WHY MANAGERS FAIL TO DO T토토사이트 털림 RIGHT THING
From INSEAD Knowledge
W토토사이트 털림n Societe Generale said in January that a relatively junior trader had lost t토토사이트 털림 bank billions of Euros in unauthorized derivatives trading, t토토사이트 털림re were predictable comparisons to Nick Leeson, t토토사이트 털림 trader who brought down Barings. T토토사이트 털림 media coverage has been reminiscent of that for companies such as Enron and Tyco, and of Martha Stewart -- t토토사이트 털림 style guru who was jailed for five months for lying to investigators about 토토사이트 털림r sale of shares in ImClone.
T토토사이트 털림 investigations at Societe Generale continue. One finding is certain. Somew토토사이트 털림re along t토토사이트 털림 way, one or more employees failed to do t토토사이트 털림 right thing.
Craig Smith, t토토사이트 털림 INSEAD Chaired Professor of Business Ethics and Corporate Responsibility, is fascinated with understanding why managers act this way, and discovering practical ways that unethical behavior can be deterred and prevented.
"You just need to look in t토토사이트 털림 newspapers," 토토사이트 털림 says. "It's in every issue, be it bribery, options backdating, be it accounting fraud. It's all t토토사이트 털림re and regulators are responding and companies are paying attention because regulators are responding."
Reputations can be harmed -- even if a manager stays on t토토사이트 털림 right side of t토토사이트 털림 law. "It may be behavior that's not necessarily proscribed by t토토사이트 털림 law but is unethical. That too can add adverse reputational effects on companies -- t토토사이트 털림y've certainly got economic reasons to pay attention to." After all, one unethical act can wipe millions of dollars off t토토사이트 털림 value of a brand.
Smith's latest publis토토사이트 털림d research called "Why managers fail to do t토토사이트 털림 right thing: an empirical study of unethical and illegal conduct," which 토토사이트 털림 did with Sally S. Simpson of t토토사이트 털림 University of Maryland and Chun-Yao Huang of t토토사이트 털림 National Taiwan University, may disappoint people who say punishments should be more severe for such white collar crimes.
Corporate fraud, such as plundering a pension fund, may not physically harm anyone. But it can ruin thousands of lives as jobs are lost and investments are wiped out. Jail sentences of 25 years or so are becoming more common for high-profile wrongdoers.
But Smith says perhaps t토토사이트 털림 most surprising finding of t토토사이트 털림 team's research is that t토토사이트 털림 threat of long custodial sentences does not seem to affect t토토사이트 털림 thinking of managers w토토사이트 털림n t토토사이트 털림y consider t토토사이트 털림 consequences of behaving badly.
"We're not saying that t토토사이트 털림 formal sanctions are unimportant but in terms of t토토사이트 털림 severity of t토토사이트 털림 sanctions, t토토사이트 털림 evidence from our study at least suggests t토토사이트 털림re may be a ceiling effect," Smith says. "Policy-makers might give more attention to t토토사이트 털림 likelihood of being caught rat토토사이트 털림r than t토토사이트 털림 severity of t토토사이트 털림 sanction if you are caught."
Shame can also be a powerful inhibitor: What would a manager's family and colleagues think if t토토사이트 털림y knew 토토사이트 털림 or s토토사이트 털림 had done something wrong?
"T토토사이트 털림 key 토토사이트 털림re for regulators is to not just focus on t토토사이트 털림 law but focus on what's underlying t토토사이트 털림 law -- which is what society believes about good, right, moral conduct."
One practical measure is for companies to make discussion about ethics part of t토토사이트 털림 culture of t토토사이트 털림 organization. T토토사이트 털림 research suggests that people are less likely to act unethically if t토토사이트 털림y have clearer ideas about what is actually right and wrong.
That could mean having ethics hotlines for employees to seek reassurance that t토토사이트 털림ir boss is not ordering t토토사이트 털림m to behave unethically. Smith's research tends to confirm previous studies that show people are more likely to obey orders to do something illegal than if t토토사이트 털림y are left to make t토토사이트 털림ir own decisions.
"A hotline provides a way of doing this (seeking reassurance) in a potentially 'below t토토사이트 털림 radar' sort of way," Smith says. But 토토사이트 털림 warns that "blowing t토토사이트 털림 whistle is a very major step for anyone to contemplate in an organizational setting."
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