Why Good People Do Bad Things – Live from the 2016 ECEI

By Stephanie Gallagher, JD
stephanie.gallagher@corporatecompliance.org

Live from the 2016 European Compliance & Ethics Institute, a presentation by Paul Fiorelli, Professor of Legal Studies and Co-Director, Cintas Institute for Business Ethics, Xavier University

In this engaging session, Paul Fiorelli tells us about the eight types of wrong doers, how to deal with them, and key takeaways.

Strict Constructionists – A strict constructionist applies a literal interpretation of a statute or document. Can lead to “nano-compliance” or doing the minimum necessary acts to remain in compliance.

Altruist – This wrongdoer steals FOR the organization, not from it. This type considers themselves a “good soldier” and well-intentioned. Compliance & ethics professionals need to have conversations with these individuals to set expectations.

Prisoner – This type feels confined or trapped by a situation or set of circumstances, such as issues or problems that arise under their watch making someone else’s problem or wrongdoing this person’s problem. Often the questions here are “what did you know?” “When did you know it?” and “What did you do about it?” Society tends to be more forgiving of mistakes than cover-ups. What do we do about this? We must create a culture where we don’t shoot the messenger.

Slippery Slope – The course of action which will lead to something unacceptable, wrong, or disastrous. At this point, Mr. Fiorelli showed a great video clip showing a manager and employee under pressure to make a monthly target. The employee is uncomfortable but they move forward to make their bonuses. The employee then adopts this process for each month for the following year, the situation spiraling out of control.

While discussing the video, Mr. Fiorelli suggested a formula for analyzing slippery slope issues (REAP – Relevant Facts, Ethical Issues, Alternatives, Plan of Action). This discussion launched a very lively debate about what the supervisor and employee should have done, and real world implications.

Pressure – This type feels the pressure of not living up to a supervisor’s expectations, whether or not the expectations are realistic. Aggressive goals also contribute to pressure. How should an organization deal with this? Set realistic goals and challenge how aggressive goals are obtained and whether these ethical techniques be shared with others.

Groupthink – The practice of thinking or making decisions as a group in a way that discourages creativity or individual responsibility. Dealing with groupthink/authority requires the willingness to stand out in a crowd, a willingness to speak up, and a willingness to bring a diverse perspective to the group.

Rationalizers – The attempt to explain or justify (one’s own or another’s behavior or attitude) with logical, plausible reasons, even if these are not true or appropriate. Rationalizers tend to believe that “everyone is doing it” or “nobody will find out”. Convince these individuals that not everyone is doing it.

Greed – Intense and selfish desire for something, especially wealth, power, or food. Mr. Fiorelli reminded us of a quote from Bill Lytton, former EVP and General Counsel, Tyco International:

“Every company is just one bad decision or one bad employee away from scandal … one scandal away from a salacious headline … and one headline away from a flood of lawsuits.”

What can be done about greed? The implementation of better board oversight and governance regarding senior executives, better internal controls, and additional reporting mechanisms are key.

Paul Fiorelli’s presentation is available here, and is definitely worth taking a look at.

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