The Harvard Business Review published a stat that’s been eating away at me. Here it is:
New MBAs Would Sacrifice Pay for Ethics
88.3% of graduating MBA students say they’d take a pay cut to work for firms that have ethical business practices, and the average amount they’d forgo is $8,087, according to a survey of 759 students in North America and Europe. The researchers, David B. Montgomery of Stanford University and Catherine A. Ramus of the University of California, Santa Barbara, suggest that the finding should be seen by the public as a hopeful sign for the management profession.
I haven’t dug further into this research but the last thing I felt in this paragraph was “hopeful.” My interpretation was ethics has a price tag…and it’s $8K. Sad. Sad.
Perhaps what bothers me most about the stat isn’t what was reported…but what wasn’t reported. For example:
- Students will take a $8K pay cut to work for an ethical company. But will they take a $9K pay cut?
- And if students will take a $8K pay cut, is the reverse true – will they stay at an unethical company for $10K?
We throw around the cliché “everyone has a price” – is the price really $8,087? This stat leads me to believe students would throw their credibility out the window for $8K. That’s less than the price of a car or a Rolex. Personally, my credibility is worth more than that. Much more. In fact, it’s absolutely priceless.
The stat raises some interesting questions for me in terms of defining ethical behavior. Wikipedia explains ethics addresses the concepts of right and wrong, good and evil, etc. This implies that ethics is subjective behavior. Granted some behaviors are deemed wrong by society (i.e. cannibalism) or some are declared illegal by government (as in murder). But if Susie is taking reams of copy paper home because the company cut her pay and her son needs it for a school project…is that unethical? I can see where some people might say yes and others will say no.
Possibly the key to defining ethics is consistency. Here’s another example – if a person calls out an organization for not following the bylaws and making stupid financial decisions, shouldn’t they also call out any organization that is doing the exact same thing? Otherwise, it looks inconsistent. One organization gets away with it, and another one doesn’t. It doesn’t look like the person is holding organizations accountable for ethical behavior. It looks like some sort of hidden agenda. And, it definitely looks hypocritical.
Another key to defining ethical behavior could be personal impact. Individuals can tolerate hearing about unethical behavior because they can say, “Oh – I didn’t know about that.” Or they can watch unethical behavior because it doesn’t directly impact them. The “I’m just doing my job” argument. It’s only when the behavior impacts them, they have to make an ethical decision.
And according to the stat above, it has to impact them more than $8K. I’m not sure I’ve bought into ethical behavior as a cost-benefit analysis formula. As much as I love numbers, there are some things that math – or money – can’t buy.
Image courtesy of Muffet
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david k waltz says
Sharlyn,
Without looking at the data, it could even be worse. If one highly compensated individual said 100,000, then that means a lot of others had to answer zero to get to the 8k number!
Also, as you have noted, the term “ethics” is somewhat general. Perhaps a more specific example could have elicited a more definitive response, for example “would you take a pay cut to work for a firm that doesn’t use child-labor?”
Without taking away from some of your insights about it being personal, and the issue of consistency, I am thinking this might be an instance of not-very-meaningful information. Thanks!
Sharlyn Lauby says
Thanks for the comment David. While I agree the data leaves more questions than answers, I hope it raises some good discussion. Especially given some of the news stories being published recently.
david k waltz says
Sharlyn,
It is definitely a topic worthy of discussion! Organization culture, of which the degree of ethics is part, is a critical factor in employee satisfaction or lack thereof, and can contribute to competitive advantage.
I often like to challenge this topic for two reasons. First, sometimes decisions are made which assumes a degree of ethicality amongst employees. Second, having worked for a number of years with the darker side of human nature, I know that not everyone has ethics.
John C says
Interesting article. Thanks for posting.
I see two angles. Unethical business practices of the overall company – questionable outsourced labor or being environmentally unfriendly vs. requiring an employee to carry out unethical business practices on a regular basis – falsify documents or recommending repairs/services people don’t really need. I feel a small amount of people would actually care about the former, but the latter would be interesting to study from the reverse perspective. As you point out – what increase would be required to participate in unethical practices? Once you make it more personal, I bet the $ number quickly rises.
Sharlyn Lauby says
Thanks for sharing your thoughts John. I agree – the flip side to the stat is very interesting. And you’re spot on…once it becomes personal, the money perspective changes.
Carolyn Sokol says
Sharlyn,
The following is a comment written by an employee of mine, college freshman… just thought I’d share something from the younger generation, not necessarily my opinion.
“After reading this article about business ethics, it made me ponder what the business world would look like if all businesses followed an ethical code. The thought was perplexing.
The problem with ethics is that they are based on a variety of subjective measures- there is no one universal code of ethics. As a people we have decided what our ethics are in the form of laws and governmental regulations. However, the private sector is another matter entirely. The products that we use on a daily basis have probably been produced in a sweat shop in another country: how unethical is that?
There is no doubt that businesses should be held to the same standards as people, but why is it surprising that people will work for unethical companies? Capitalism dictates that people make money, so saying that someone would sacrifice 8k for ethics is impressive to me.”
Sharlyn Lauby says
Hi Carolyn. The thing that struck me most about this comment was the definition of capitalism. Yes, capitalism means making money…but companies make money is socialist economies as well. Both economies have non-profit entities. And all of them have the potential for unethical practices. Thanks for sharing – it was a thought provoking comment.
Susan Connor says
Wakey wakey to the effects of ethics verses wellness. http://tocve4medtt.blogspot.com/2011/12/just-sleeping-on-it.html complements your post.
Sharlyn Lauby says
Susan – thanks for sharing. Excellent post!
Susan Connor says
Thank you for responding … you Sharon have made my day!