May 1, 2012 ~ National Public Radio ran a podcast of an interesting topic, Why People do Bad Things. We often find that executives within a company or within a huge hospital complex will do things which most people find morally and ethically wrong.
Listen to the story of Toby Groves, who as a young boy watched his father in what he thinks is having a heart attack. Toby was watching his father react to a newspaper story that Toby’s older brother had just been charged with bank fraud. Toby swore to his father he would never become a person like that.
“He grew up on a farm, from a really religious family. He could never be involved in something like fraud," according to NPR.
But 22 years later, Groves is standing in front of the same judge as his brother. Toby Groves is charged with bank fraud.
Groves was an upstanding business man who founded a mortgage company, but in 2003 his successful mortgage business began running into trouble. The fraud started with a home equity loan on his personal property. Groves needed the loan to bail out his business but he lied on his business application inflating his income. To commit the next loan fraud he needed help from other people and Toby was shocked when no one said ‘no'.
Multiple fraudulent mortgage applications followed and friends and associates helped from within his mortgage company and from outside title companies. Nobody said 'Wait, we have to think about this.' Instead they said ‘yes I’ll help you.' Most large frauds could not happen without a large group of people willing to help.
The interesting thing is why people do what they do in organizations? In judging bank fraud we might assume the character has a flawed character, the reporters say. The second assumption is we would never do that.
The experts say they are wrong.
A researcher at Notre Dame working on business ethics says the way a decision is presented very much changes the way in which a person will view a decision. Certain frames will make us blind to ethics.
Those cognitively primed to think about business are significantly more likely to lie than those to whom the information is presented within an ethical frame. The business context cognitively activates one set of goals- to be successful. You become focused on meeting those goals and less on the other goals such as ethics. People are unaware they are making a profoundly unethical decision.
Researchers agree that really bad people do exist, but only in a minority of cases.
Psychologists within an organization may commit fraud because they like to help each other, especially people we identify with, such as people who are associates or co-workers. It’s an interesting listen… here is the podcast. ( Go past Planet Money about 3:30 min in the timeline).