Business and Personal Ethicsbusiness ethics

Construction Ethics: Why Good People make Bad Choices

Twenty years ago, when I stepped out of federal prison (OK I may have lost some readers here – but let me challenge you to keep reading), I can honestly say I learned a thing or two about what motivates good people to make bad choices.  Since then my work with businesses, especially in the construction industry, has provided a framework for understanding what to look for and how to Construction Ethicsprevent unethical behavior.  From local to regional companies to large multinationals, construction ethics has one universal theme –  unethical behavior leads to bad consequences.

In a competitive world, is it safe to say that all construction employees are expected act in an ethical manner when it comes to the legal, moral, and professional conduct related to the fulfillment of their employment responsibilities? Who wouldn’t answer YES to this question?  Yet when it comes to ethics many people find challenges that end in bad behavior.

Yet, in my work as a professional ethics consultant and advocate, I have seen more examples of circumstances where good people make bad choices by taking one step on the slippery slope of unethical activity. And, from experience, once on that slope – well the word “slippery” can be an understatement.  When it comes to construction ethics or ethics in any business, no one is exempt from stepping on that slippery slope.

The process of making bad choices, unethical choices, begins with a simple almost thoughtless decision. How do I know? Well, I am living proof that good people can make some really bad choices and the consequences most certainly can be devastating. While not proud of this sentence, I have made unethical choices and spent time in federal prison as a result. So, suffice it to say, I know a thing or two about the simplicity of making one step on the slippery slope that can lead a person to choices that are life changing.

“Never in my wildest dreams did I see this coming. When I first started “borrowing” from my client I had every intent of paying back what I took. Heck, I did pay some of it back…at least at the beginning!” Those were the words I shared as I openly confessed that the life I was living was, for the most part, an illusion. Truth be told, for all my legitimate successes, I had over time become no more than a liar and a thief. My choices created consequences that I never dreamed were possible.

My comments above I have heard over and over when working in the construction ethics arena with companies from coast to coast.  Well intended people are subject to temptation.  There is a pattern, but first let’s review some examples of violations of construction ethics.

Examples of Unethical Behavior

In most ethical lapses, people don’t start off with the intent to lie or defraud. Instead, they get caught up in a messy situation and compromise their ethics as a way to dig themselves out of their hole. What begins as a seemingly minor infraction spirals out of control over time – in other words they get caught in the unethical continuum.  The following are examples of folks how stepped on the slippery slope and veered way off course in the area of construction ethics.

Gordon Holder, NYC former chief of development for Brooklyn construction, was indicted for expedited inspections and ensuring they would no speed bumps in the construction process.  David Weiszer, an unregistered expediter, sent a list of buildings owned by his clients on an almost daily basis to Holder.  According to the indictment, Weiszer paid him around $200,000 in bribes, and even moved into a house across the street from Mr. Holder in Pennsylvania and drove him four hours to and from work every day.

Alan Squires and his wife Bonnie defrauded the worker’s compensation system in their bid on a rehabilitation project sponsored by the City of Amsterdam Industrial Development Agency. The couple submitted a successful $295,000 bid to the AIDA to rehabilitate mixed-use commercial and residential buildings, attesting they were exempt from having workers’ compensation insurance coverage for the project.  Here construction ethics were violated by making a false statement regarding worker’s compensation.

Harper Construction, a privately held general contractor has paid $5.4 million to resolve allegations that it fraudulently billed the federal government for work on multiple projects on military bases.  According to the allegation, the company knowingly used sham, small disadvantaged businesses and then falsely certified to the government that it used legitimate small disadvantaged businesses.  A whistleblower, Rickey Howard, a former Frazier employee, reported the fraud.  Provisions of the False Claims Act permit the whistleblower to recover a portion of the proceeds obtained by the government. Howard will receive $1,485,000.

If bad choices lead to tough consequences, what can we do to identify bad behavior before it starts? What can we do, as managers or leaders, to prevent unethical choices from being made in the first place? Those are two very profound questions. We are encouraged if not required to uphold the standards of ethical conduct promulgated by our employer or association or both. It’s not however signing the Code of Ethical Conduct that is important, rather the question that deserves attention and rarely one that we receive training on is why do good people make unethical choices.

The Three Components of Bad Behavior in Construction Ethics

It’s not just power or position that contributes to the fall of smart people.  If you look at any ethical failure there are three components that always are present in some form or fashion.  Need, Opportunity and Rationalization.  If one component is missing the ethical lapse fails or you can’t stand on the three-legged stool. What was Holder, Squires, or Harper Construction’s  need?  Perhaps position and power do provide a certain level of opportunity the average person lacks.  But the key question, when you look at construction ethics, is how did they rationalize their behavior?

Research has shown that three behaviors are at the core of what would cause or allow an otherwise ethical person to make unethical and potentially illegal choices. These behaviors are well documented and for those who are charged with detecting fraud (Statement of Auditing Standards #99) are called “the fraud triangle” which applies to all areas of business and construction ethics:

Need. Described as perceived pressure that a person is experiencing, is the first and critical component of what motives a person to stray from ethical to unethical. Need may come in a variety of forms. The person who is in too much debt likely experiences financial strain – which was the root of my need. Alice, a church secretary, found her need triggered by her granddaughter’s diagnosis of cancer. Infamous Bernie Madoff’s need was certainly not money; likely, he was triggered by the need to be infallible. Harper Construction’s perceived need was likely driven by business success at all costs. Whatever the pressure, need is the core emotional state that starts the ball rolling from a choice that is ethical to unethical.

Opportunity. It makes no difference what your need may be if you don’t have the opportunity to satisfy it then the unethical and potentially illegal choice fails. Without Opportunity there is no fuel for the potential unethical fire. I was a trusted employee, and with that trust came opportunity. Holder was trusted, and had been for so many years that no one could comprehend he was capable of any unethical activity. Madoff took opportunity founded in trust to a new level.

Rationalization. Need combined with opportunity provides a firm foundation, but the glue that holds unethical activity together is the ability to rationalize that what is wrong, is right. If you ask most people found guilty of unethical/illegal behavior, they will tell you they felt their actions were legitimate. I, for example, rationalized that I was not “stealing” money as long as my intent was to pay it back. Further, I solidified this mental game by paying some of the money back. “Surely, I wasn’t guilty of stealing money as long as I was paying it back.”

That, of course, is a clear example of “‘stinkin’ thinkin.’” The mind can be tricky and when you combine need with opportunity, and can rationalize bad behavior as good, you have the perfect storm to move from ethical to unethical, and potential illegal, behavior.  While we all would like to think that those employed in busienss would act in the highest and best interests of all concerned and with integrity.  Reality in construction ethics is humans are all subject to “stinkin’ thinkin” and once on the slippery slope there’s a very real chance that the outcome will be bad.

What Can Be Done to Prevent Unethical Activities?

As business managers, HR Directors and those connected with Compliance, there are clear actions we can take that can help keep folks between the ethical lines.

Look for Need! While we can’t control what needs our employees have, we can be aware of any changes or activities that would suggest an increase in need and the stress that need brings.

I was the one responsible for my unethical actions. I was in too much debt and succumbed to the pressure of my need by turning to an unethical activity. I blame no one, but I also have to acknowledge that if those close to me (my partners in business for example) had noticed my changing patterns of behavior their attention might have thwarted my actions.

When subconscious need is brought to light or becomes conscious, then often the outcome is reduced inclination toward unethical behavior. So, signs to look indicating increased need are: (1) calls from creditors or personal calls intensifying at work; (2) abnormal purchases without apparent new sources of funding; (3) lifestyle changes and/or (4) marital issues or challenges with aging parents.

Need is the fuel that supports the possibility of unethical behavior. The challenge most managers face with thinking about “Need” is to be open minded enough to consider the potential sources of “Need” so that what might fuel unethical behavior can be suppressed.

Minimize Opportunities. The most effective course of action to keep our employees and associates between ethical lines is to remove opportunities to conduct unethical activities. For example, I embezzled money from a client’s trust fund. While I am not proud of that action (now some 25+ years ago), had the bank account that I used required two signatures, the embezzlement would have been far more difficult. Think about it: with that minor change what would I have done, asked the co-signer to help me steal money from the trust? The answer is simple: of course not. So, less opportunity equals less chance for unethical activity.

A practical question is how do we reduce opportunity? Some of the answers are obvious. Minimize opportunities by: (1) requiring multiple signatures on checks; (2) require people to rotate job responsibilities from time to time; (3) strongly encourage employees to take vacations or time off; and/or (4) ask employees from different positions within the company to identify how people can or do act unethically. When a person is aware that their actions are being watched or subject to being watched, the “Opportunity” factor decreases substantially. As worn out as the line might be, people really do respect what management inspects. Of course, management must be subject to inspection as well.

Train Rationalization. Depending on one’s internal ethical compass, what one person can easily rationalize may be a problem for another. Therefore, as managers our role (just as important as the more analytical “Opportunity” role) is to educate our people on the significance of “Rationalization” identifying what it sounds like and when it might appear.

When employees hear what rationalization sounds like, when we bring to consciousness what is active in the subconscious, it becomes far easier to support each other in our ethical choices. At a recent ethics seminar an attendee commented, “But everybody does it.” As those words were spoken, another participant yelled out, “Rationalization!” The crowd erupted in laughter as people began to see just how simple and easy it is to rationalize the “little things”. And, when we rationalize the little, the larger unethical choices become easier to swallow.

What’s Your Ethical Culture?

Every organization needs to remember that the creation of an ethical culture is exemplified in the actual behavior and attitudes of all team members. The question is not so much whether you talk the talk (in policy documents, training materials or video or webinars), but whether you walk the walk.

A week ago I had dinner with a client and heard about a number of ways his team was acting in an unethical manner.  When pressed about culture he shared that when he took over the team a few short months ago he was informed more than once that “this is the way we’ve always done it.”  He wanted to change the culture.  The question he had to ask is – was he willing to break it in order to remake or rebuild it into something that he and the company would be proud of.  Changing a culture of unethical behavior starts at the top and without support from the top evidenced by a real commitment, the idea of changing long standing behaviors can be hard.

Want to create a culture of ethical behavior in your organization? It’s easy if you think about it. When you start by understanding how good people make bad choices, and follow it with an effective ethics-training program that reinforces ethical choices and accountability, you have a recipe for success. Every choice has a consequence. What choices do you make for your organization to help keep your most valuable assets between the ethical lines?

YOUR COMMENTS AND THOUGHTS ARE WELCOME!

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