colombia.  I initially thought to myself, “How clever.  They haven’t technically done anything illegal and must, therefore, have thought they would escape scrutiny.”  But, really – can that be right??

What planet am I on?  Since when is insider trading legal … for anyone?

I, too, learned from 60 Minutes that there is apparently an insider trading loophole the size of Congress.  According to much of what I’ve read and heard, because U.S. Senators, Congressmen and Congresswomen have no “corporate responsibilities,” they are generally exempt from the rules that apply to you, me and the rest of the country.  And based on their roles and “true” responsibilities, they are, not surprisingly, often privy to information about specific companies and entire industries long before Joe Q. Public becomes aware of it.  Sadly, but also not a surprise, it appears that many members of Congress – on both sides of the aisle – then go on to personally profit from that knowledge.  Although the irony may go without saying, I’ll say it anyway:  it’s very disturbing that the very people who legislate and regulate, often in the wake of and purportedly to prevent malfeasance, turn around and exhibit the exact same behavior they wish to prevent in others.

Published in Insider Trading

Discounts for Customer Reviews: Clever or Unethical?

31 Jan 2012
Written by Meghan Daniels

I was recently riding in an elevator of a luxury apartment building when I noticed an interesting sign.  It read: “Do you like living here? “ and then proceeded to outline instructions for how to submit a “positive” review of the apartment complex online in exchange for a $150 monthly rent credit.   At the time, my thoughts went back and forth between “wow they are desperate” and “clever idea!”  This week, when I read about a very similar trend in the technology world (click here to read article), I thought back to that sign in the elevator and began to consider… is this type of practice really ethical?  

Ethics Training

17 Nov 2011

Lori gives commentary about our When Employees Raise Business Conduct Concerns course, co-developed with the International Business Ethics Institute.

Published in Expert Commentaries

When it comes to external board participation, wouldn’t it be easier if there was a hard and fast rule?  Outside an absolute restriction on external board participation by employees, which would be an injustice to employees and companies alike, there really is no simple policy.  Should you limit participation to certain types of boards?  To a certain number of boards?  With an increase in external scrutiny surrounding conflicts of Interest over the last several years, it is important for companies to clarify their approach to this topic, even in the absence of a black and white policy.  Further, it’s imperative for employees to understand that outside board participation can, in some cases, present a conflict of interest and that they are required to disclose these relationships to the Compliance Office. 

Rush provides guidance on how organizations can teach ethics that’s “beyond compliance”.

Published in Expert Commentaries
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