Ethical Conflicts in Ethical Companies

December 31, 2002
Document

2002
Frank Navran

Feeding the Hog (the retaliatory response)

There's a story making the rounds about a consultant who was called into a lumber company. Profits were slipping and management couldn't figure out what was causing it. All of the other performance measures were stable or increasing. The consultant did what consultants do, talking with a large number of employees. He observed several things about this particular lumber company, including the fact that working conditions were somewhat austere and that the dominant leadership style was autocratic, almost to the point of being abusive.

In one of his many conversations, the consultant asked an employee how it was that, given the difficult working conditions and harsh leadership style, there wasn't more absenteeism, poor production or any of the other typical symptoms of an organization that was "hard" on its workers.

The employee answered, "Oh that's easy. When we get frustrated, or angry we just feed the hog." Seeing the puzzled look on the consultant's face the employee explained. The "hog" was the big mechanical wood chipper at the back of the plant. All unusable scrap was fed to the hog to make the wood chips that go into particle board, one of the least profitable products the company manufactured. "When we get upset," he explained, "we take finished lumber and feed the hog." (And the company never knows where the chips came from. After all, you can't tell scrap wood from finished lumber once it is reduced to chips.)

The consultant was still puzzled. That explained the slipping profits but not the absence of the typical symptoms of an organization in distress. "I still don't see why people don't just call in sick to avoid coming to work." The employee explained. "We don't really want to miss work. We all have hog quotas. If we aren't here to feed the hog we are fined $20. That money goes into the party kitty and pays for our quarterly family picnic and beer blast."

Employees in nearly every organization feed the hog, finding their own unique way of punishing their employers for perceived wrongs. Feeding the hog is what employees do to get even and getting even is one of the two most powerful drivers that cause good people to do bad things. It is how people strike back when they believe the organization is being unfair. And it isn't limited to blue collar workers on the factory floor. People in all fields and at all levels feed the hog.

Silent Saboteurs (the defensive response)

There is a problem with this story. When we talk about feeding the hog it sounds funny and clever. There is no denying that it is clever, but it is far from funny. Neither the actions of the organization which stimulate that degree of anger within an employee body, nor the unethical retaliations of the employees are at all funny.

We prefer to call the intentional, counterproductive behaviors of employees by another name: Silent Saboteurs. Silent, because nobody talks about them and Saboteurs, because they undermine your business plans, creating failures... eating at your effectiveness from the inside like a cancer. Often they are clever, but never funny.

There are two generic drivers which motivate employees to become Silent Saboteurs. First there is retaliation as characterized in the story about feeding the hog. This is when employees feel that they are being mistreated and are getting even. Second, there is self-preservation. This is where employees are attempting to meet the perceived expectations or requirements for success. This latter category includes several phenomena that can be found in nearly every large organization. Using the word Saboteurs as a mnemonic we can look at a number of common practices which individuals employ to meet organizational requirements and/or expectations for success at very high costs to their employers.

Scapegoating: blaming failure on someone or something else.

Abdicating: not accepting responsibility for decision making.

Budgeteering: manipulating budgets and expenses.

Overpromising: making commitments one intends to ignore.

Turf guarding: hoarding resources and/or control.

Empire building: accumulating power and control.

Underachieving: doing the minimum needed to get by.

Risk avoiding: taking the safe position even when it is wrong.

Sharp penciling: making results look better than they are.

Regardless of the form they take the Silent Saboteurs are little more than sophisticated forms of lying, cheating and stealing.

You may already know how employees in your organization strike back. You may know how they protect themselves. Especially if you came up through the ranks, you may know of the Silent Saboteurs in your organization. And, like many others, you may believe that there is nothing you can do about them. The good news is that you can do something about them. But before you can fix them, you have to find them.

A Case Study

Let's examine one organization and use it as a model of how you find and fix the Silent Saboteurs. This was the customer service bureau of a large company. The organization's performance, as measured by the standard service indicators, was good but it was obvious that employees were highly stressed.

A concerned management knew something was wrong even though all of the measurement systems indicated everything was as it should be. They called the author in to help them resolve what they had labeled a morale problem.

Here employees were using both retaliatory and self-protective behaviors. They were getting even for what they believed were unfair pressures to meet unrealistically high performance requirements and they were protecting themselves from what they characterized as a hostile management environment.

Take sales quotas as an example. Many of the people in the customer service bureau had left the sales side of the organization to escape the pressure to meet ever increasing quotas. Once the company decided that there were sales opportunities in service calls, customer service employees were required to make sales attempts during every customer contact. These employees found several creative ways of meeting their sales quotas (protecting themselves from the organization) while punishing the organization for making them meet these sales quotas in the first place. Three examples are provided below

#1 - The Silent Sale

A customer would call with a service need and the customer service representative would deliver the mandatory sales pitch for supplemental services. If the customer declined and the customer service representative was below quota, he/she would add the service to the customer's contract anyway. A month or so later he customer would notice that the service had been "mistakenly" added to the bill and would again call the company to have the "error" corrected. The employee got credit for the sale (because it was in the computer system for the required 30 days) beating the quota.

As a "bonus," call frequency increased due to these intentional "errors" requiring the company to increase overtime and add employees. It was a double victory for the employees. They earned their sales commissions and got the company for imposing sales quotas in the service bureau.

Upon investigation, we determined that approximately 5% of all sales made by customer service personnel were silent sales.

#2 - The Disconnected Customer

In this same organization the customer service people were subject to a series of productivity and quality measurements. One of the performance measurements assessed how efficiently the customer service representative handled the problem. Call durations were monitored and automatically recorded. The company's interest was in driving down the average call length so that more calls could be handled by fewer employees.

Supervisors (who were measured on the average call times in their units) used every technical and motivational tactic at their disposal to encourage employees to keep call duration to a minimum.

When an employee's average time rose above the desired goal several options were present. The easiest for the employee was to take calls and then intentionally hang up after only a few seconds. These micro-calls drove down the average at the customer's and company's expense. The company, with several hundred customer service employees on line, was averaging (by our most conservative estimate) close to 500 intentional hang-ups per day! Call volume rose. Customer satisfaction fell. And, the company spent thousands of dollars "fixing" their trouble prone telephone system.

#3 - "Coding" the Customer

One final example. This same client was very concerned with customer satisfaction. A staff of market researchers routinely called customers to evaluate their satisfaction with the product and the level of customer service. Any customer dissatisfaction with services received was immediately communicated to the supervisor and the "guilty" employee was chastised in an effort to improve service levels.

For customers who preferred not to be troubled with a follow-up call, a code could be placed in their file to eliminate them from the print out of current contacts used to select customers for follow-up phone contacts.

Here was an easy way to avoid punishment. If a customer service representative had a particularly difficult call, or "lost their cool" with a customer, they simple went into the records and coded the customer for no follow-up calls. In this way they assured themselves that the only customer complaints that would reach management were those where the customer took the time to write. They knew that only a very small percentage of dissatisfied customers would go to that length. Once again the employees found ways to protect themselves from a perceived hostile management.

The process used to examine the impact of the organization's formal systems on its ethical effectiveness is known as an ethics audit. A typical ethics audit consists of a series of complimentary interviews and structured surveys or questionnaires that get at such issues as the perceived importance and effectiveness of:

  • Stated organizational values.
  • Ethics strategies.
  • Ethics goals and objectives.
  • Ethics policies and procedures.
  • Ethics measurement systems.
  • Rewards for ethical behavior.
  • Consistency between the above factors

The audit process measures the effectiveness of the organization in defining and implementing its overall ethics strategy.

Examining the Informal Systems

The informal systems include those leadership behaviors and operating norms that fill the gaps in the formal systems. This is often characterized as the organization's culture. How do supervisors and managers communicate their expectations and requirements? How are informal measurements and rewards administered? What is communicated informally about how people survive and succeed in this organization? What values are modeled? What do peers view as appropriate behavior?

By understanding the informal system we learn what employees believe about the organization's motives and methods. We learn what is understood about requirements and expectations. We see how the organization operates on a day-to-day basis.

The processes used to examine the informal structures are similar to those used with formal systems (interviews, questionnaires and other instruments). Very often the exploration of the informal system is integrated into the ethics audit.

Typically this step, whether taken alone or integrated into an ethics audit, can be characterized as a review of the organization's ethical climate. Ethical climate surveys explore the impact of the informal processes on peoples' perceptions of the organization's operational values. Topics typically include:

  • Informal guidelines for ethical decision making.
  • Support for ethical practices.
  • Ethical consistency of leadership behaviors.
  • How informal negotiations are conducted.
  • How ethics messages are communicated.
  • How customers, suppliers, et. al. are treated.
  • Peer influence.

The climate survey process measures the impact of the organization's actions and the beliefs they generate and/or support on employees' perceptions of ethical expectations and requirements.

Using Diagnostic Instruments*

The use of structured instruments allows us to systematically assess the ethical effectiveness of the organization.

The examination of the formal and informal ethical systems characterize the present state of the organization. The systematic use of diagnostic tools allows one to track the measured characteristics of an organization over time. One can then assess the impact of training, consulting services or any internal activities intended to impact the ethical effectiveness of the organization.

Diagnostic tools also allow one to clearly differentiate between symptoms of organizational dysfunction and the causes which lie behind the symptoms. The systematic identification of interrelated problem causes forms the basis for truly understanding the organization's present level of ethical effectiveness and the actions required to increase that effectiveness.

Integrated Analysis

To take action based on only one of these techniques (formal systems analysis, informal systems analysis or the use of diagnostic instruments) is the organizational equivalent of prescribing a medical procedure without adequately diagnosing the patient... and we believe that prescription without diagnosis is malpractice.

What is needed is an integrated analysis of the data generated by all of the techniques described above. Many of these techniques can be applied using internal resources with only minimal reliance on outsiders. Others are most effectively implemented with expert assistance.

It is also well recognized that these techniques are most effective when applied to multiple functions/levels of an organization. To assume that the perceptions of a given function or level reflect the larger organization would risk missing one of the most significant data, the differences in perceptions across sub-populations of the organization.

Ethical Conflict And Ethical Congruence

In the broadest terms we characterize the motivation behind feeding the hog and the Silent Saboteurs as various forms of ethical conflict. That is the term we use for the condition where the values of the organization, the values of the employees and the perceived criteria for success (as manifested in the formal and informal systems of the organization) are misaligned.

That misalignment results in employees believing they must protect themselves from the organization and/or gives them reason to believe it is appropriate to strike back at the organization.

The organizational state where values, behaviors and perceptions are aligned is called ethical congruence.

When we talk about lying, cheating and stealing in an organization we are discussing the direct tangible symptoms of ethical conflict. When we talk about finding and fixing ethical conflict we are discussing ways to increase total ethical congruence. That means we reduce indirect tangible and intangible costs as well.

The underlying assumption is that increasing ethical congruence reduces the motivation for counterproductive or retaliatory behavior. (See Figure 1.)

Fixing It

Having completed the integrated analysis, there are a few fairly straightforward steps for increasing ethical congruence. Please do not misunderstand. We are not suggesting that these steps are simple or that you will ever totally eliminate ethical conflict. Our best hope is to drastically reduce that conflict and increase congruence.

As Figure 1 illustrates, increased ethical congruence allows for increased employee commitment to organizational values and goals. The result is increased ethical and organizational effectiveness.

We have developed a six step action plan that we call the ABCs of ethical congruence.

A - Admit it.

The diagnostic process uncovers the who, what, where, when and why of the Silent Saboteurs in a given organization. Many leaders, when confronted with these data experience the natural first reaction of denial. Before any progress can be made it is necessary for the leaders involved (including you) to admit that the data might just be accurate and that you could be facing ethical conflict in your organization. When confronted with the diagnostic data, acknowledge that the Silent Saboteurs are at work. Admit that your actions might be interpreted as unfair or inconsistent by some employees. Admit that people in your organization feed the hog.

It is also important to recognize the risks inherent in increasing ethical effectiveness. Typically, any given leader has a vested interest in the status quo. Change threatens

that stasis

and represents a potential threat to one's power and position.

B - Build ethical congruence

. By following the steps listed below you can build a higher level of ethical congruence in your organization. It is important to realize that these steps are not a one time fix. You don't increase ethical congruence with a single decision or action. The desired increases require changes from past patterns and that those changes must evolve over time if they are to be enduring.

C - Communicate your values

. Employees act on what they believe. They can better understand your values if you make the effort to clarify what you want and expect, what is required for them to be successful in the organization and the motives and intentions behind your decisions. Employees are more confident in your decisions and actions if they understand why you require them. Without your explanation they will assume motives and values that may be less accurate and benevolent. It is when employees perceive hostile or conflicting motives that they fall back on feeding the hog and the Silent Saboteurs.

D - Develop ethically congruent systems

. Employees not only need to hear you state your needs and requirements. They pay careful attention to the congruence between what their leaders demand and how the formal systems support, monitor, measure and reward both compliance and non-compliance with those requirements. It is critically important that you act in ways that are consistent with your rhetoric. It is equally important for your words to match the message contained in the formal policies, procedures and practices that govern how work is performed and how employees are treated.

E - Empower employees to excel

. The Silent Saboteurs clearly demonstrate that employees are empowered. They have the power to cause the organization to fail through both retaliatory and defensive behaviors. It is our responsibility to turn that empowerment towards increasing organizational effectiveness. When employees feel as if they have some degree of control over their work they are less inclined to strike back. They are also less likely to misunderstand the organization's motives. Empowerment does not mean giving up control. It does mean sharing information and helping employees develop increased commitment to organizational values and goals through increasing ethical effectiveness.

F - Focus on ethically congruent leadership practices

.* These are the decisions and actions which increase employee commitment to and trust in the organization. When leader behaviors are consistent with the organization's stated values (and the priorities implied by the formal systems) employee confidence increases. Employees know that the organization is serious about what it claims to believe in. When organizational values are consistent with the individual employee's own beliefs those values are perceived as being worthy of support and employee commitment to the organization's values and goals goes up.

This last factor, ethically consistent leadership practices, is the one factor that leaders at all levels of the organization have the most control and influence over.

Ethically Congruent Leadership*

This factor is not only one which all leaders control, it is also one of the most powerful forces for increasing ethical effectiveness in an organization.

At the individual level

the question employees have about their leaders is , Can I trust you? Ethical congruence is ultimately a matter of building individual trust. There are a number of ways a leader can build trust in an organization. Perhaps the simplest has to do with keeping promises, both implied and explicit. It has been said that trust is the residue of promises fulfilled. This is true for both organizations and individuals.

At the organizational level

trust also means that the leaders' actions are consistent with the organization's values as well as the leaders' (and employees') personal values. Ethically congruent leadership at the organizational level requires leaders to ethically apply the systems, policies and procedures of the organization. It presupposes knowledge of and respect for each employee's values.

Three organizational preconditions exist for this level of ethically congruent leadership:

  • A clear statement of operational values.
  • An ethics strategy.
  • Ethics policies, practices and procedures.

If you do not have a clear statement of what you and your organization believe in (operational values) then create one and communicate it to your employees.

If you do not have an overall strategy for increasing the level of ethical and operational effectiveness in your organization, then develop and implement one.

If you do not have policies, practices and procedures that define the ethical conduct of business then write them and train your employees on how to apply them.

Newtonian Ethics

To be ethically congruent means that considering the ethical component of day-to-day decisions and actions becomes as much a rule of business as gravitational attraction is a rule of nature. Gravity never waivers. Gravity never makes exceptions. Gravity never looks the other way. It is consistent, predictable and eminently trustworthy... because you always know what to expect. Knowing what to expect is a basic element of trust.

If Sir Isaac Newton were writing an article on ethics he might point out that, just as there are rules that describe gravitational attraction, there are governing rules of business ethics:

1. An organization in ethical conflict tends to stay in ethical conflict until sufficient ethical leadership force is applied to cause it to realign.

2. An organization that has achieved a high degree of ethical congruence requires constant attention or it will revert to ethical conflict.

3. A single ethically inconsistent action or decision can send ripples throughout the organization resulting in employees feeding the hog and/or resorting to Silent Saboteurs.

Ethically congruent organizations understand this overriding nature of ethical congruence and effectively integrate the management of ethical congruence into their overall management and leadership practices.

WIIFM

Each of us is concerned with accomplishing the goals and objectives associated with our area of responsibility. When we achieve those results through the efforts of others we accept a leadership responsibility. As leaders we are obliged to provide our employees and associates with the skills, knowledge and resources needed to be successful.

Yet in nearly every organization, despite their own desire to do what is good, right and fair, people consciously elect to act in ways which are diametrically opposed to the purposes and goals of the organization that employs them.

If we, as leaders, are to stop people from feeding the hog or silently sabotaging the organization, then we must understand why they feel motivated to seek retaliation or self-protection. What value or benefit do they derive from the behavior? It is incumbent upon us to discover the WIIFM (What's In It For Me) behind the behavior and remove it. Rather than punishing the employee, consider removing the motivation behind the "punishable" behavior. Human behavior is not simple, but neither is it random. People act in ways that are productive according to some definition, even when that action is counterproductive from their employer's point of view.

Silent Saboteurs and feeding the hog are not new. People have been silently and creatively beating the system since the first system was implemented. Unfortunately, these behaviors have either been ignored or misunderstood. Leaders have believed that there is nothing that can be done. Many have thought that it is human nature for people to resent having to work and those for whom they have to work. Elaborate controls have been installed to protect the organization from the unethical or uncommitted employee. We have measured and checked up on workers, always suspicious... knowing full well that they were beating the system. We made the systems tighter and tighter, squeezing out opportunities for employees to shirk their duty to the organization. We tried to make the systems foolproof. We lost sight of the intelligence and creativity our employees bring to work. We underestimated them and paid the price.

The answer is not in trying to make the systems foolproof. We have tried that for years and failed because the fools are smart enough to beat any system we can create. The answer lies in not treating our employees like fools. Take away the reasons for lying, cheating and stealing. Make the Silent Saboteurs an anachronism and your organization will flourish. Find out what your employees are angry about. Identify which organizational requirements they view as conflicting with their personal values. Stimulate the necessary changes to achieve increased ethical congruence.

The Challenge

Ethical conflict is not the telltale sign of an unethical company. Ethical Conflict occurs in ethical companies that do not fully appreciate its origins and/or impact in the workplace. It is the legacy of leaders who believe that such conflict is inevitable. It is symptomatic of organizations that fail to take advantage of the full set of human potential for which they are already paying. Ethical conflict represents perhaps our greatest opportunity to increase organizational effectiveness by doing something positive for (and with) our employees.

We can achieve remarkable increases in productivity, quality and customer satisfaction when our employees are committed to organizational goals and objectives. And we can do that by reducing the ethical conflict they experience in the workplace.

The people who chose to work for your organization do not awaken each morning looking forward to another day of internal turmoil and ethical conflict. They do not relish the struggle between their personal values and the pressures to succeed on the job. They are not thinking joyously of how they will beat the system yet another time. With few exceptions they are good people anxiously awaiting the opportunity to commit to the values and goals of an organization that values, respects and trusts them. An organization that is ethically congruent. An organization where there is no need for any employee to resort to feeding the hog or the Silent Saboteurs.

I challenge you to make that

your

organization.