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FOR IMMEDIATE RELEASE
FROM: Nancy Gardner (206) 543-2580
nancylou@u.washington.edu
DATE:
January 9, 2006
Corporations like Enron that overemphasize outcomes such
as profits might make their leaders blind to ethics and limit
their abilities to recognize ethical or moral issues when
they surface, according to a University of Washington study.
Scott Reynolds, an assistant professor of business ethics
in the UW Business School, examined why some managers recognize
a situation as involving moral issues whiles others do not.
His research demonstrates it is not always obvious when an
issue has moral overtones – people can and do disagree
about whether an issue involves ethics.
In two separate studies, Reynolds asked 96 senior-level managers
to rate five scenarios involving varying degrees of ethical
violations designed to measure their moral awareness. Previous
research has shown that when facing ethical dilemmas, individuals
either focus on the ends (consequences such as happiness,
harm and profits) or the means (such as don't lie, don't
cheat and don't steal) as they search for a solution. The
study, published in the current issue of the Journal of Applied
Psychology, found that this preference also influences an
individual's capacity to simply identify a problem as an
ethical issue.
Reynolds found that people who focus primarily on the ends
recognize ethical issues when harm is done but are much less
sensitive to ethical issues that seem to only involve a violation
of the means (someone lied, broke a promise, violated a policy,
etc.). When it appears that no harm is done, ends-based decision-makers
are much less inclined to see the issue as an ethical one.
Means-focused people, however, recognize both harmful situations
and those situations in which the means used were an ethical
issue.
The results are surprising, he said, because they suggest
that means-based decision makers are affected by a much broader
range of what they consider to be ethical issues.
"For that reason, ends-based decision-makers might be
very surprised to know what others call or treat as ethical
issues," Reynolds
said. "You could say that ends-based decision-makers
are 'blind' to those kinds of ethical issues."
Reynolds believes former Enron Corp. chief executive officer
Kenneth Lay and others at the bankrupt trading and energy
company might have been victims of this phenomenon. He speculates
that Lay and other Enron executives probably saw no harm
in what they did and therefore believed there were no ethical
aspects to their business – it was just doing business
as usual. Thus, there was an initial sense of surprise or
disbelief within the culture once they saw outsiders' reactions
to their business practices.
"If you saw his testimony before Congress, he just looked
dumbfounded the whole time," said Reynolds. "He
just didn't get it – that his business decisions had
powerful ethical components to them and that his decisions
could be framed as either moral or immoral and right or wrong.
He never really became morally aware and for that reason
the rest of us have had to suffer. It's not necessarily that
he didn't have a conscience, it's that nothing about the
situation activated or turned on his conscience."
Enron employed more than 20,000 and had revenues of $101
billion in 2000 but questionable accounting practices and
widespread corporate fraud led to its collapse. Lay is expected
to go on trial soon for securities and wire fraud and making
false statements, charges that carry a maximum sentence of
175 years.
"The findings of this study suggest that when attempting
to improve moral awareness in organizations, leaders should
take the initiative to better educate managers about the
moral value of rules, principles and guidelines more generally," Reynolds
said.
"Improving managers' appreciation for such guides
increases their ability to access moral frameworks in the
face of not just harmful situations, but also seemingly inconsequential
violations of rules."
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