5 Signs That Your Organization Has An Unethical Culture Brewing…

The Harvard Business Review has published an article describing what it learned from a survey of experts asked to describe the conditions they have observed in organizations later revealed to have serious ethics problems—the symptoms of an unethical organization ethics culture. Here are the five top signs, with the corresponding rationalizations from the Ethics Alarms list where appropriate, as well as related unethical patterns of thinking and relevant organizational ethics principles that are repeated constantly in training sessions by people like me, yet routinely ignored. The news media, meanwhile, often covers the incidents as if journalist have never heard of those principles.

I. Urgency and fear: Following corruption scandals, leaders tend to describe events in terms of pressure, necessity, and what the company needed to do to ”survive.” This perception of existential competitive threats can be used to justify the creation and maintenance of toxic incentives, and it will undermine any efforts to raise concerns.

Rationalization 28. The Revolutionary’s Excuse: “These are not ordinary times.”

An argument for those who embrace “the ends justify the means”—but only temporarily, mind you!—the Revolutionary’s excuse has as long and frightening a pedigree as any of the rationalizations here. Of course, there is no such thing as “ordinary times.” This rationalization suggests that standards of right and wrong can and should be suspended under “special” circumstances, always defined, naturally, by those who defy laws, rules, and societal values. Their circular logic results in their adversaries feeling justified in being equally unethical, since times in which the other side engages in dishonesty, cheating, cruelty, and more is, by definition, extraordinary.

The inevitable result is a downward spiral of conduct, until unethical behavior is the norm. Ironically, the rationalization that “these are not ordinary times” no longer is necessary at that point. Unethical conduct has become ordinary, the new normal. This is, it is fair to say, the current state of American politics.


Rationalization 31. The Troublesome Luxury: “Ethics is a luxury we can’t afford right now”

Ethics is never “a luxury.” It is slyly effective to describe it as such, however, and those who do so usually believe it—which means you should sleep with one eye open when they are around, watch your wallet, and never turn your back. Saying ethics is a luxury simply means that the speaker believes that one should be good and fair when it is easy and benefits him or her, but when problems loom and crises have to be faced, ethics are optional. This attitude is another calling card of Oliver Wendell Holmes’ “Bad Man,” the law abiding citizen who will cut your throat for his own benefit if he finds a legal loophole. In a true crisis, ethical values are often the only thing standing between us and catastrophic misconduct in the throes of desperation and panic; they aren’t luxuries, they are life-lines. When you hear yourself saying, “I’ll do anything to fix this! Anything!” it is a warning, and the ethics alarm needs to start ringing hard. Grab those ethical values, and hold on to them. They are the last thing you can afford to be without at such times.


II. Isolation: Groups and teams that are far from headquarters—either in geography, access to information, or both—are vulnerable. When a team that is isolated (by accident or design) comes under the direction of an authoritarian, competitive leader, an enterprise has created the baseline conditions for corruption. People are far more influenced by their immediate surroundings than by a code of conduct set at the top.

This is group-think, ignoring the tenets of Professor Zimbardo’s rules that he recommends to avoid the phenomenon:

“Avoid situations where you lose contact with your social support and informational networks, for the most powerful forces of social influence thrive then. You do not want all your reinforces to come from these new sources….Never allow yourself to be cut off emotionally from your familiar and trusted reference groups of family, friends, neighbors, co-workers…


III. Fragmentation and plausible deniability: When a corporate scandal occurs, it is common for leaders to deny personal knowledge. Sometimes these hollow-sounding explanations are literally true, if disingenuous. A leader does not need to personally sign off on a bribe payment to hold responsibility for how employees have been socialized into an organization and what behavior is sanctioned or rewarded. But organizational complexity, matrixed responsibility, and a lack of clarity as to roles can help feed and justify conditions in which each decision is judged in isolation, and no one is held broadly accountable.

Leadership is the #1 factor in creating an ethical organizational culture, or allowing an unethical culture to take root and thrive. The operative maxim is “The fish rots from the head down.” Leaders who engage in this conduct often are employing contrived ignorance, for they don’t want to know what is going on, and rejecting the core leadership ethics principle of accountability.

The most glaring recent example of this species of smoking gun evidence of incompetent or unethical leadership:  The IRS Scandal. Yet this genuine example of corrupted government and unethical culture was never subjected to independent investigation, despite real evidence, real harm to democratic institutions, and obvious cover-up efforts.


IV. Success and impunity: We have a tendency not to question success. When a team markedly outperforms its peers, it develops a mystique that serves to block scrutiny of the basis of that success. The reputations of other teams suffer as they appear to underachieve in comparison. If the high-achieving team’s success has been achieved by unethical means, a company has created a slippery slope by which conditions in one subculture spread to others.

This begins with “The ends justified the means,” the colloquial version being commonly expressed as “You can’t argue with success!” Then the attitude is bolstered by several pernicious rationalizations:

Rationalization 3. Consequentialism, or  “It Worked Out for the Best”

The ethical nature of an act must be evaluated when it is done, and not based on its results. Consequentialism is an open invitation to extreme “the ends justify the means” conduct, where even cruel and illegal conduct becomes “ethical” because good consequences happen to arise out of it, even when the good was completely unintended or unpredictable. Snooping into the contents of your host’s medicine cabinet is wrong, and the fact that you discovered a mislabeled pill bottle with rat poison in it doesn’t make your violation of her privacy ethical, even though it allows you to tell her and save her life. That is good fortune, not ethics. Similarly, an ethical act doesn’t become wrong because it happens to set in motion an unpredictable chain reaction resulting in a catastrophe. In the classic old “Star Trek” episode, “The City on the Edge of Forever,” Dr. McCoy rescuing a woman from being killed results in Nazi Germany winning WW II. That doesn’t mean his courageous and selfless act was unethical. It was still the right thing to do.

Rationalization 4. Marion Barry’s Misdirection, or “If it isn’t illegal, it’s ethical.”

The late D.C. Mayor and lovable rogue Marion Barry earned himself a place in the Ethics Distortion Hall of Fame with his defense of his giving his blatantly unqualified girlfriend a high-paying job with the DC government. Barry declared that since there was no law against using the public payroll as his own private gift service, there was nothing unethical about it. Once the law was passed (because of him), he then agreed that what he did would be wrong the next time he did it.

Ethics is far broader than law, which is a system of behavior enforced by the state with penalties for violations. Ethics is good conduct as determined by the values and customs of society. Professions promulgate codes of ethics precisely because the law cannot proscribe all inappropriate or harmful behavior. Much that is unethical is not illegal. Lying. Betrayal. Nepotism. Many other kinds of behavior as well, but that is just the factual error in the this rationalization.

The greater problem with it is that it omits the concept of ethics at all.  Ethical conduct is self-motivated, based on the individual’s values and the internalized desire to do the right thing. Barry’s construct assumes that people only behave ethically if there is a tangible, state-enforced penalty for not doing so, and that not incurring a penalty (that is, not breaking the law) is, by definition, ethical.

Nonsense, of course. It is wrong to intentionally muddle the ethical consciousness of the public, and Barry’s statement simply reinforces a misunderstanding of right and wrong.

Rationalization 5. The Compliance Dodge.

Simply put, compliance with rules, including laws, isn’t the same as ethics. Compliance depends on an individual’s desire to avoid punishment. Ethical conduct arises from an individual’s genuine desire to do the right thing. The most unethical person in the world will comply if the punishment is stiff enough. But if he can do something unethical without breaking the rules, watch out!

No set of rules will apply in all situations, and one who is determined to look for loopholes in a set of laws, or rules, or in an ethics code, so that he or she can do something self-serving, dishonest, or dastardly, is likely to find a way. This is one reason why the ubiquitous corporate ethics programs that emphasize “compliance” are largely ineffective. By emphasizing compliance over ethics, such programs encourage the quest for loopholes. Remember that when Enron’s board realized that one of its financial maneuvers violated its Code of Ethics, it made compliance possible by changing the Code.

When an organization or society makes compliance…doing the right thing to avoid unpleasant consequences… the focus of its attempt to promote ethical conduct, it undermines the effort by promoting confusion in the not-infrequent circumstances when doing the right thing hurts. The better approach, and the one promoted by Ethics Alarms, is to teach and encourage good behavior and ethical virtues for their own sake. When the inevitable loophole opens up in the rules, when the opportunity to gain at someone else’s expense is there and nobody will ever know, it is the ethical, not the compliant, who will do the right thing.

Rationalization 10. The Unethical Tree in the Forest, or “What they don’t know won’t hurt them.”

The habitually unethical as well as the rarely unethical who don’t want to admit they have strayed are vulnerable to this classic, which posits that as long as the lie, swindle, cheat, or crime is never discovered, it hardly happened at all…in fact, one might as well say it didn’t happen, so you can’t really say anything really was wrong…right? Wrong. First of all, a remarkable percentage of time, the wrongful act is discovered. Even if it is not, however, the unethical nature of the act is intrinsic, and exists independently of how many people know about it. Just as a tree that falls in the forest with nobody around both makes noise and causes damage, so undetected, well-disguised or covered-up wrongs are exactly as wrong as those that end up on the front pages. They also cause the same amount of harm much of the time. A cancer you don’t know about can still kill you. #10 is one of the dumber rationalizations.

Rationalization 11. The King’s Pass, The Star Syndrome, or “What Will We Do Without Him?”

One will often hear unethical behavior excused because the person involved is so important, so accomplished, and has done such great things for so many people that we should look the other way, just this once. This is a terribly dangerous mindset, because celebrities and powerful public figures come to depend on it. Their achievements, in their own minds and those of their supporters and fans, have earned them a more lenient ethical standard. This pass for bad behavior is as insidious as it is pervasive, and should be recognized and rejected whenever it raises its slimy head.  In fact, the more respectable and accomplished an individual is, the more damage he or she can do through unethical conduct, because such individuals engender great trust.

Rationalization 13. The Saint’s Excuse: “It’s for a good cause”

This rationalization has probably caused more death and human suffering than any other. The words “it’s for a good cause” have been used to justify all sorts of lies, scams and mayhem. It is the downfall of the zealot, the true believer, and the passionate advocate that almost any action that supports “the Cause,’ whether it be liberty, religion, charity, or curing a plague, is seen as being justified by the inherent rightness of the ultimate goal. Thus Catholic Bishops protected child-molesting priests to protect the Church, and the American Red Cross used deceptive promotions to swell its blood supplies after the September 11, 2001 attacks. The Saint’s Excuse  allows charities to strong-arm contributors, and advocacy groups to use lies and innuendo to savage ideological opponents. The Saint’s Excuse is that the ends justify the means, because the “saint” has decided that the ends are worth any price—especially when that price will have to be paid by someone else.


V. In-group language: Humans need both to hide and rationalize unethical behavior, leading to the widespread use of in-group jokes and euphemisms. A rich terminology springs forth to describe bribes, from “gifts” and “commissions” to SNC Lavalin’s “project consultancy costs,” TSKJ’s “cultural arrangements,” and the funds Enron put aside to “educate Indians.” Metaphors of war and sport, common in this context, help to shift the frame away from that of individual choice.

This symptom is the addiction to what I have sometimes referred to as “cover words,”—euphemisms that constitute deceptive, deceitful terminology designed to mislead others, distort honest discussion, and often to allow individuals engaged in unethical conduct to simultaneously wallow in convenient denial. Both “pro life” and “pro choice” advocates engage in this practice. So do illegal immigration advocates who refer to illegal immigrants as just “immigrants.”

The practice is summarized in Rationalization #63:

63. Yoo’s Rationalization or “It isn’t what it is”

Named after John Yoo, the Bush Justice Department lawyer who wrote the infamous memo declaring waterboarding an “enhanced interrogation technique,” and not technically torture,  #63 is one of the most effective self-deceptions there is, a handy-dandy way to avoid logic, conscience, accountability and reality.

Examples of this are everywhere. Paul Krugman, the progressive economist and Times columnist, began a column like this:

“Remember all the news reports suggesting, without evidence, that the Clinton Foundation’s fund-raising created conflicts of interest?”

The Clinton Foundation’s fundraising created a conflict of interest, by definition. For a non-profit organization, with family connections to either a current Secretary of State or a Presidential candidate, to accept money from any country, company or individual who has or might have interests that the Secretary or potential President can advance is a conflict. It’s indisputable. No further ‘evidence” is needed.”

How does Krugman deal with this problem? Simple: he convinces himself that screaming conflicts aren’t what they are without “evidence,” by which he means “proof of a quid pro quo.” But a quid pro quo is bribery, not a conflict of interest. A conflict of interest might lead to bribery, but a conflict is created as soon as there is a tangible reason for an official’s loyalties to be divided.

Yoo’s Rationalization or “It isn’t what it is” turns up everywhere, and has since time began. A mother swears that her serial killer son “is a good boy,” so she doesn’t have to face that fact that he’s not. It is denial, it is lying, but it is lying to convince oneself, because the truth is unbearable, or inconvenient.  It is asserting that the obvious is the opposite of what it is, hoping that enough people will be deluded, confused or corrupted to follow a fraudulent argument while convincing yourself as well. The Rationalization includes euphemisms, lawyerisms, and the logic of the con artist. Illegal immigration is just immigration. Oral sex isn’t sex, and so it’s not adultery, either. I didn’t steal the money from the treasury! I was just borrowing it!

And waterboarding isn’t torture.

#63  also could be named after Orwell’s “1984,” and called “Big Brother’s Rationalization” in homage to “War is Peace,” etc. But John Yoo deserves it.

15 thoughts on “5 Signs That Your Organization Has An Unethical Culture Brewing…

  1. Excellent. Top notch. The guts of what you do, and do well, and this is also exceptionally well done. One of your more consequential pieces, IMHO.

      • Agreed on both. Pushing for quick involvement, isolation, the “success” of the relationship (in the eyes of the one in charge), redefined terms that only the participants understand, etc. are all marks of an unhealthy relationship, either in group or individual form.

        • Sounds like three relationships a woman I was emotionally involved with once engaged in – pressure for quick commitment, quick sex, and ultimately quick (and many) children, isolation of her from her family and friends, and delusion on both the men and her part as to what was really going on and what was acceptable (verbal and physical abuse and ultimately rape).

          Also sounds like my last boss before I got my current job – pressure to commit quickly to bad terms, constant and oppressive oversight, repeated rationalizations of rotten behavior. It was about this time 12 years ago that I finally decided it was going to be time to leave, as my now-former boss handed me a check for $50 at about 4:30 on Christmas Eve (everyone else had been allowed to leave at one), and said “I gave the other people their bonus checks at lunch (the Christmas lunch I alone was not invited to since “someone needs to man the phones, and you’re elected”). Frankly I should be giving you nothing at all, since your work is just the north side is acceptable. However, I am going to give you enough to get to your family’s celebration tomorrow and buy a modest flower arrangement, bottle of wine, or whatever, so they do not think you are too cheap. I expect better of you this year.”

          • Yoikes!! Sounds like that (I assume) guy didn’t embrace the second half of the Vince Lombardi (whose first gig was in your neck of the woods, at St. Cecilia High School/Englewood, NJ) approach to motivation:

            Tear ’em down to build ’em up.

            • Not at all. The firm had split and 2 partners took no one with them except their secretaries. The remaining 2 kept the other 2 secretaries, one part time secretary/typist who was worthless, and the 3 associates. This guy didn’t want to keep me, because I had worked mainly for one of the partners who had left, but if he were to let me go in a downsizing rather than for cause, I would have gone on unemployment and his rates for unemployment insurance would be raised. He didn’t want to risk trying to fire me for cause, because he feared the possibility of a lawsuit.

              So, he told me that, although he could let me go because I was originally hired to work for this other guy, he was a good guy and “didn’t want me to have a gap in my resume.” To prevent that gap, I could remain, however, the terms would be as follows:

              1. I would lose my salary and be paid hourly, the first twenty hours each work week being unpaid; 2. I would have no paid vacation and not be paid on holidays;. 3. I would have to turn in my gas credit card (previously issued by the firm) and pay for my own gas to get to my assignments, and a previous $200 monthly stipend for the use of my own car for work would be stopped. 4. I would be allowed to retain my health insurance, however, I would have an additional $200 deducted from my hourly pay each pay period to offset that.

              In addition to these generous terms I was told I would be given all the distant assignments, since one of the other associates was going to be taking over all cases near my home and the other was going to take the cases medium distance from my home or the office. I would get all the assignments that required at least an hour of driving each way, often more, and if it meant tolls or parking charges, that was on me.

              I tried to make it work, but about half the time I would come to the end of the week having lost money by the time I paid for gas, tolls, and parking incidental to my job, paid the $200 deduction for health insurance, and my 20 unpaid hours.

              The bonus that wasn’t a bonus coupled with the patronizing speech and my depleted savings finally led me to seek other employment. Of course when this guy caught wind of the fact I was looking, the you know what really hit the fan…

  2. II. Isolation: on a micro- level, you’ll find the organization has people who are there purely because of connection to the boss – no known qualifications at the time of hire, and part of a tight social circle with the boss. If there are a lot of these people, then the organization doesn’t want people with knowledge of what’s general practice in the industry and there’s a pretty good chance it’s a criminal enterprise.

  3. Jack,

    “The Star Sydrome” hit me right between the eyes. Here’s why:

    There’s an Irish bar in Hoboken, NJ, that had a mural of famous Irishmen painted on the outside wall. One of them was Sinead O’Conner, who was throwing some tantrums at the time and generally making an ass of herself. As a Marine, I didn’t care for her at all.

    In a conversation with a young woman I was doing work for, the discussion turned to that mural and she didn’t understand why it annoyed me. I said something about her (O’Conner’s) disrespectful behavior during the National Anthem and asked if she thought that was okay. Her answer?
    “Oh, but she’s soooo talented!”

    Happy Holidays

    Tony Wiersielis

    PS With all you post, I wonder if you ever sleep.

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