A recent issue of Qn, the publication of the Yale School of Management, features an inspiring interview with Professor Dan Ariely of Duke University on the sources and implications of cheating in business.  A renowned scholar in a more and more influential area of behavioral economics, he argues on the basis of his team's research that the tendency to be dishonest remains steady for most individuals and is only seriously distorted, for better or for worse, by mechanisms which discourage or encourage it.  This correlation is particularly relevant for professional groups which rely on common codes of practice and in which participants observe each other's behavior very closely in a never-ending negotiation of standards.  To illustrate how this process operates, Ariely provides a well-rehearsed example of how investment bankers had gradually lost their moral bearings in the run-up to the banking crisis by slowly stretching, as a professional group, the boundaries of what is acceptable. It needn't have happened provided there had been a drastically different distribution of incentives.  This type of disintegration is feasible at the level of organizations too and it is in their leaders' hands to set out incentives in a way that prevents it from happening, a strategic skill taught at executive training programs.

According to Ariely, human psychology makes it possible to reconcile two seemingly unbridgeable needs – to feel good about our conscience and to obtain extra benefits by stretching the rules, even beyond their breaking point.  With this fragile balance between moral discipline and borderline creativity, this ecosystem is in constant danger of drifting away towards ethically dubious waters, a process which is tremendously accelerated in the context of closed communities, like professions or organizations. Here, a series of tiny movements beyond acceptable boundaries may relatively quickly trigger a massive shift that can undermine the integrity of the entire system.  When this type of a scenario unfolds, normally well-disposed people are lured deeper and deeper into misconduct, further compromising an organization.

In fact, to a large extent, it is a question of organization and suitable executive training programs can dramatically reduce dangers inherent in working with large groups of people.  Choices senior managers make regarding day-to-day operation of businesses and behavior of employees at work are capable of contributing to or compromising moral integrity that underpins the enterprise.  Sometimes they concern sweeping principles that safeguard against the possibility of a catastrophe comparable to the credit crunch materializing.  More often though, there are small-scale and mid-scale decisions that strengthen the system and make the organization both more disciplined and more vigorous in response to internal and external temptations.  In practice, such immunizing techniques vary depending on the nature and needs of companies. The creators of relevant executive training programs can be trusted to offer the educators that will provide maximal reinforcement to an organization.