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Corporate dishonesty: is HP an aberration?

By Scott Bradner

Watching Hewlett-Packard's slow motion train wreck has been fascinating. Every day in the last two weeks there has a new revelation of questionable behavior on the part of this once admired company. So far Wall Street does not seem to have joined in the fun, since HP's stock price has not been all that impacted, even though the Wall Street Journal has been the most aggressive source of news about the story. Even congressional hearings, complete with posturing politicians and current and former HP employees invoking their right to not say anything, has failed to get Wall Street to react. One aspect of this story has puzzled me throughout the whole ugly saga -- why did some HP employees go along even though they were not going to individually benefit from their misdeeds?

This question is hardly new with the HP case, as long as there have been organizations some members of the organization have been willing to be dishonest or worse for the benefit of the organization. But what makes a secretary at Enron or an accountant at Arthur Anderson go along with breaking the law when their pay will not be impacted. In a story that was in this morning's New York Times - why would scientists at Bayer not tell the FDA about possible adverse effects found in a new study on people using Bayer's heart bypass surgery drug Trasyolol when the scientists were in a meeting called by the FDA to talk about the safety of the drug? Why is loyalty to an employer higher than the respect for honesty and to the law?

Boston University law professor Tamar Frankel explores some of these issues and much more in her recent book "Trust and Honesty: America's Business Culture at a Crossroad." She outlines a number of reasons that people go along with falsehoods and dishonesty even if they understand that it is wrong to do so and even when they will not directly benefit from doing so. Frankel says that major forces include pressure from fellow employees (peer pressure), actions by those in leadership roles, isolation of the leaders behind a wall of "yes persons," a feeling that those who object have bad intentions, and a feeling that "everyone does it." She also points out the societal tendency to redefine what is wrong. New York Senator Daniel Patrick Moynihan described this as "defining deviancy down" (http://www2.sunysuffolk.edu/formans/DefiningDeviancy.htm) Moynihan wrote that "the amount of deviant behavior in American society has increased beyond the levels the community can "afford to recognize" and that, accordingly, we have been re-defining deviancy so as to exempt much conduct previously stigmatized." If dishonesty becomes the norm in corporate behavior there is a tendency to not see this as something to worry about. Not everyone agrees with Senator Moynihan's assumptions (see http://www.albany.edu/scj/jcjpc/vol2is5/deviancy.html) but it does seem to explain what went on within HP and Enron and within many other corrupt organizations.

In both the HP and Bayer cases the public found out about the wrongdoing because someone in the know would not go along with the falsehoods and dishonesty -- so not everyone falls for the pressures. The Sarbanes Oxley law requires that public corporations set up a way for people to anonymously report corporate wrongdoing - clearly this is a critical facility if we are to avoid having to redefining corporate malfeasance as normal.

disclaimer: The Harvard Business School's emphasis on ethics (announced just before the Enron collapse) tries to do its part but that only covers a small part of corporate America and the above opinion is mine alone.