Best Buy, for example, recently held an internal competition that produced some questionable results. Individual employees who tallied the most activity over a specified period of time would be eligible for prizes and recognition. The competition was relatively informal and the activity tallies were largely based on the honor system (i.e., employees could designate which activities “counted” toward the contest).

 After the fact, a quick review of the data revealed that contest participants, as a group, had obviously inflated their results.  Although it was an internal contest and there was no effect on the numbers we report to the public, nonetheless it was a concern.  When pressed on the issue, many participants claimed to know of co-workers who included non-qualifying activity in the contest tally but, of course, no one admitted to doing so themselves. The situation was somewhat reminiscent of the Tour de France in recent years; we knew a significant number of participants cheated but we didn’t know which participants or how badly. My questions for you:

 1)    Does the fact that an unknown number of participants inflated their results to an unknown degree invalidate the entire contest?  

 2)    In a competitive situation involving prizes and recognition, is it realistic to rely on the honor system and self-reporting of results?

 3)    What if the contest was team-based instead of for individual employees? If you had to guess, would participants be more likely or less likely to pad their results? Why?

 4)    Fudging aside, there is reason to believe the contest did encourage the desired sales knowledge and behaviors among participants – which was exactly the point of the contest. Would that justify re-running the contest in the future?

 5)    If you were the business team managing the contest, how would you deal with the situation?

 New research suggests, however, that very few of us are willfully unethical and that bad behavior is most often unintentional. The real problem, the theory says, is the “framing” of the situation at hand. Depending on how a decision is positioned, our brains may not be able to “process” the ramifications of the choices before us.

 As an example, researchers asked two groups of test participants to consider certain decision making scenarios. One group was coached to think of the decisions from a business perspective and the other from a purely ethical perspective. Those for whom the decisions were framed as business issues were far more likely to make unethical choices than those considering the situation from within an ethical framework. The implication: Situations and our surroundings “activate” different goals within us, altering our brains’ decision making logic. My questions for you:

 1)    Do you believe we are all capable of behaving unethically if faced with a situation “framed” to exclude ethical analysis?

 2)    Could telling someone to “always do what’s right for the business” automatically predispose him or her to make unethical decisions?

 3)    Researchers suggested one solution could be to place disclaimers at the top of every contract or legal document to help “frame” the situation appropriately for our brains. For example, “I understand that lying or falsifying information on this document is wrong and unethical.” Might something this simple be helpful?

 4)    Assume for a moment the research is entirely accurate and our brains’ decision making ability is unconsciously compromised by our situational “framing.” Does that necessarily let the decision maker off the hook?

 This belief has lead to disclosure laws that influence nearly every phase of our culture. The next time you apply for a car loan or home mortgage, notice how much paperwork is disclosure-oriented. The potential side effects at the end of those prescription drug ads? All required disclosures. Restaurants in New York and many other cities must now post an A/B/C “sanitation” grade reflecting their most recent health inspection results. Again, all legally required disclosures intended to help consumers.

 The author maintains, however, that such disclosures often miss the mark and are merely an exercise. “In the beginning, disclosure was a means to an end, and now it’s often an end in itself,” says Kevin Weinfurt of Duke University. “People think, ‘If we’ve disclosed we’ve fulfilled our responsibilities.’” There is also the issue of whether the disclosure is truly actionable. The restaurant sanitation grades reportedly work because consumers can use it to make a quick decision on where to dine. By comparison, how many people have ever actually read the fine print on a loan application or would have the wherewithal to seek out a different lender?

 Archon Fung of Harvard University suggests that more information is not necessarily better. “I’d like to see an effort toward prioritizing what information is really important and then some effort in providing data in a way that is simple and effective.” There may indeed be movement in that direction. The article notes that the Consumer Financial Protection Bureau is in the process of designing simplified mortgage disclosure forms. I’ve also read that a dramatically revised window sticker will soon be required for all new cars sold in the U.S. The new sticker will make it easier for consumers to compare emissions, estimated fuel costs and the relative fuel efficiency of different types of vehicles (e.g., hybrid, electric, internal combustion). My questions for you:

 1)    What is the difference between “compliance” and “ethics?”

 2)    Can you think of a common consumer disclosure that is compliant with applicable law but masks a potential ethical abuse?

 3)    Have you ever read all of the disclosure forms on a loan application? If so, did it influence your decision making in any way?

 4)    What about the effort to design new mortgage disclosure forms and window stickers for new cars? Potentially beneficial or government excess?

 According to Smith, Goldman Sachs’ “secret sauce” was a culture that “revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.” This culture enabled Goldman to earn employee loyalty and client trust for 143 years. However, Smith makes a number of observations that, if true, suggest this culture has been lost somewhere along the way:

• “I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs.”
• “Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.”
• “I attend derivatives sales meetings where not a single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.”
• “Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.”

 This is all one man’s opinion, of course, and Goldman Sachs offered a firm rebuttal to these claims. It’s impossible for outsiders like us to know whether this is a fair and accurate measure of the firm’s culture. Either way, however, the underlying topic is ripe for discussion:

 1)    In an advisory services industry such as this, should a firm’s desire to maximize profits always be subordinate to the best interests of its clients? Why or why not?

 2)    Smith acknowledges that he had not witnessed any outright illegal behavior, only self-serving actions that place company profit above client interests. If something is legally permissible, does that necessarily make it ethical?

 3)    Smith says that “…if clients don’t trust you, they will eventually stop doing business with you.” Do you agree with this statement and, if so, what does that suggest about the relative importance of short- vs. long-term profit?

 4)    Are there any lessons here for other consumer facing businesses such as ours?

The Health.com piece describes a study conducted at the University of California/Berkeley on more than 1,000 people of all ages, genders, ethnicities and religious and political affiliations. Researchers were careful to include participants of all education levels, household incomes ($16,000 to $150,000) and with differing self-perceptions of “social standing.” After seven separate experiments, they concluded that higher-status people are, in fact, more likely to behave in ways that serve their own self-interest to the detriment of others. For example:

• Motorists driving shinier, newer and more expensive cars were more likely to cut off other motorists at a busy intersection or to ignore pedestrians in the crosswalk.
• Participants who perceived themselves in a higher socioeconomic class were more likely to say they would engage in “everyday” unethical behavior such choosing not to correct a cash register mistake in one’s favor.  

 Why the difference? One theory is that higher levels of financial security create feelings of entitlement and reduced concern for others. It could be that wealthy people feel they have the resources to get away with unethical behavior if caught. Researchers also found a high correlation between unethical behavior and those participants who held positive views of greed.

 A competing opinion offered by Dr. Robert Gore of Alliant International University cautioned readers not to jump to conclusions. It is possible, after all, that people of a higher social class are simply more willing to admit to unethical behavior. Other than the Shiny Car Syndrome noted above, do they actually behave that way in day-to-day life? However, the fact that the Berkeley team obtained the same results across seven different experiments is telling. My questions for you:

 1)    Do you believe people of a high socioeconomic status are generally less ethical than those of lower financial means? Why or why not?

 2)    If you answered “yes” to question #1, what do you believe to be the underlying cause?

 3)    Consider the issue from a chicken versus egg point of view. Do you think someone born “poor” would likely become less ethical if they became “rich” later in life?

 4)    Same question as #3 but the other way around. Would someone born to wealth and comfort likely become more ethical if that financial security/status were suddenly taken away?

 5)    What connection do you see between these research findings and high profile cases like Enron, Tyco and Bernie Madoff?

The employee denied any wrongdoing. She claimed she did not know the customer, had no contact with the customer other than helping him compare and select the laptop, and denied allowing her Employee ID Number to be used at the cash register – the “key” to unlocking Best Buy’s Employee Discount. The investigation told another story. Store security video clearly showed the employee standing at the cash register with the customer. Likewise, the cash register transaction record showed the employee’s unique ID Number had been used to ring up the sale at a discount. It also came out that the customer was, in fact, the employee’s boyfriend.

 Add it up and you have incontrovertible proof of an Employee Discount Policy violation. Termination decision upheld, case closed. There was something else in the Peer Review summary that caught my eye, however. The cashier who rang up the sale was also interviewed as part of the investigation and her testimony contradicted the video and cash register evidence. The cashier claimed it was not an Employee Discount transaction and that she did not enter the terminated employee’s ID Number into the system at any time during the encounter.

Both statements were untrue, of course, presumably to help a friend “beat the rap” and keep her job. The Peer Review summary does not state what ramifications (if any) the cashier may now face for giving false testimony during the investigation. My questions for you:

 1)    When a friend makes a mistake and is at risk of suffering the consequences, is it wrong to help them cover up the mistake by lying on their behalf? Why or why not?

 2)    One could argue the cashier is also guilty of violating the Employee Discount Policy by enabling the co-worker to abuse the privilege. Do you agree?

 3)    Have you ever been in a situation where you felt compelled to lie on behalf of a co-worker to help them cover their tracks? How did it turn out and how did you feel about your decision after the fact?

 4)    What if the terminated employee had said, “You got me! I helped my boyfriend buy the laptop at a discount, what I did was wrong, and I’m willing to repay Best Buy the full amount of the discount.” Would that sway your point of view regarding this situation?

• Day-to-day contentment or emotional well-being
• Overall “life assessment” satisfaction with one’s place in the world

 Not surprisingly, the researchers found that your life assessment tends to increase as you earn more money. So, people who make $160,000 per year generally report a higher level of overall satisfaction with their lives than people making $120,000. When it comes to actual day-to-day contentment, however, they found a very different pattern. The data revealed that contentment and emotional well-being do increase with a person’s income, but only to the level of $75,000 per year. At that point, contentment “plateaus” and higher levels of income do not increase one’s day-to-day happiness despite the greater quantities of stuff you can afford to buy. Says Mr. Deaton, “Giving people more income beyond 75k is not going to do much for their daily mood…but it is going to make them feel they have a better life.”

 The article does not clarify whether the magic $75,000 figure applies to both New York City and Kansas City. My guess is the plateau would vary according to the relative cost of living of one’s location. Regardless, the study makes for interesting debate regarding the motivations underlying human behavior.

 1)    Do you agree with the conclusion that day-to-day contentment likely plateaus at a certain level of annual income (such as $75,000)?

 2)    How about the assertion that increasing levels of income beyond the magic number will continue to elevate one’s “life assessment” relative to others?

 3)    Let’s assume two people have done the exact same unethical act, such as cheating on income taxes. Person A makes $20,000 per year and Person B makes $20 million per year. Based on this study, would you infer anything about the motivations behind their respective decisions to cheat?

 4)    Let’s take question #3 one step further and assume that both Person A and Person B are indeed caught cheating by the IRS. How should they be penalized under the law?

1. a.    The crime was the same; both should receive identical punishment
2. b.    The penalty should be proportional to the “size” of the crime (e.g., the amount of income withheld or tax avoided)
3. c.    Person B did not “need” to cheat and should suffer a greater penalty

 5)    Some European countries are beginning to index criminal penalties based on the income level of the individual. For example, a millionaire driving a Ferrari recently received a $290,000 speeding ticket in Switzerland. The goal is to capture the attention of wealthy “scofflaws” who would otherwise break the law with impunity. Do you think the European approach is fair or valid?

 Case in point, I was consulted about an issue at Best Buy recently that could be summarized as follows:

• Andy has been passed over for an apparently well-earned reward or advancement opportunity. 
• As a concerned leader with firsthand knowledge of the situation, Ben sees this and believes it to be both unfair and unethical. However, Ben has no direct tie to Andy.  Rather, Andy is managed by Charlie. 
• Andy has not complained to or confided in Ben about their plight; Ben’s concern is based purely on his own observations.

 Ben was very troubled by the situation and asked me for advice. He wanted to step forward and say something to help Andy. On the other hand, Andy had not solicited his help. Was it really his place to intervene? My questions for you:

 1)    Andy has not expressed concern or asked for help. Even so, if Ben has witnessed something affecting Andy that he truly feels to be unfair or unethical, would he be justified in speaking up?

 2)    If you answered “yes” to question #1, who should Ben approach first?

1. a.    Andy, the person on the receiving end of the unjust treatment
2. b.    Charlie, the manager who should be looking out for Andy’s best interests
3. c.    Charlie’s manager
4. d.    A neutral third party, such as HR

 3)    What if the situation was indeed unfair / unethical but Andy specifically asked Ben not to intervene on his behalf? Is it more important to respect the wishes of the impacted party or to ensure that justice is served within the company – and potentially alert the company to an issue that might create legal or reputational damage?

 Best Buy is often paid by vendors in return for displaying their merchandise in the store according to a very precise “planogram.” The employees in charge of our in-store merchandising process will take photographs of the display on a periodic basis, upload them to the vendor, and thereby document that the work was done according to planogram specs.

 In this particular situation, a Best Buy employee was terminated for falsifying the documents provided to our vendor. Specifically, the employee took a shortcut and provided the same photographic “proof” to the vendor two weeks in a row. The Peer Review investigation revealed there was much more to the case, however. It turns out the terminated employee did not have responsibility for the planogram that day; a different Best Buy employee had done the merchandising work in question. Likewise, it did not appear there was any real intent to mislead the vendor:

 The employee on planogram duty was having problems uploading new photos to the vendor and asked the terminated employee for help. When she also was unable to make the upload system work properly, the terminated employee suggested they simply upload the photos used the prior week. After all, nothing had changed in the planogram since then and the display was set up exactly as pictured one week earlier. What harm could there be in re-using identical one-week-old photographs?

 After considering the facts of the case and testimony from all involved, the Peer Review panel found that the terminated employee did not actually “falsify” the documents. An improper workaround? Yes. Deception? No. The Panel also felt the other employee involved – the one actually accountable for the planogram work that day – was partially responsible for filing the incorrect report. It would be unfair to terminate one employee and not hold the other to the same standard.

 The Peer Review panel voted to reinstate the employee (written warning only) and recommended a variety training steps to ensure the situation would not repeat itself. My questions for you:

 1)    Do you agree with the Peer Review panel’s conclusion that “falsification” did not occur?

 2)    Do you agree the other employee also bore partial responsibility for the issue and should receive similar discipline?

 3)    The investigation revealed that the manager who lodged the initial complaint had multiple performance issues with the terminated employee in the past, specifically related to filing incomplete paperwork. What role might that past history have played in his termination decision? More importantly, should past history be considered when taking disciplinary action for a current offense? Why or why not?

 4)    Where is the line between a seemingly harmless shortcut and a critical breakdown in standard operating procedure? How can you know when you’ve crossed that line?

 1)    Do you agree that creative people are generally more “morally flexible” than those who are less creative?

 2)    Do you believe the opposite to necessarily be true? For example, are rigid, left-brain thinkers necessarily ethical? Why or why not?

 3)    The article also hypothesizes that creative people perhaps believe they can “win us back with a creative apology, a creative excuse or a creative defense in court.” Have you ever observed this to be the case? If so, how did it turn out?