UNC Kenan-Flagler Business School

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UNC Kenan-Flagler Business School

ROI: RESEARCH INSIGHTS FROM KENAN-FLAGLER


Acting Dishonestly in the Name of Equity

4/1/2010

The good news is that we’re wired to appreciate fairness. The bad news is that sometimes we feel justified in cheating. But under what conditions do people act dishonestly to help or hurt others?

“Situational inequity” can trigger powerful emotional reactions that drive dishonest behavior, said Francesca Gino, a UNC Kenan-Flagler organizational behavior professor who has studied the question.

“A lot of the research I’ve done looks at ordinary people and examines the effect of situational factors on people’s behavior,” Gino said. “It’s not that these people are rotten, but there are factors in certain situations that can lead them to cross ethical boundaries.”

Street Sign

Gino and her colleagues set up two experiments that measured participants’ emotional reactions of envy, empathy, happiness and guilt. They randomly paired participants and observed how inequity between them influenced the likelihood of one dishonestly helping or hurting the other, while varying the financial incentives for dishonest behavior.

They found that participants engaged in dishonest behavior to relieve the emotional distress caused by wealth-based inequity:

  • Individuals increase hurting behavior and reduce helping behavior when they experience negative inequity (when they are worse off than the others).
  • They increase dishonest helping when they experience positive inequity (when they are better off than the others).
  • Inequity produces emotional reactions that appear to drive dishonest behavior, both through direct comparisons with others and through empathetic concern for others.

Although they found that financial self-interest does influence dishonest behaviors, the stronger motivation is to reduce inequity. Individuals were willing to pay or forgo pay to relieve emotional distress.

Their findings highlight the importance of emotional reactions to pay equity and inequity in driving dishonest behaviors. This work joins the stream of research examining the ‘‘when’’ and ‘‘why’’ of dishonesty. It shows that circumstances of the victims and beneficiaries of ethically questionable actions, a previously overlooked factor, also have significant explanatory power.

Negative emotional reactions to inequity (such as envy) are powerful drivers of dishonest behavior that hurts another, Gino found. But even positive emotions (such as empathy) can have negative consequences when they drive dishonest behavior that is economically or socially costly (when helping another is costly to a third party or organization, for example).

The results have important practical implications and suggest that:

  • Organizations and their managers should pay close attention to inequities because they can result in dishonesty in the workplace.
  • Dishonesty is particularly worrisome when it consists of a person hurting the performance of another.
  • Dishonest helping also can be costly when it accommodates poor performance or covers up weakness or lack of motivation in individuals.

Life is full of inequities, and the business world is no exception. A supervisor makes more money than a line worker. Executives have more privileges than middle managers. In those examples, though, the inequity is justified and doesn’t produce a behavior-changing emotional reaction.

Businesses need to make clear their reasoning behind awarding some people more favorable treatment than others, Gino urged. “If there are inequalities, they need to be explained so people are able to regulate the emotional reactions they have to inequity.”

Some companies go to great lengths to level the working conditions. At Intel, for instance, everyone works in cubicles, even senior managers. If inequities can’t be explained or justified, get rid of them, Gino said. If employees feel they are treated fairly, they will be less likely to do things that ultimately hurt the company.

“Unjustifiable inequities can generate envy among employees,” she said. “As a result, people end up crossing ethical boundaries to relieve their emotional distress.”

Gino’s other research reveals that unethical behavior increases when people can’t see or make the connection to the people they are harming. And her work shows that it can be a process. Cheating can increase incrementally. If someone cheats a little on an expense report and no one seems to notice, the next time he might cheat even more. If he doesn’t catch any flak from that, he might branch out a little more each time until at some point he is behaving in outrageously unethical ways that would have surprised even the perpetrator early on.

Healthy work and social environments depend on the ability of leaders and employees alike to spread ethical norms and values — while reducing the attractiveness of unethical misconduct, said Gino, who continues to research how to best accomplish this goal.

Very simple steps can greatly increase ethical behavior. Installing highly ethical leaders in a corporation can inspire others throughout the organization to raise their own ethical behavior standards. Even signing their names at the top of an insurance claim form or a tax return can influence people to fill out the form more honestly.

“People want to see themselves as good,” Gino said. “They feel some emotional distress in situations that aren’t fair. Sometimes they’ll do what they can to relieve that emotional distress, no matter who it hurts.”

Francesca Gino is an Assistant Professor of Organizational Behavior