Underpinning the housing collapse that began in 2006 were many unethical business behaviors. Unethical business practices start with the small things and grow like a cancer until they result in a meltdown of grand proportions. Everybody is susceptible to the psychological traps that lead to unethical behavior given the right conditions. Recognizing the signs of unethical business behavior can help you avoid falling prey to them. When you work in business or do business with others, pay attention to signs that unethical business practices are underfoot.
When a leader or authoritarian figure demands obedience without question, it creates a psychological trap that often leads to unethical behavior, according to Robert Hoyk, Ph.D, and Paul Hersey, MBA, Ed.D, in their article "The Root Causes of Unethical Behavior" in the "Graziadio Business Review." The authors illustrate that psychological traps distort perceptions of wrong and right to support unethical behavior as if it were in the right. When an authoritative figure is not open to questions about a process, procedure or product, this is a good sign that unethical behavior might be involved.
Everybody Does It
The false consensus, "everybody does it" is a way for people to justify unethical behavior. Stealing office supplies, falsifying documents and cheating on time cards are all unethical behaviors often justified by the person committing the act. Employing the phrasing "everyone does it" helps the wrongdoer not feel guilty about what he is doing, and it minimizes the need to admit unethical practices.
Need to Please
Managers or business owners who seek closure in a situation at all costs could lead others to potential unethical business practices. People learn from grade school up the need to respect authority. Because of this, many undertake unethical practices when trying to please a supervisor. The supervisor who cares not about the means, but only the results, might ask employees to make up data, or do other dishonest things, just to get the project done.
Pressure and Stress
Two signs that can signal unethical behavior are pressure and stress. Employees who are pressured to meet deadlines or to finish projects under budget may turn to unethical behaviors to achieve the desired results. One of the complaints in the mortgage meltdown and the foreclosures that followed was that bank personnel were not vetting foreclosure documents before signing them. This led to violations of law that resulted in a $26 billion settlement brought by the U.S. government against five of the country's largest banks. Even though employees knew what they were doing was unethical, for them, it was the only way to meet corporate demands.
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