It can be difficult to maintain ethical standards and make the right decisions in real-life business situations, for example in breach of trust cases or insider trading. How can companies address this?
In an article in the Harvard Business Review, Eugene Soltes, associate professor of business administration at Harvard Business School, discusses some cases in which corporate executives have found it difficult to maintain ethical standards in real-life business situations – one example is a real-life case of insider trading. Soltes writes that moral decisions that seem quite straightforward during training exercises can be far more difficult when they occur during actual day-to-day decision making.
Three reasons business executives can make the wrong choice
He pinpoints three obstacles that make ethical decisions in the workplace different and more difficult than in training simulations:
- One important difference is that in real life, decisions aren't made in isolation and they aren't taken in focused sessions. In training exercises, a dilemma is identified for participants and this simplifies the decision-making process. Identifying the ethical dilemma is one of the key steps to choosing the correct course of action.
- The second difference is that a variety of different viewpoints are discussed openly during training exercises but this is often not the case inside corporate cultures, where 'towing the company' line often suppresses diversity of opinion. Diversity of opinion can be a strong reminder to individuals that they are accountable, encouraging transparency of behaviour.
- Thirdly, decisions are often made in a split second and under pressure. Ethical decisions can rely more on intuition rather than on reasoned thinking, which requires more time and reflection.
Soltes concludes: “The challenge for organizations is to cultivate environments where ethical decisions are easier, not more difficult. Creating training exercises that better simulate the actual environment, circumstances, and pressures where ethical decisions are made is the first step toward addressing these critical challenges.”
CTMfile take: An interesting discussion on a problem that all companies face. Corporate treasury in particular should be vigilent of this type of problem and this article suggests that maintaining a healthy workplace atmosphere with a diversity of opinions is one way to tackle executives making the wrong choice.
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