MANAGING FOR ETHICAL CONDUCT

We talked about how most employees look outside them for guidance about how to behave. We have also discussed ethical culture and how organizations, especially large ones, manage ethics and legal compliance. Within this broad organizational context, managers oversee employee behavior every day, and they can have enormous influence on employee behavior. Therefore managers need simple and practical tools for managing the ethical conduct of their direct reports in the context of the broader organizational culture. This chapter introduces some basic management concepts that provide a foundation for understanding how to manage in a way that increases the probability that employees will behave ethically. These principles can be applied at the department level or at the level of the entire organization. Consistent with the focus of the book, each section concludes with practical implications for managers. Underlying our recommendations to managers are three key assumptions:

1. Managers want to be ethical.

2. Managers want their subordinates to be ethical.

3. Based on their experience, managers will have insight into the unique ethical requirements of the job.

Practical Advice for Managers: Ethical Behavior

What are the practical implications for managers? First, think of ethics in concrete behavioral terms. Specifically, what kind of behavior are you looking for in your subordinates, and how can you create a departmental work context that will support that behavior? Specifying concrete expectations for ethical behavior means going beyond abstract statements, such as ‘‘integrity is important here’’ to more concrete statements, such as ‘‘I expect sales representatives to be absolutely honest with our customers about such things as the characteristics of our products and our ability to deliver by a certain date.’’ Providing a reason for these expectations is also important. ‘‘We’re interested in building long-term relationships with our customers. We want them to think of us as their most trusted supplier.’’ Finally, it’s the manager’s responsibility to create a work environment that supports ethical behavior and discourages unethical behavior just as much as it’s the manager’s responsibility to manage for productivity or quality. Don’t just set ethical behavior goals. Follow up to make sure that they’re achievable and that they’re being met, and model ethical conduct yourself. Your people will pay more attention to what you do than to what you say. Take advantage of opportunities to demonstrate the ethical conduct you expect.

The Dennis Levine Example

Now for an example of someone lower in the organizational hierarchy. Dennis Levine’s personal account of his insider trading activities, which resulted in his arrest and imprisonment in the 1980s, also suggests multiple ethical selves. He described himself as a good son, husband, and father, and a man who had been encouraged by his parents to ‘‘play straight.’’ ‘‘I come from a strong, old-fashioned family . . . [my father] taught me to work hard, believe in myself, and persevere . . . as a kid I always worked.’’9 Levine’s wife, Laurie, had no idea that he had been secretly and illegally trading in stocks for years. In fact, the family lived in a cramped one bedroom apartment for nearly three years after their son was born despite Levine’s huge insider trading profits. That someone is ‘‘from a good family’’ or is ‘‘a family man or woman’’ is no guarantee of ethical behavior in the office. At the office, the manager is dealing with the ‘‘office self,’’ who may be very different from the ‘family self’’ or the ‘‘religious self.’

Levine was a good son, husband, and father. But he separated his family self from his insider trading self. Why was his insider trading self allowed to exist? We can only speculate that this office self fit into an environment where peers were crossing the ethical line and not getting caught. Most important, his continuing huge profits led Levine into a downward spiral of unethical behavior that he found difficult to stop despite his recognition that it was illegal.