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Business Ethics

  • Stefan Kühl
  • Thursday, 30. May 2024

Why Demanding Integrity Turns Employees into Hypocrites

‘Integrity’ is management’s new favourite word. Employees are expected to behave not only in accordance with the law and the business’s own internal rules but also in an ethical way. The senior managers of organizations commit themselves to policies that show ‘moral integrity’ and vow to lead on the basis of ‘values’; their employees, in turn, are asked to adopt an ‘ethical attitude’. 

There are even businesses that have created the position of Chief Integrity Officer. Public administrations are launching programmes aimed at raising the level of integrity among employees. Hospitals are distributing questionnaires that are meant to allow employees to judge whether their decisions are compliant with the principle of integrity. What has made business ethics so popular? And what happens when moral standards are actively promoted and used to judge actions within the organization? 

The reason for the popularity of integrity is said to be the ‘failure’ of traditional systems for guaranteeing adherence to the rules. Under the name of ‘compliance’, all large organizations have introduced full-blown rule books to ensure that laws are not broken and that sector-specific professional standards and the organization’s own rules are adhered to. Departments have been created, often with hundreds of employees, whose sole purpose is to make sure that the rules are obeyed. And – surprise, surprise – special career paths for so-called ‘compliance managers’ have emerged. 

The traditional way of ensuring that people follow the rules is simple. Organizations create protocols to which their members have to adhere if they want their membership of the organization to continue. Actions that are acceptable are those that accord with protocol; actions that are unacceptable are those that do not. Here is a simple example: say there is a rule that in the case of an invitation to tender whose value exceeds 20,000 euros, the organization must obtain several bids. If the staff member obtains several tenders and follows the prescribed procedures in obtaining them, he or she is on the safe side. If the staff member does not follow the rule, and its violation becomes known, he or she will come under pressure to provide a justification. In this situation, compliance management is a matter of ensuring that rules are followed to the greatest possible extent. 

The popularity of the idea that organizations should be guided by ‘ethical values’ is based on the observation that the traditional ways of ensuring compliance are not sufficient in the fight against corruption, money laundering, the formation of monopolies, and environmental violations. It is not enough, the argument goes, just to obey the rules; what is necessary is for organizations to pursue values. The goal should not be the mere mechanical adherence to the rules, that is, the non-violation of the law, professional standards, or internal stipulations. Rather, what is required is the development of a ‘specific attitude based on values’ which goes far beyond the rules set by the organization. 

At first sight, a commitment to values seems fairly reasonable. It would be surprising if the director of a business openly promoted ‘corrupt policies’, called on his employees to adopt an ‘immoral attitude’, and propagated ‘value-free leadership’. One advantage of making use of the ‘sphere of values’ in this way is that it means there are ‘high chances of consensus’. It is easy to get people quickly to agree on human rights, environmental protection, justice, peace, and freedom as guiding values. 

What is a problem, however, is that values, as opposed to protocols, only provide very vague guidance when it comes to making concrete decisions. In many cases, values will not tell you which option should be preferred. How should we respond to the fact that the freedom of movement offered by cars at the same time leads to the premature death of thousands of people who live close to large roads and motorways and are exposed to the nitrogen oxide and particulates emitted by vehicles? In cases of international conflict, should one wage a war to promote human rights? When it comes to making specific decisions, taking values, as opposed to protocols, as our point of orientation leads to a number of very real contradictions. 

The demand for integrity is primarily a demand that employees behave in an ethical way. Employees have to demonstrate their ‘moral strength’. In difficult situations they have to stand up for what is ‘right and just’, even if this implies a significant cost to themselves. What matters is adherence to moral standards out of a ‘recognition of their correctness’, not because their violation will be met with sanctions. 

The ethical demands placed on employees have endlessly proliferated. Employees are asked to act ‘in accordance with their own values’ and always to aim at a ‘fair balance’ between their personal advantage and what is good for others. ‘Authenticity’, the agreement between the ‘values one holds and how one acts’, is of the essence. Acting with integrity requires ‘moral steadfastness in the face of adversity’ – meaning that, in cases of conflict, one should strive for the result that ‘corresponds best to the values one represents’. 

Because neither views nor attitudes can be decreed, the popularity of the ideas of integrity, ethics, and values has led to a boom in the number of cultural programmes laid on by organizations. In large organizations, ‘Chief Innovation Evangelists’ take employees on ‘culture journeys’ to smaller organizations, where they are meant to learn the art of communicating outside of hierarchies. Employees are asked to participate in a culture of cooperation, which means ‘honest behaviour’ towards each other, being ‘straightforward and reliable’, meeting each other ‘on an equal footing’, and engaging in ‘amicable relationships’. What effects do such ethically charged initiatives have on organizations? 

When organizations emphasize the value of integrity, this does not bring about more ethical behaviour on the part of their employees. Ethical values do not function like a machine where you input the demand for ethical attitudes on one side and ethical behaviour comes out at the other side. The only effect of these integrity-promoting initiatives is that employees come to present their behaviour differently. When senior managers create a value-driven climate, employees have to ensure that their actions can be seen not only as compliant, efficient, and innovative, but also as morally exemplary. 

These initiatives achieve the exact opposite of what they intend: hypocrisy. Of course, no organization can afford to do without a certain amount of hypocrisy. Every business, every public administration, every hospital, every political party, and every NGO needs to present to the outside world not only its real achievements but also a dressed-up image of itself. Although ‘pretence’ and ‘hypocrisy’ probably do not sound very flattering to the ears of practitioners, they are simply the established terms in organization theory for referring to the kinds of window dressing that all organizations create. 

There are, however, good reasons for leaving this window dressing, which is indispensable for the creation of legitimacy, to the experts. It is the central (sometimes implicit) task of marketing experts and public relations departments. And it is often also a core responsibility of managing directors to put up a nice façade for their organizations and to maintain and, if necessary, repair it. But part of their job is equally not to confuse the pretty façade with the reality. 

However, if the senior leaders of an organization require their employees to commit themselves to ethical values and integrity, this stifles internal discussion. Integrity becomes an abstract formula to which employees are forced to express their commitment if they want to get on in the organization. In meetings that sometimes bear a striking resemblance to Sunday Mass, the value formulas decreed from above are rehearsed. Micro-political conflicts are charged with moral significance, and controversy, which is unavoidable in any organization, is associated with questions of personal respect. All of this changes an organization, but it will certainly not turn it into a more ethical version of itself. 

Prof. Stefan Kühl

links in his observations the latest results from research with the current challenges of the corporate world.

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