In my last post, I identified three contributors to unethical behavior in the workplace: the opportunity for gain, the desirability of the gain, and the lack of constraints on behavior. Logically, if we are trying to promote ethical behavior, we will want to minimize the opportunities and desirability while maximizing the constraints. However, practically speaking, opportunity and desirability are so difficult to control that the best approach usually relies on increasing the constraints.
To use the same example as my last post, it is difficult to minimize the opportunity to gain from insider trading because it would require us to minimize insider information, but managers make decisions all the time intended to increase the performance of their firms – and we want them to – so reducing available information hinders their effectiveness. It is difficult to minimize desirability of the gain because it would require changing human behavior. If interest in financial gain was not a feature of human psychology, then opportunities to make money would be irrelevant. How likely is that?
The best tool we have is to create sufficiently powerful constraints to deter the unethical behavior. In the U.S., we have built barriers to engaging in the unethical behavior: insider trading is difficult because strong laws prohibit it; we have increased the likelihood of being caught: regulators actively monitor patterns of trading surrounding major company events, keeping a particularly close eye on company executives and their associates; and we dole out serious penalties for infractions: prosecutors seek heavy fines and even jail.