Creating a Culture Where Moral Values Lead the Way
Have you ever thought about the reasons why ethical failures keep happening? It’s not just business failures, which I blog about in my workplaceethicsadvice.com blog. Ethical failures often are caused by the pursuit of profits above all else. It happens all too frequently in government. Time after time we see government/political persons making decisions that are self-serving rather than acting in the public interest. Ethical failures occur all the time in health care. Just think about Medicare fraud we constantly hear about. I could go on but you get the point.
To say that ethical failures occur because of bad decisions is an understatement. There’s much more to it, and that is the purpose for this blog. The key ethical value to avoid ethical failures is integrity. As the ancient Greeks knew, it provides the practical wisdom needed to make decisions that are right, not wrong, and the courage to follow through with ethical action.
I recently read a piece on Big 4 News, an Australian digital website, that claims ethical failures are preventable. The key is how to manage the underlying causes, including: pressure + incentives + ethical fading+ weak challenge +inadequate accountability combine.
Why Ethical Failures Are Preventable
Writing for Big 4 News, Dr. Peter Collins identifies Twelve Practices for Preventing Ethical Failure. Collins believes ethical failure is predictable and leaders need a practical discipline for prevention. On a macro-level, he uses a leadership framework drawn from investigations, inquiries, behavioral ethics, governance failures and the experience of working with leaders who genuinely want to do the right thing.
According to Collins, the case for prevention is not abstract. Ethical failure destroys trust, damages institutions, harms the vulnerable and consumes enormous public resources. The result is repeated ethical failures. “The insights that emerge from inquiries are usually preventive insights. They tell us what leaders could have seen, what boards could have asked, what regulators could have challenged, what whistleblowers could have been protected from, and what organizational practices could have been changed before harm occurred.”
The Key Takeaways are:
- Ethical failures are often predictable — and therefore preventable.
- Incentives and targets can unintentionally reward unethical behavior.
- Under pressure, ethical considerations can fade from decision-making.
- Strong governance requires real independence, accountability and challenge.
- Whistleblowers and independent investigations are critical early-warning mechanisms.
These are essential steps to prevent ethical failures. I agree with Collins that under pressure, ethics often fades. People simply stop seeing the decision as ethical, but one that affects the budget, a legal issue, a media issue, a performance issue ad/ or a process issue. “The human consequences disappear from view.”
Ethical Fading
Ethical fading refers to the phenomenon where the ethical dimensions of a decision become less visible or completely overlooked, allowing self-interest and external pressures to dominate decision-making.
According to the digital ethics website, “Ethics Unwrapped,” ethical fading occurs when the ethical aspects of a decision disappear from view. “This happens when people focus heavily on some other aspect of a decision, such as profitability or winning. People tend to see what they are looking for, and if they are not looking for an ethical issue, they may miss it altogether.”
Psychologist Anne Tenbrunsel and colleagues find that innate psychological tendencies often cause us to engage in self-deception, which blinds us to the ethical components of a decision. For example, euphemisms like “We didn’t bribe anyone… we just ‘greased the wheels,’” help people disguise and overlook their own wrongdoing.
Ethical fading is similar to moral disengagement. Moral disengagement is when people restructure reality in order to make their own actions seem less harmful than they actually are. Both ethical fading and moral disengagement help people minimize the guilt they feel from violating ethical standards.
So, while ethical fading is common, we can try to counteract it by learning to recognize when we put ethical concerns behind other factors in making decisions.
The Bystander Effect
In ethics, what you do matters. All too often, people stand back, hoping someone else will intervene.
The Bystander Effect is a social psychological phenomenon where individuals are less likely to help someone in need when others are present. The presence of multiple bystanders creates a diffusion of responsibility, leading individuals to assume someone else will intervene. This effect highlights how social dynamics can influence moral behavior, often resulting in inaction during emergencies
Bystanderism is a form of participation. In many organizations, leaders know when a colleague has crossed a line, when a complaint has been mishandled, when a conflict has been tolerated, or when a culture has become unsafe and even toxic. Their silence becomes part of the failure.
Ethical Leadership
Leaders must make it clear that loyalty to the organization never means loyalty to wrongdoing. The standard should be simple: if you see conduct that places integrity at risk, you have a responsibility to act. Collins provides a useful perspective: “the standard you walk past is the standard you accept.”
There are other reasons for ethics failures addressed by Collins, most of which are well known such as:
- Governance means to hold board members accountable and take responsibility for their actions.
- Boards cannot outsource culture and then be surprised when culture fails.
- Whistleblowing can be a sign that ordinary systems of oversight are being ignored.
- A culture is essential to treat whistleblowers with respect and protect them from retaliation.
- Leaders should set exemplary standards for everyone else and ask not: “Can I get away with this?” Instead, ask: “What standard am I setting for everyone else?”
- A culture of deference, convenience, fear or misplaced loyalty can create a culture where boards overlook past misconduct of a CEO, and when leaders tolerate conflicts of interest.
Character-Based Decision Making
As Collins says, “Aristotle understood that ethics is not simply a matter of rules. It is a matter of character formed through repeated action. People become courageous by doing courageous things. They become honest by telling the truth when it is costly. They become just by acting fairly when fairness is inconvenient. They become humble by listening, learning and admitting error. Leadership development must be character formation. Leaders need technical skill, strategic judgment and financial discipline. But they also need courage, prudence, honesty, compassion, humility and a commitment to the common good.”
The problem with organizational ethics is it doesn’t focus on the means to an end. Too much attention is placed to the ends justifying the means. This kind of decision-making can lead to the rationalization for unethical actions.
Concluding Thoughts
Regulators and professional bodies exist because self-interest is insufficient to protect the public good. Rules can never accommodate every instance where an ethical dilemma exists. It is essential to build trust within organizations but, also, to oversee (i.e., verify) actions. It’s crucial for individuals and organizations to engage with the end goal of being transparent so others understand the reasons for a decision and any ethical implications to consider.
Blog posted on August 25, 2026, by Steven Mntz, PhD, professor emeritus from Cal Poly San Luis Obispo. You can contact Steve at smintz@calpoly.edu. Visit his website to learn more about his activities.