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Contemporary Cases of Corporate Corruption: Any Relevance for I-O Psychology?1

Joel Lefkowitz
Baruch College, CUNY

1This essay is based on the authors presentation as chair of a panel at the SIOP conference, April 12, 2003, Orlando, FL. The contributions of the other panelists, Dan Ilgen, Bob Lee, Ed Locke, Rod Lowman, and Ben Schneider, are greatly appreciated. They are not, however, responsible for the content of this paper.

Recent corporate ethical meltdowns have caused enormous economic damage and loss of stakeholder trust (Fleming, 2004). There have been massive distortions of profit statements by misclassifying expenses, appropriation of corporate assets for personal use and gain by senior executives, extortionate compensation for management bearing little relationship to performance, and dilution of stockholder holdings by extravagant and undeserved executive stock options, the whole sorry mess being overseen by apparently comatose (or complicit?) boards of directors.

I would like to engage the readers of TIP in a consideration of this topic from four perspectives: (a) its implications for the study of organizational behavior; as well as its implications for I-O psychologists in our roles as (b) educators; (c) practitioners; and (d) members/managers of organizations potentially involved in such corruption. My intent is to stimulate discussion within the Society of the values and objectives of our field and the way in which they articulateor notwith the values of the corporate world on one hand and the professional service model of psychology on the other hand. 

In all honesty, however, that broad outline doesnt capture fully my own concerns in this area. I confess to something of a personal agenda, which is reflected in the tendentious press paragraph I wrote for this SIOP session in 2003:

Practicing I-O psychologists make their livelihood by contributing to the corporate enterprise and serving the productivity goals and profitability objectives of corporate leadersjust as did the auditors, bankers, lawyers, and securities analysts caught up in the scandals of the past few years. Are I-O psychologists, therefore, susceptible to the same forces of corruptibility? Or does I-O psychology espouse alternative moral values and promote an ethical stance that places it in opposition to such forces?

Although only a portion of this essay addresses that question directly, it can be kept in mind as a meta-issue lurking beneath the overall topic. Perhaps another important thing to keep in mind is that Enron had a code of ethics, expressed commitments from top management for ethical practice, an ethical training program, a system to protect internal whistleblowers, and other indications of ethical sensitivity, as well. So, a second metaissue is one suggested by attempts to answer the questions: What went wrong? Why werent all those organizational and programmatic indications of ethical concern sufficient to prevent what happened?

Four Perspectives

I. Implications for the Study of Organizational Behavior
We can view the scandals of the past few years from the standpoint of social and behavioral scientists, as actions to be understood in terms of their individual, organizational, and societal antecedents, as well as the contextual influences that facilitate or discourage their emergence. 

Ethical behavior has frequently been explained as a reflection of moral character and virtue, or personal values, or rational decision making, or following objective moral principles, or modeling the actions of significant others such as organizational leaders, or social (including organizational) norms and reinforcement contingencies. Of course, all may be involved, and treating such behavior as an object of scientific study like any other will contribute to its understandingand maybe to its prevention. In recent years, personality and developmental psychologists have joined members of other related disciplines to focus on understanding the development of moral sensitivity and other antecedents of ethical behavior, to the extent of creating a subspecialization of moral psychology. And I-O psychologists have highlighted the role played by contextual, including organizational, influences (cf. Lefkowitz, 2003, for a review of both areas).

But morality as a behavioral phenomenon differs from other types of organizational behavior we study. It is not simply an empirical or descriptive matter that can be analyzed with the traditional scientific detachment of presumably value-free investigations. It comprises a set of value-laden moral questions that forces us to grapple with our normative assumptions and personal values. This, of course, becomes inescapable in our role as practitioners contributing to the accomplishment of organizationally defined goals and objectives.

II. Implications for I-O Psychologists in Our Role as Educators
Many members of the Society are full-time or part-time academics concerned with the education of professional psychologists and/or future managers. To what extent are we preparing our students to deal with ethical issues and temptations in professional life? For example, 2003 was the first year that Ethics and Values was included as a submission category (among 45 content areas) for the SIOP conference.

Last year, the Association to Advance Collegiate Schools of Business (AACSB)despite many petitionsfailed to introduce a required ethics course as a condition for business degree accreditation. Most of the top MBA programs do not require a course in ethics. The same can probably be said with regard to many I-O psychology doctoral programs. What should the content of those courses include? Should ethical issues be integrated into all courses? Well, of course is the easy answer to that one, but, as Mitroff and Swanson (2004) observed recently, distributing ethics across the curriculum results in spotty and inconsistent [coverage], with only one-third of accredited [business] schools requiring a stand-alone course in ethics.

On the other hand, many have argued that ethical behavior is primarily a reflection of personal virtue or dispositional traits of character acquired early in life as a result of religious upbringing and/or other aspects of primary socialization. As such, to these folks, it is not much amenable to educational influences. But we know that organizational social structure, leadership, cultural norms and incentive systems do play significant roles (Ciulla, 1998; Darley, Messick, & Tyler, 2001).

A key issue, here, is the implied question To what extent can we, as educators, reasonably be expected to accept some responsibility for shaping the future ethical behavior of our students? In any event, how well prepared are we to do so? To what extent do we opt out simply because we ourselves are not versed in moral philosophy, ethical decision making, or in dealing with values issues? Even when I-O psychology doctoral students are exposed to ethical issues, it is likely to be limited to topics such as the ethical treatment of research participants (offset with some complaining about the unreasonableness of Institutional Review Boards), as opposed to such esoteric topics as the social and moral justification for business and the responsibilities that entails, in addition to its instrumental and economic justifications. 

Do we as a profession, in fact, shy away from a consideration of moral issues? A search of the subject indexes of 29 I-O psychology text books revealed that (a) the topic of ethics is listed in just six of the books, mostly a passing mention of the existence of the APA code; (b) the term morals or morality (generally used as a synonym for ethics) is not mentioned at all; (c) the term values fares better, being mentioned in 11 of the texts, but in all but two instances referring to work values or bureaucratic values as a component of organization culture. In only two instances are values discussed, even briefly, in the context of the professional values that inform and shape the research, theory, and practice of I-O psychology.2

2 Both of those had to do with the humanistic value system underlying the work of OD practitioners. And in one of those two instances humanistic values are held up as a difficulty to be overcome, as an obstacle to the realization of performance effectiveness and productivity. 

III. Implications for I-O Psychologists in Our Role as Practitioners
A current popular conceptualization of capitalist free enterprise emphasizes corporate social responsibility and a multiple stakeholder model of organizational decision making. Nevertheless, the dominant value system guiding corporate America is one of productivity, profits, and shareholder value. It has been argued in many quarters, although certainly not universally accepted, that this value system and the goals it spawnsperhaps corrupted by the individual power needs of some corporate leadersaccount for the unethical excesses we have seen. In other words, it appears that under some circumstances, at least for some people, the distinctions are obscured between personal contributions to organizational success with their accompanying justifiable rewardsas opposed to individual greed and unjustified personal enrichment. 

The enormous success in the business world of some modern professions such as accountancy, law, and many others is in part attributable to their positive contributions to the corporate enterprise. And those contributions have been enabled by these professions adopting the corporate value structure and their willingness to contribute to the goals of profitability and shareholder value, which generally provide the basis for their own remuneration as well. 

Might this account for the complicity of the accountants, auditors, financial advisors, securities analysts, lawyers, and bankers who serviced the corrupt corporate executives in their illegal and unethical enterprises? If so, what is the potential for I-O psychologists, who appear to share the same success and corporate values, sharing a similar fate? The question is the extent to which those professions listed above, and I-O psychology, operate like those that Donaldson (1982) referred to as new, technocratic professions (e.g., the systems analyst, marketing specialist, labor negotiator, management theorist, and public relations expert) that lack a spirit of altruism or service. He notes The old professions have frequently failed to apply the moral standards articulated in statements of their professional goals; but the new professions fail, it seems, because they do not even attempt to articulate moral standards (p. 113).

But might we be less likely to succumb? Perhaps, as psychologists, we are imbued with some countervailing values and norms? The preamble to the APA ethical code commits us not only to increasing scientific and professional knowledge of behavior but also to the use of such knowledge to improve the condition of individuals, organizations, and society. How, and to what extent, is that implemented in I-O psychology? For example, on which side of the issue do we come down when improving the condition of many individuals and society conflicts with the aim of maximizing corporate productivity, profitability, and shareholder value? 

IV. Implications for I-O Psychologists in Our Role as Organization Members
Many of us are full-time practitioners in corporations. In fact, at a certain point in our careers, many of us function more as general (or human resource) managers than as professional psychologists. The transgressing executives may be our own leaders, as well as the managers and role models of the employees with whom we work, who report to us and who are our colleagues. In other words, because those of us who are in organizations frequently move beyond the specific concerns of developing and implementing human resource systems, we no longer have the luxury of a purely technocratic perspective focused on validity coefficients, training effectiveness scores, performance appraisal forms, definitions of competencies, and so forth to shield us from moral involvement in the overall enterprise. 

Moreover, as noted earlier, part of our heritage from psychology includes a humanistic concern (cf. Kimble, 1984) for bettering the welfare of organizations and individuals, as well as society as a whole. This reflects what has been called the true professional ideal (Kimball, 1992) as part of the professional model (Hall, 1975). Consequently, as psychologists, it is appropriate that we assume a moral advocacy role in organizations. But that gives rise to several concerns. First, wouldnt it require that we take an active part in denouncing these unethical actions and their perpetrators? And might that not be personally risky? But there is evidence that some human resource professionals can and do adopt a role of ethical leadership and guidance within the organization notwithstanding that their professional loyalties and ethical commitments, as well as an altruistic norm of service, may place them in direct conflict with their organizations business goals (Wiley, 1998, p. 147). 

Second, how does that role articulate with our supposedly objective study of unethical behavior as social scientists? This question is an extension of the nearly sacrosanct assumption of a value-free or scientific orientation in positivistic I-O psychology. But I do not think it can be argued successfully that our applied research and (especially) professional practice isnt currently imbued with the assumptions, methods, goals, and objectives reflecting the business value system. So, the issue is one of potentially competing or conflicting values, not the introduction of humanistic values into social systems void of any values at all.

The third issue concerns the value set that might guide us in such moral advocacy. What is it? Where is SIOPs ethical code or mission statement pertaining to this domain of human endeavor? Our current guiding light, the scientistpractitioner model, is an inadequate statement of values in this regard. It embodies a scientific (i.e., descriptive and predictive) perspective, and an instrumental perspective. Arguably, missing from our core values as a profession, and hence, from our contributions to organizational discourse as well, is a well-articulated normative (i.e., moral) perspective as a third leg of support. In other words, we are used to asking scientific questions like Is it valid? and instrumental questions like Is it productive? Efficient? Useful? Glaring in its absence is the normative question that inquires Is it the right thing to do?

References

     Ciulla, J. B. (Ed.) (1998). Ethics, the heart of leadership. Westport, CT: Praeger.
     Darley, J. M., Messick, D. M. & Tyler, T. R. (Eds.) (2001). Social influences on ethical behavior in organizations. Mahwah, NJ: Lawrence Erlbaum Associates.
     Donaldson, T. (1982). Corporations and morality. Englewood Cliffs, NJ: Prentice-Hall.
     Fleming, J. E. (2004, June). The need for ethics in business. The Academy of Management News, 35(2), 5.
     Hall, R. T. (1975). Occupations and the social structure (2nd Ed.). Englewood Cliffs, NJ: Prentice-Hall.
     Kimball, B. A. (1992). The true professional ideal in America. Cambridge, MA: Blackwell Publishing.
     Kimble, G. A. (1984). Psychologys two cultures. American Psychologist, 39, 833839.
     Lefkowitz, J. (2003). Ethics and values in industrial-organizational psychology. Mahwah, NJ: Lawrence Erlbaum Associates.
     Mitroff, I. I., & Swanson, D. L. (2004, June). An open letter to the Deans and the faculties of American business schools: A call for action. The Academy of Management News, 35(2), 7.
     Wiley, C. (1998). Reexamining perceived ethics issues and ethics roles among employment managers. Journal of Business Ethics, 17, 147161.


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