Levy Lecture: Reasons behind unethical behavior

Maryam Kouchaki, an Associate Professor of Management and Organization at Northwestern’s Kellogg School of Management, studies moral decision-making in her quest to understand why people within organizations behave unethically. She spoke about her research during a presentation to the virtual Levy Lecture crowd on Tuesday, March 8.

Three-quarters of the lecture attendees who responded to a survey after the lecture said they were motivated to attend because the topic was “especially relevant today given what is going on in the world,” a fact reinforced as Kouchaki showed an array of corporate logos representing some of the most egregious recent cases of fraud and criminality. In her attempt to explain why people behave unethically, Kouchaki started with a big picture view for the Levy audience.

Models of bad behavior

Kouchaki presented three scenarios. One model is “a few bad apples,” a collection of rogue, opportunistic and greedy individuals over whom the organization has very little control. Enron is an example, since the criminal behavior was limited to the top echelon. The second model is an unethical culture pervasive within the organization that promotes a mindset of blindly following unethical leaders, no matter what the cost. Wells Fargo’s creation of millions of fraudulent accounts exemplifies employees behaving unethically while blindly following unethical leaders.

The third is a standard economic model for how some organizations consciously and deliberately make decisions. Leaders evaluate the cost benefits of the questionable behavior, the probability and likelihood of being caught and the magnitude of the punishment if found out. If the benefits outweigh the costs, some organizations choose to proceed even if the behavior is questionable or unethical. Purdue Pharma is a recent example.

Although some people choose to behave unethically, Kouchaki said there is plenty of evidence showing that people deeply care about ethics. “They want to be ethical people. And this is an evolutionary argument as well for us, for humans as social beings. We care about being ethical and being seen by other people in our group as ethical. So, when you think about our psychology, there are deep roots for this idea that ethicality is essential to who we are and we care deeply about it,” according to Kouchaki.

Who’s going to heaven?

She shared a finding from a U.S. News & World Report survey done around 2000. One thousand people were asked, who on a long list of celebrities would be lucky enough to go to heaven when they died. The percent of “heaven-sent” support varied: 52% for Bill Clinton, 62% for Michael Jordan, 79% for Mother Teresa. Then this same group was asked if they thought they would be going to heaven, and a whopping 87% of them thought they would be. Clearly people care about being ethical and want to be seen as such.

We want to be seen as ethical, and yet unethical behavior abounds even if it is only “a little bit here and there,” Kouchaki said. Some commonplace examples include insurance fraud, intellectual property theft, tax deception, employee theft and fraud, cyberloafing (surfing the Internet for personal reasons while at work) and wardrobing (using or wearing a new item, returning it to the store and getting a full refund, usually done with high-end designer clothes). Cumulatively these behaviors cost businesses hundreds of billions of dollars a year.

How do humans integrate two opposing ideas, the desire to be honest and be thought of as ethical, yet still behave unethically? Kouchaki has conducted research proving that there are psychological mechanisms that affect people’s behavior. She has also demonstrated that moral behavior is dynamic, a sort of “work in progress.” For instance, in stressful or anxiety-producing situations, Kouchaki has shown that more people tend to behave unethically than they would without the extra stressor. She has shown that unethical behavior occurs more frequently in the afternoon than the morning, and if subjects think no one is watching.

Not everyone who participates in her studies behaves unethically. Some people are honest consistently. But among those who do behave unethically, Kouchaki has shown that people tend to forget or block out their own unethical behavior, which she has termed “unethical amnesia.” Kouchaki suggests “that for almost any one of us, there are psychological and social factors that could lead ordinary people to engage in repeated bad behavior.”

Growth opportunities

As Kouchaki concluded her presentation, she talked about what she terms “moral vulnerability.” As a teacher, she sees the educational opportunity within the data. She says it’s important “to recognize that we aren’t perfect, and we are lucky to make mistakes and fail in being ethical and moral, and we have to think about it more carefully, and come up with designs and systems that encourage people to learn from their lapses, their mistakes, and really focus on being good, honest people.” She believes we can take charge of our own ethics and behavior.

During the question and answer period, the audience asked Kouchaki about her research, how corporations can build a culture that incentivizes people to behave ethically and how deference to authority and loyalty affects business environments. She also clarified that her research applies to most people but does not account for the 5-10% of people who are narcissists or sociopaths. Sociopaths will lie and behave unethically all the time, so the best defense is to make sure those people are not put in positions of power.

Kouchaki is hopeful that with greater transparency about expected standards of ethics in companies, and more studies of ethicality in graduate and executive education programs like the ones she teaches at Northwestern, positive change is possible. The link to this lecture may be accessed here.

By Wendi Kromash as published in the Evanston RoundTable. Ms. Kromash is a member of the Levy Center Foundation Board; she manages and moderates the Levy Lecture Series.