Category Archives: ethics

Liar Liar, You’re Still Hired

liarWe all know lying is wrong. But we’ve all done it. And those who say they’ve never told a lie—not even a tiny little white one—well, they’re probably not being truthful.

That goes for job seekers too. It’s not uncommon for hungry applicants to embellish their skills and experience a bit, in order to pump up their resumes and increase their odds of getting a foot in the door.

But what happens when a candidate gets caught trying to put one over on a hiring manager? That may depend on the severity of the lie, and the potential an employer sees in the person who told it, according to a recent CareerBuilder survey.

In a poll of 2,188 hiring managers and HR professionals, 51 percent of respondents said they would automatically dismiss a job candidate if they uncovered a lie on his or her resume. Interestingly though, 40 percent said their decision to move forward with an applicant who lied on a resume would depend on what the candidate lied about. Another 7 percent said they would be willing to overlook a lie if they liked the candidate.

Dave Ulrich, professor of business at the Ross School of Business at the University of Michigan, was “surprised” at the number of hiring managers willing to look past an applicant’s stretching of the truth, however small the fabrication may be.

“I tend to be quite strongly in the 51 percent who believe that, if someone lies [about] little things, he or she might lie [about] bigger things.”

Some may contend that not all information on a resume—titles or job duties, for instance—is of equal importance, says Ulrich.

“But I would argue that even these less significant facts signify an attitude of integrity,” he says. “The messages on the resume signify the candidate’s style. Applicants would be better served demonstrating candor and transparency to build relationships of trust.”

Indeed, many hiring managers (more than half, according to the aforementioned survey) wouldn’t exactly rush to put their faith in would-be employees they saw as being dishonest right off the bat. And there are some fibs—or flat-out, obvious lies—they may not be so inclined to forgive. Enjoy this sampling of some of the most unusual lies employers reported catching on resumes:

• A candidate’s job history included a stint as the assistant to the prime minister of a foreign country. (Just one problem—the country in question does not have a prime minister.)

• One hopeful boasted on his resume that he was a high-school basketball free throw champion. (Not sure how Kevin Durant-like consistency from the charity stripe would even apply to the workplace, but he fessed up to his lie in the interview nonetheless.)

• A 32-year-old applicant indicated having 25 years of professional experience. (He or she must have been one smart, hard-working baby.)

• And, speaking of babies, one job seeker claimed to have worked for 20 years as a babysitter for celebrities such as Madonna and Tom Cruise.

I actually feel for the prospective employer in this last case. It’s too bad this candidate was lying, because I’d think an employee with that kind of experience could be a big help in dealing with divas and difficult bosses in the workplace.

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Early Birds vs. Night Owls: Which is More Ethical?

77741160 -- worker and clockDespite what you may have heard, the likelihood that an employee will make an ethical decision in the morning more than the evening has as much to do with his or her “chronotype” as it does the actual time of day.

In a forthcoming article in the journal Psychological Science titled, “The morality of larks and owls: Unethical behavior depends on chronotype as well as time of day” (downloadable), co-authors Brian Gunia of Johns Hopkins University, Christopher Barnes of the University of Washington and Sunita Sah of Georgetown University’s McDonough School of Business quash the existing theory that individuals are more likely to be unethical as the day wears on due to a loss of energy and effort to exert self-control and behave ethically.

Instead, they say, their research proves ethical behavior has more to do with the fit between an individual’s chronotype, or best/preferred time of day, and the actual time of day. The study shows morning people working in a night shift were more likely to be unethical than morning people in a morning shift, and night people in the morning were more likely to be unethical than night people at night. This suggests people may be more likely to act unethically during the “mismatched” time of day.

“Ethics is not a stable trait in people,” says Sah. “Instead, people exhibit dynamic patterns of unethical behavior across the day based on their circadian [cyclical fluctuations in sleep propensity] rhythms. By understanding their chronotypes, people can help predict when ‘the better angels of their nature’ will appear.”

The study, according to this release, challenges the existing “morning morality effect” that claims ethical decisions are mentally taxing and normal daytime activities deplete our limited cognitive resources as the day goes on.

In addition, the researchers found sleep “can have a significant impact on ethical decisions,” Sah says.

“Our research suggests that early-rising owls or late-working larks will be more likely to make seemingly small, unethical decisions that could have larger consequences.”

So what are managers and HR professionals supposed to do with this information? How can they mitigate this risk? Sah suggests learning the chronotypes of employees and creating work structures, schedules and hours that match individuals.

Requiring morning folks to make challenging, ethical decisions at night or vice versa could “run the risk of encouraging unethical behavior,” the release states. “Employers should also carefully consider overtime, shift work, flextime and requirements during Daylight Savings Time clock changes.

“By understanding chronotypes and the significance of the time of day,” says Sah, “individuals can become more ethical in the way they work, the quality of their work and the decisions they make at any moment.”

And employers, the researchers claim, can help make that happen.

Who knew?

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Corporate Misconduct: Everyone Loses

financial misconductTalk about one bad apple spoiling the whole bunch.

A new Penn State University study finds the announcement of one public firm’s misconduct can have negative consequences for other public companies in the same industry, in the form of decreased investor confidence.

Srikanth Paruchuri and Vilmos Misangyi, associate professors of management and organization at PSU’s Smeal College of Business, studied accounting irregularities that resulted in financial restatements, in which the company in question had to revise and publish one or more previous financial statement. The pair focused on a sample of 725 Standard & Poor 1500 firms, covering 219 industries. They analyzed 84 financial restatement events that took place in 2004, as captured in the U.S. General Accountability Office’s Financial Restatement Database.

When one firm announces that wrongdoing has occurred within its organization, Paruchuri and Misangyi found “a generalization of culpability ensues,” to an extent that investors fear others within the industry “are also likely to have engaged in similar misconduct,” they wrote in the study, which is slated to appear in the Academy of Management Journal.

And, the more recognizable the company doing the dirty deeds, the worse the fallout, it seems.

“In other words,” the study authors wrote, “bystander firms are more negatively valued based on another firm’s misconduct if the offending firm is larger, and therefore more familiar to the investor.”

In the context of how investors perceive financial transgressions, “investors will see those perpetrator firms with which they are familiar as being representative of the industry as a whole, and this familiarity therefore makes the culpability of the perpetrator more potent for generalization,” according to the researchers.

These findings come just a few months after we reported on the release of an Ethics Resource Center study indicating corporate misconduct is on the decline. In a poll of 6,400 U.S. employees, the Arlington, Va.-based ERC found 41 percent of respondents saying they observed misconduct in 2013; a 14 percent dip from 2007.

So, that’s encouraging. But, as this new PSU study demonstrates, the implications of bad corporate behavior are far-reaching, extending well beyond your organization’s walls. Taken together, these studies seem to also offer another reminder of HR’s responsibility to conduct solid ethics training, promote a principled corporate culture, and, hopefully, keep the organization from becoming that one bad apple.

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The Decline of Workplace Misconduct

workplace misconductThe good news coming from a recent Ethics Resource Center study? Corporate misconduct seems to be on the wane, overall.

The not-so-good news? A majority of the misdeeds that are occurring in the workplace are committed by those the organization counts on to set an example for employees to follow.

The Arlington, Va.-based nonprofit research organization’s eighth National Business Ethics Survey finds 41 percent of 6,400 U.S. employees reporting they observed misconduct in 2013; down from 55 percent in 2007. And only 9 percent of employees said they felt pressure to compromise their ethical standards in 2013, compared to 13 percent who said the same in 2011, the last time the ERC conducted its business ethics survey.

The shrinking number of employees witnessing transgressions at work implies a connection between fewer cases of misconduct and solid ethics training, along with a strong culture, said ERC President Patricia J. Harned, in a statement.

The numbers indicate as much, with the percentage of companies reporting a “strong” or “strong-leaning” ethics culture increasing to 66 percent in 2013, up from 60 percent in 2011. In addition, 81 percent of companies provided ethics training in 2013, with 67 percent including ethical conduct as a performance measure in employee evaluations, according to the survey.

So, it would appear that ethics training programs are largely doing a good job of connecting with the average employee. A more troublesome finding to emerge from the poll, however, suggests the message isn’t reaching the higher levels of the organization.

The survey found managers engaged in 60 percent of the misdeeds seen by employees in 2013, with senior managers more likely than lower-level supervisors to break rules. Senior managers were identified in 24 percent of these cases, with middle managers and first-line supervisors pinpointed 19 percent and 17 percent of the time, respectively.

It may not be all that surprising that the propensity for bad behavior increases with rank. But HR leaders are “uniquely suited” to push the organization’s ethics program forward and help build an ethically solid workplace from top to bottom, ERC Senior Vice President Moira McGinty Kios recently told Bloomberg BNA.

“Employee evaluations, promotions and activities related to counseling, discipline and terminations are HR responsibilities,” said McGinty Kios. “HR professionals are perfectly positioned to ensure that each one of these areas is an opportunity to promote the company’s values, and as a result, promote and improve ethics in the workplace.”

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Severance Without the ‘Sweetener’

Ever said or written something you wished you could take back? Then you probably have some idea how Lucy Adams might be feeling right now.

200275121-001In Adams’ case, it’s the word “sweetener” that’s currently plaguing the BBC HR director. If you’ve been watching the news lately, you know that current and former BBC officials were grilled earlier in the week by the MPs on the House of Commons Public Accounts Committee over controversial severance payments that were made to senior managers who were terminated between 2005 and 2013. Many of those payments reportedly exceeded what was spelled out in their employment contracts.

One of those officials marched before the committee is Adams, who is accused of using the word “sweeteners” to describe the payouts.

Here’s how the Guardian describes the hearing …

At Monday’s hearing Adams said she could not recall using the word ‘sweetener’—which she described as a ‘strange term’—when asked repeatedly by Stephen Barclay, the Conservative MP and PAC committee member who obtained the email.

However, when the MP said it came from a leaked email in his possession, she conceded: ‘I may have used the term by means of an incentive to get to a swift resolution.’ ”

In the Guardian story, Barclay is quoted describing the term as a “ ‘damning illustration of the attitude at the top of the BBC’ towards six- and seven-figure payouts to departing executives” and shining “a light on the real culture of the HR department which saw payments [that went beyond] contractual terms as simply perks of the job.”

According to the piece, Adams “denied that she had instructed HR staff to be lax about paying handsome severance deals in an effort to reduce the senior-management headcount at the BBC.”

As a result of the uproar over her alleged role in the matter and her choice of words, some have called for Adams to immediately step down from her role as the BBC’s HR chief, in advance of her recently announced departure next April.  Accusations by the MP against Adams, who has headed HR at the BBC since 2009, reportedly brought cheers to the BBC newsroom.

I imagine it hasn’t been one of the better years for the BBC HR chief, especially the last week or so. But I think  a strong case could also be made that BBC controversy—and the principal role Adams is alleged to have played in it—hasn’t done the HR profession as a whole any favors either, at least not in the U.K. (Here’s a slightly over-the-top-piece that appeared in the Telegraph.)

I’ve come to appreciate many of the British TV sagas that have made their ways to U.S. shores, like Downton Abbey and State of Play. But this is one real-world drama we all probably would have been better off without.

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Integrity and the C-Suite

rba1_34New research from the Center for Creative Leadership suggests that integrity, bravery and social intelligence are important predictors of performance for top-level executives. The research, including a poll of 246 middle managers and 191 top executives along with an analysis of feedback data from direct reports, bosses and board members, found a positive relationship between the direct report ratings of leaders’ character strengths and the boss/board member ratings of performance; the more integrity, bravery, perspective and social intelligence leaders have, the higher their performance ratings.

The research also uncovered a disconnect between C-suite executives’ perception of their own integrity vs. that perceived by their direct reports. It found that top executives tended to overrate their integrity in comparison to ratings provided by their direct reports. Meanwhile, middle managers’ ratings of their own integrity tended to hew much closer to the ratings provided by their direct reports.

For top executives, integrity was the biggest predictor of performance, accounting for just more than one-third (34 percent) of the total variance explained by all four character strengths, followed by bravery (33 percent) and social intelligence (23 percent).

Ambitious middle managers may want to focus on their own integrity and bravery: Although integrity and bravery best predict performance of top executives, social intelligence is the most important performance predictor for middle managers. In other words, the characteristic that most helped middle managers succeed in their current positions may not be enough to help them at the executive-level.

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HR and Risk Management

How often do you collaborate with your risk-management counterparts at your organization? You should be doing so on a regular basis, according to Lowers Risk Group, a consulting firm with about 1,000 global clients. We’ve covered the issue of risk and human capital before, including this byline and this cover story. Now, a new whitepaper from Lowers highlights what it believes are key trends “driving the expanding role of human resources in enterprise risk management.”

Vince Pascarella, who has an SPHR and is vice president of Lowers Risk Group, has this to say:

Executives tend to rank human capital very high in terms of the potential impact on business results — often ahead of financial risks — but few believethey are managing human capital risk effectively. Most risks begin and end with people, so it’s not surprising to find that human resources is increasingly being called to the table to help mitigate risk.”

The whitepaper is free but requires registration, so I’ll summarize some of the key points and then you can decide whether to delve deeper. First, it cites a Deloitte report that finds a number of trends are leading to a greater focus on human capital risk management: “Black swans,” or low-probability events that have far-reaching impact (including the Euro crisis, the Gulf of Mexico oil spill, the tsunami in Japan, the Middle East uprisings) and “people risks” such as fraud, theft and security breaches that end up making headlines. The view of what constitutes human capital risks is expanding, the whitepaper notes, and now includes four “manageable areas of HCM”:

1. regulatory compliance

2. position risk level

3. management risk tolerance levels, and

4. onboarding issues “that may allow individuals to fall through the cracks.”

This new awareness of risk is, according to the whitepaper, leading HR to collaborate more closely with their risk-management brethren and create a “risk mindset” for day-to-day HR activities. HR must also “make the most of its existing data” to help identify potential risks.

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Leaders Behaving Badly, Cont.

The big news on Friday was the surprise resignation of Gen. David Petraeus as head of the Central Intelligence Agency after he admitted to an extramarital affair. In a statement announcing his resignation, Petraeus—a highly decorated veteran of the wars in Iraq and Afghanistan—said: “After being married for over 37 years, I showed extremely poor judgment by engaging in an extramarital affair,” Mr. Petraeus wrote. “Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours.”

Not an hour after that story broke came an announcement from giant defense contractor Lockheed Martin that its CEO-to-be was also a goner for involving himself in a situation similar to Petraeus’. The company released a statement in which it said the board of directors had “asked for and received” the resignation of Christopher Kubasik, who had previously been scheduled to become CEO in January, after an ethics investigation uncovered evidence of an affair between Kubasik and a subordinate at the company.  He had been serving as vice chairman, president and chief operating officer. His replacement will be a woman: Marillyn A. Hewson will take over his current position and will become the new CEO in January.

While it’s unfortunate to see leaders like Petraeus, in particular, done in by poor judgment, these two resignations at least serve as a reminder to rank-and-file employees that ethical violations—at the CIA, indiscretions such as Petraeus’ could have left him vulnerable to blackmail—have consequences at the top of the pyramid, not just the bottom.

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Do As We Say, Not as We Do …

There’s just one question that comes to my mind while reading over the alleged misdeeds of former Best Buy Chairman and Founder Richard M. Schulze: Just what was this guy thinking?!?

By this point the general outline of the story is fairly well-known: Schulze has just resigned after acknowledging he knew about an “improper relationship” between Best Buy’s (married) CEO and a younger female employee, yet failed to report it to the board of directors. CEO Brian Dunn, who resigned last month, “violated company policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment,” according to a report by the board’s audit committee, which began looking into the matter in March after a Best Buy HR exec heard about it, according to the New York Times.

The 51-year old Dunn and the 29-year-old employee appeared to have had a rather intense relationship, even if–as they maintain–it was not sexual. According to the audit report, the CEO contacted the female employee by cellphone “at least 224 times during one four-day and one five-day trip abroad, including at least 33 phone calls, 149 text messages and 42 pictures or video messages.” Things got especially awkward in the workplace when the employee began boasting to other employees about her relationship with Dunn and the favors he provided her with, including tickets to concerts and sports events.

For me, the kicker is when an executive provided Schulze with a signed, written statement from another employee detailing the relationship between Dunn and the young woman. Chairman Schulze proceeded to confront Dunn with the written allegation and ask if it was true. Dunn denied it was true, and Schulze dropped the matter, failing to follow company policy by notifying the appropriate company officials. Let me state that again: Schulze confronted Dunn with a SIGNED, WRITTEN STATEMENT from a whistleblowing employee, and then did nothing. So, Best Buy, how’s that whistleblower program working out? How’re the corporate ethics folks feeling these days? And how’s that whistleblowing employee doing–does he or she still have a job at Best Buy?

After flagrantly violating company policy, Dunn is walking away with an estimated $6.6 million severance package. Schulze will receive the “honorary title of chairman emeritus” when his resignation is official in June.

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Resigning in a ‘Very’ Public Way

By now, I probably don’t need to tell you who Greg Smith is.

Yesterday, Smith resigned as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa in the most public of ways: through an op-ed piece in the New York Times!

Since then, the piece has created quite a stir, including leading off last night’s NBC Nightly News broadcast (and perhaps others).  As of early this morning, roughly 365 people posted comments to the op-ed piece on the NYT’s website and the news has been all over the business news channels, Twitter and the like.

This isn’t the first time a departing employee or executive has found an unusual way to tender his or her resignation. For example, I vaguely remember hearing about an incident where someone brought a cake to work colorfully decorated with their resignation letter on it.  But I wouldn’t be surprised if this wasn’t the first time someone used the op-ed section of a major national newspaper to bid his or her employer farewell. (Be sure to let me know if this isn’t the case.)

In his op-ed, Smith cites the “firm’s decline in moral fiber” as the reason for his departure, writing:

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids?  No humility?  I mean, come on.  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.

Goldman Sachs (headquarters pictured above) responded to Smith’s assertions, saying that it didn’t reflect the way the company treated its clients.

So what’s the takeaway for HR leaders?

Merrie Spaeth, a Dallas-based communications’ expert, offers this assessment of Smith’s letter:

Normally, you’d say this is exactly the wrong, wrong, wrong way to go out the door. But this is like the woman who wrote the long letter to Ken Lay (Enron.) This is a very substantial, very senior, very well respected executive. He is actually sending a love letter to the firm, meaning—he loves GS and is willing to have a potentially very negative impact on his own position in the industry by calling them to account.

(Spaeth says she considers the op-ed piece credible because of what happened to “a good portion of the financial services/banking industry,” not because she personally knows Smith.)

I suspect the folks at GS may not see it the same way as Spaeth.

So returning to my earlier question of what this might means to HR leaders, Spaeth suggests the following:

I think the message for the senior HR executives is that you have to have functioning internal feedback and safety valves which hold executives accountable. (Think of Mark Hurd at HP and his behavior with the ‘escort.’ Think how many people had to know about that but no one stepped in and said, ‘Mark, pal, knock it off. No good will come of this.’  The GS example is potentially much more detrimental. Think of what just happened to Olympus, the Japanese company. They fired their CEO when he uncovered massive wrongdoing, and they thought they could get by.)

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