Why Managers Take Bad Decision

Good manager make bad ethical choices?
      Gellerman explores why decision-makers sometimes act unethically. Based on three corporate cases, he identifies and analyzes the roots of the misconduct managers confront across different kinds of businesses. He then provides practical recommendations and examples to ensure ethical behavior.
 
      The author identifies four commonly held rationalizations that explain why decision-makers behave unethically: (1) a belief that the activity is not “really” illegal or immoral; (2) a belief that the activity is in the individual’s or the corporation’s best interest; (3) a belief that the activity is “safe” because it will never be found out or publicized; and (4) a belief that since the activity helps the company, the company will condone it and even protect the person who engages in it.
 
            Regarding the first rationalization, Gellerman argues that in order to avoid misunderstandings, companies must establish ethical guidelines for all employees. When employees face an ambiguous situation, some may conclude that whatever has not been predetermined as wrong must be correct. The author recalls the old principle: “When managers must operate in murky borderlands, their most reliable guideline is: when in doubt, don’t.”
 
      In the second rationalization, ambition plays a key role. Ambitious managers look for ways to attract auspicious attention by reaching the expected results, even if it ultimately implies putting the organization at risk. Many managers have been promoted on the basis of the results obtained in those ways because of the lack of an objective review of their successes. The author suggests that one way to avoid this is to hire an independent auditing agency that reports to outside directors.
       
            The third rationalization, the author notes, is perhaps the most difficult to deal with because much of the restricted behavior escapes detection. How can we prevent wrongdoing that...