Ethics must be at the top of an organization. It is a leadership issue and the chief executive must set the example. –Edward Hennessy
Years ago, I had the unenviable task of terminating over 60% of the employees at one of the branch offices I had been given responsibility for when I was employed by a financial institution in Nevada. The dismissals included the branch manager, assistant manager, teller supervisor and two tellers. This action was predicated on the fact that for over nine months this cadre of workers had been falsifying their mileage expense reports. This tight knit group of coworkers, led by the branch manager, had come up with this scheme to supplement their income at the expense of the bank. All expense reports were initially handled and signed off at the branch level. So, when the compensation forms were submitted to the accounting department for payment, no one paid attention to the fact that each report was almost identical month after month. Another red flag that should have clued someone in there was a problem was that three of the employees were not eligible for mileage repayments since their job function did not require travel outside the branch.
Much to the detriment of the bank, the department responsible for the review and disbursement of reimbursement funds had not caught the fraudulent activity in a timely fashion. Another contributing factor in the terminations was that the offending tellers had been supplementing their teller drawers from a kitty to hide outages and when they were not meeting their sales goals they submitted falsified referral reports. All of these ethical infringements were committed by or done with the knowledge and tacit agreement of the branch management staff; therefore all of these employees had to be let go.
An in-depth investigation revealed that this group of co-workers had become overly cohesive; all of the employees expressed a strong emotional attachment towards their colleagues. One person in particular who had not been discharged declared it was due these feelings she had chosen to reserve judgment surrounding their behavior. As time passed, she then decided there was no reason to raise concerns since her manager had been endorsing this questionable conduct and therefore, she concluded their seemingly unethical actions must be permissible. Schminke, Wells, Peyrefitte and Sebora (2002) state there is a “tendency for groups to exhibit ethical conformity, which can change the beliefs and behavior of a group member” (p. 8). Each terminated employee cited insufficient compensation as the primary motivating factor behind the falsified reports and felt justified in seeking an alternate solution to this issue. Furthermore, both the manager and assistant manager stated they and their team regularly drove places on behalf of the bank and had not recorded or sought compensation so, either way the bank owed them money.
Sims and Sauser (2013) identify illusions of group morality as one of several symptoms of groupthink. The researchers explain that illusions of group morality occurs when “group members feel they are moral in their actions and therefore above reproach. This symptom leads the group to ignore the ethical implications of their decisions” (p.7). Two newly hired employees, who had previous banking experience and had been assigned to train in this office explained at their former employer, the formation and use of a kitty to offset a teller drawer outage was considered unethical. However, due to the events at this branch, they were under the impression that it was a norm within this financial institution and had consequently done it themselves.
Both the branch manager and the assistant manager’s behavior demonstrated complete disregard for the culture of the organization, which promoted ethical behavior as one of the institutions’ top values. “Organizational culture determines how an organization operates and how its members frame events both inside and outside the company” (Sims and Sauser, 2013, p.4). The actions of the leadership team within this office had essentially invalidated the culture the bank worked to endorse. Simha and Cullen (2012) conclude “egoistic climates to be the worst in terms of encouraging employee dysfunctional behaviors” (p.27). As evident in the situation described above, the self-interested mindset of the offending branch employees led them down a destructive path, which ultimately resulted in their termination.
Schminke, M., Wells, D., Peyrefitte, J., & Sebora, T. C. (2002). Leadership and ethics in work groups: A longitudinal assessment. Group & Organization Management, 27(2), 272-293. doi:10.1177/10501102027002006
Simha, A., & Cullen, J. B. (2012). Ethical climates and their effects on organizational outcomes: Implications from the past and prophecies for the future. Academy of Management Perspectives, 26(4), 20-34. doi:10.5465/amp.2011.0156
Sims, R. R., & Sauser, W. I. (2013). Toward a better understanding of the relationships among received wisdom, groupthink, and organizational ethical culture. Journal of Management Policy and Practice, 14(4), 75.