What are the negative effects of a culture that encourages dishonesty and corruption on an organization’s reputation and its employees?

1. What are the negative effects of a culture that encourages dishonesty and corruption on an organization’s reputation and its employees?

• Your submission should be between 150-300 words and include citations from outside resources used in your response (no need to cite the textbook or case here). Dont overthink it. Not too technical

Whether people do or do not comply with rules, expectations, or requirements of their workplace has been found less to do with their moral character and more to do with interpersonal factors in their work environments.¹ Whether you are an honest, kind, or generous person may not shine through when you are making decisions about right and wrong in the context of your work.  Research shows both culture and leadership are more prominent influences in social situations of moral decision-making than a person’s individual character.²

Some studies even indicate that whole professions or industries may implicitly encourage dishonesty.³  One experiment shows, how subjects behaved honestly or dishonestly when thinking about their professional identities.  In the study,⁴ people were either tasked to simply complete a nondescript survey or to think about their professional role (priming them to operate in a manner like they were at work).  They were then tasked to provide results for a series of coin flips.  The participants were told in advance the more times the coin showed heads, the more money they would make.  People in the banking industry who took the nondescript survey were comparably as honest in reporting coin flips as people who worked in other industries.  The bankers who were told to think about their professional identities, however, inflated the reporting on how often the coin turned up heads. This was in contrast to other people in the study from different professions who did not display the dishonest reporting behavior like the bankers did.  However, that does not mean the results are limited to only the banking industry. Other studies have shown that when people are prompted to think about money, they also engage in similar behavior.  This is especially true when they assume a professional identity and the behavior relates to the bottom line performance of an organization.  Financial performance seems strongly tied to an incentive to be dishonest.

Each organization has a way of understanding what is and is not acceptable in the context of their culture.  Can we fudge the numbers a little?  It is okay to take an extra half our at lunch? Do we stand around the water cooler and dump on the weird guy in accounts receivable?  Can we take sick days if we’re not sick?  How people answers these questions indicates the ethical climate of the organization?  The ethical climate refers to the values in place in the organizational culture that guide people’s understanding of what is and is not acceptable behavior.⁵ In cases like the banking industry, Wells Fargo specifically, an emphasis on prioritizing profit over customer’s interest lead to a huge scandal in 2016.⁶  The company had been creating millions of fraudulent savings and checking accounts on behalf their clients without their client’s consent.  This deceitful practice cost their clients unexpected fees and charges as well as adversely affecting many of their clients credit ratings.  Employees of the bank blamed the organization and its leadership for creating unrealistic goals in terms of “cross-selling” — the sale of new products (e.g. credit cards, checking accounts) to existing customers of the bank. The pressures institutionalized by reward and punishment systems drove employees to behave outside of their typical value set and prioritize workplace expectations over moral character.  It was a clear example of toxic culture leading to disastrous results for the company and its customers.