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Ethics and corporate culture

Nicola Sharp, professor of law at the University of Illinois School of Law. Jennifer K. Robbennolt, “Alice Curtis Campbell” Professor of Law and Professor of Psychology, University of Illinois Law School,

In 2021, Toyota Motor Corporation agreed to pay a $180 million fine to settle U.S. Environmental Protection Agency (EPA) enforcement action against the company. , due to failure to submit an emissions defect report to the EPA as required by the Clean Air Act. Toyota was aware of the reporting violations but took no action to change or reveal the company’s failure to comply.

According to Audrey Strauss, acting U.S. Attorney for the Southern District of New York, “Toyota turned a blind eye to violations by failing to provide adequate training, attention, and supervision,” and “undermined the EPA’s self-disclosure system.” I made it.” Therefore, in addition to the $180 million fine, the largest civil penalty imposed in history for breach of emissions reporting obligations, Toyota is subject to additional compliance and reporting practices, as well as training, communication, and oversight. Several conditions must also be met, focused on improving the

MicroStockHub on Pixabay

Source: MicroStockHub on Pixabay

Toyota’s consent decree is the latest in a string of emissions-related scandals involving efforts by both Volkswagen and Daimler to design vehicles to evade emissions testing. This is just one example of a company’s lack of compliance with regulatory rules and ethical standards.

The psychology of behavioral ethics provides insight into how such ethical failures can occur. Decision makers with ethical blind spots arising from unconscious bias, external or societal pressures, diffusion of responsibility, and other unrecognized factors may act unethically without always being aware of it. . As these decisions are made, other aspects gradually take center stage, and the ethical implications of the decisions fade into the background.

One of the reasons decision makers engage in, deliberately ignore, or ignore unethical behavior is that some corporate cultures do not promote ethical and compliant behavior. A corporate culture that emphasizes ethics and compliance is critical to optimal organizational functioning, employee engagement, individual commitment to ethical behavior, and whistleblowing in the face of violations.

Corporate culture is integral to an ethics and compliance program, so unless an organization has a culture that promotes ethical behavior and a commitment to the law, the U.S. Sentencing Guidelines for Organizations will not consider the program to be sufficiently effective. not.

So how is an ethical culture built or destroyed? Trust or distrust of an organization is one of the key factors. In fact, trust has been called “the glue that holds company culture together”, with ethical behavior playing a disproportionate role in maintaining trust and unethical behavior destroying it.

Ethics research shows that employees are more likely to speak up when they have more trust in an organization. Conversely, employees who place little trust in their company typically lack a sense of personal accountability and, as a result, typically do not identify and point out the ethical lapses of their colleagues. Volkswagen’s corporate culture is, for example, “[ed] internal communication and [have] discourage[ed] Don’t let middle management tell you the bad news. ”

Psychological research is essential to understanding and fostering a healthy corporate culture. Existing research has explored the components of an ethical and compliant culture, including training, communication and supervision. This is the very aspect of Toyota’s culture that was deemed inappropriate. Additionally, the impact of the pandemic on organizational efforts to build a healthy work culture presents many new research opportunities, especially with the shift to remote work environments.

Psychological research shows that remote workers face social and professional isolation and have fewer opportunities to share information. Companies “need to change their culture and norms to support” an ethical remote work environment.

Editor: Ashley M. Votruba, JD, Ph.D., SPSSI Blog Editor, Assistant Professor, University of Nebraska-Lincoln