The Limitations of Compliance

Business ethics challenge the cultural legitimacy of ideas such as agency theory, which prompted the business managers be driven by self-interest. The theory assumes that, the managers need to be incentivized for them to deliver maximum shareholder benefits.

Two US studies term ‘amoral management’ as both intentional and unintentional. Intentional amoral management practices occur when business and ethics are considered two separate realms. Unintentional amoral management, emerge when managers fail to canvass the ethical impacts of their decisions and actions.

There are now new researches held to investigate into how workplace context shapes managerial and employee behavior. These researches suggest that employee ethics are dynamic and that the behavioral cues of employees are taken from the social messaging of their organization in order to succeed.

Social psychology highlights that many people are likely to commit serious unethical acts in situations, such as the power dynamics embedded in workplace hierarchies. These typically result due to depersonalization in large workplaces and let the individuals to skip personal accountability.

The managers and employees can behave inconsistently across different situations. This ‘argentic shift’, first identified by Stanley Milgram’s ‘obedience to authority’ of Yale research and later supported by Stanford’s prison experiment, suggests that there can be an erosion of agency in an organization till the point when individuals simply follow directives.

Examples of Unethical Practices

In November 2012, UBS was fined £29.7 million for failures in its systems and controls that allowed former employee Kweku Adoboli to conduct Britain’s biggest bank fraud

In December 2012, HSBC agreed to pay a record $1.92 billion to settle charges, which the banking giant violated US sanctions, by transferring billions of dollars for prohibited nations, it enabled Mexican drug cartels to launder tainted money through the American financial system, and it worked closely with Saudi Arabian banks linked to terrorist organizations

In 2012, Barclays was fined £290 million for manipulating key interest rates

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