The idea that an action is not really wrong is an old issue. How far i terjemahan - The idea that an action is not really wrong is an old issue. How far i Bahasa Indonesia Bagaimana mengatakan

The idea that an action is not real

The idea that an action is not really wrong is an old issue. How far is too far? Exactly where is the line between smart and too smart? Between sharp and shady? Between profit maximization and illegal conduct? The issue is complex: it involves an interplay between top management’s goals and middle managers’ efforts to interpret those aims.
Put enough people in an ambiguous, ill-defined situation, and some will conclude that whatever hasn’t been labeled specifically wrong must be OK—especially if they are rewarded for certain acts. Deliberate overdrafts, for example, were not proscribed at Hutton. Since the company had not spelled out their illegality, it could later plead guilty for itself while shielding its employees from prosecution.

Top executives seldom ask their subordinates to do things that both of them know are against the law or imprudent. But company leaders sometimes leave things unsaid or give the impression that there are things they don’t want to know about. In other words, they can seem, whether deliberately or otherwise, to be distancing themselves from their subordinates’ tactical decisions in order to keep their own hands clean if things go awry. Often they lure ambitious lower level managers by implying that rich rewards await those who can produce certain results—and that the methods for achieving them will not be examined too closely. Continental’s simple wrist-slapping of the officer who was caught in a flagrant conflict of interest sent a clear message to other managers about what top management really thought was important.

How can managers avoid crossing a line that is seldom precise? Unfortunately, most know that they have overstepped it only when they have gone too far. They have no reliable guidelines about what will be overlooked or tolerated or what will be condemned or attacked. When managers must operate in murky borderlands, their most reliable guideline is an old principle: when in doubt, don’t.

That may seem like a timid way to run a business. One could argue that if it actually took hold among the middle managers who run most companies, it might take the enterprise out of free enterprise. But there is a difference between taking a worthwhile economic risk and risking an illegal act to make more money.

The difference between becoming a success and becoming a statistic lies in knowledge—including self-knowledge—not daring. Contrary to popular mythology, managers are not paid to take risks; they are paid to know which risks are worth taking. Also, maximizing profits is a company’s second priority, not its first. The first is ensuring its survival.

All managers risk giving too much because of what their companies demand from them. But the same superiors who keep pressing you to do more, or to do it better, or faster, or less expensively, will turn on you should you cross that fuzzy line between right and wrong. They will blame you for exceeding instructions or for ignoring their warnings. The smartest managers already know that the best answer to the question, “How far is too far?” is don’t try to find out.

Turning to the second reason why people take risks that get their companies into trouble, believing that unethical conduct is in a person’s or corporation’s best interests nearly always results from a parochial view of what those interests are. For example, Alpha Industries, a Massachusetts manufacturer of microwave equipment, paid $57,000 to a Raytheon manager, ostensibly for a marketing report. Air force investigators charged that the report was a ruse to cover a bribe: Alpha wanted subcontracts that the Raytheon manager supervised. But those contracts ultimately cost Alpha a lot more than they paid for the report. After the company was indicted for bribery, its contracts were suspended and its profits promptly vanished. Alpha wasn’t unique in this transgression: in 1984, the Pentagon suspended 453 other companies for violating procurement regulations.
Ambitious managers look for ways to attract favorable attention, something to distinguish them from other people. So they try to outperform their peers. Some may see that it is not difficult to look remarkably good in the short run by avoiding things that pay off only in the long run. For example, you can skimp on maintenance or training or customer service, and you can get away with it—for a while.

The sad truth is that many managers have been promoted on the basis of “great” results obtained in just those ways, leaving unfortunate successors to inherit the inevitable whirlwind. Since this is not necessarily a just world, the problems that such people create are not always traced back to them. Companies cannot afford to be hoodwinked in this way. They must be concerned with more than just results. They have to look very hard at how results are obtained.

Evidently, in Hutton’s case there were such reviews, but management chose to interpret favorably what government investigators later interpreted unfavorably. This brings up another dilemma: management quite naturally hopes that any of its borderline actions will be overlooked or at least interpreted charitably if noticed. Companies must accept human nature for what it is and protect themselves with watchdogs to sniff out possible misdeeds.

An independent auditing agency that reports to outside directors can play such a role. It can provide a less comfortable, but more convincing, review of how management’s successes are achieved. The discomfort can be considered inexpensive insurance and serve to remind all employees that the real interests of the company are served by honest conduct in the first place.

The third reason why a risk is taken, believing that one can probably get away with it, is perhaps the most difficult to deal with because it’s often true. A great deal of proscribed behavior escapes detection.
We know that conscience alone does not deter everyone. For example, First National Bank of Boston pleaded guilty to laundering satchels of $20 bills worth $1.3 billion. Thousands of satchels must have passed through the bank’s doors without incident before the scheme was detected. That kind of heavy, unnoticed traffic breeds complacency.

How can we deter wrongdoing that is unlikely to be detected? Make it more likely to be detected. Had today’s “discovery” process—in which plaintiff’s attorneys can comb through a company’s records to look for incriminating evidence—been in use when Manville concealed the evidence on asbestosis, there probably would have been no cover-up. Mindful of the likelihood of detection, Manville would have chosen a different course and could very well be thriving today without the protection of the bankruptcy courts.

The most effective deterrent is not to increase the severity of punishment for those caught but to heighten the perceived probability of being caught in the first place. For example, police have found that parking an empty patrol car at locations where motorists often exceed the speed limit reduces the frequency of speeding. Neighborhood “crime watch” signs that people display decrease burglaries.

Simply increasing the frequency of audits and spot checks is a deterrent, especially when combined with three other simple techniques: scheduling audits irregularly, making at least half of them unannounced, and setting up some checkups soon after others. But frequent spot checks cost more than big sticks, a fact that raises the question of which approach is more cost-effective.

A common managerial error is to assume that because frequent audits uncover little behavior that is out of line, less frequent, and therefore less costly, auditing is sufficient. But this condition overlooks the important deterrent effect of frequent checking. The point is to prevent misconduct, not just to catch it.

A trespass detected should not be dealt with discreetly. Managers should announce the misconduct and how the individuals involved were punished. Since the main deterrent to illegal or unethical behavior is the perceived probability of detection, managers should make an example of people who are detected.

Let’s look at the fourth reason why corporate misconduct tends to occur, a belief that the company will condone actions that are taken in its interest and will even protect the managers responsible. The question we have to deal with here is, How do we keep company loyalty from going berserk?
That seems to be what happened at Manville. A small group of executives and a succession of corporate medical directors kept the facts about the lethal qualities of asbestos from becoming public knowledge for decades, and they managed to live with that knowledge. And at Manville, the company—or really, the company’s senior management—did condone their decision and protect those employees.

Something similar seems to have happened at General Electric. When one of its missile projects ran up costs greater than the air force had agreed to pay, middle managers surreptitiously shifted those costs to projects that were still operating under budget. In this case, the loyalty that ran amok was primarily to the division: managers want their units’ results to look good. But GE, with one of the finest reputations in U.S. industry, was splattered with scandal and paid a fine of $1.04 million.

One of the most troubling aspects of the GE case is the company’s admission that those involved were thoroughly familiar with the company’s ethical standards before the incident took place. This suggests that the practice of declaring codes of ethics and teaching them to managers is not enough to deter unethical conduct. Something stronger is needed.

Top management has a responsibility to exert a moral force within the company. Senior executives are responsible for drawing the line between loyalty to the company and action against the laws and values of the society in which the company must operate. Further, because that line ca
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Gagasan bahwa suatu tindakan tidak benar-benar salah adalah isu lama. Seberapa jauh adalah terlalu jauh? Persis di mana adalah garis antara cerdas dan terlalu pintar? Antara tajam dan teduh? Antara maksimalisasi keuntungan dan perilaku ilegal? Masalahnya kompleks: melibatkan interaksi antara tujuan manajemen puncak dan menengah manajer upaya untuk menafsirkan mereka bertujuan.
menaruh cukup banyak orang di ambigu, situasi sesuatu, dan beberapa akan menyimpulkan bahwa apa pun belum diberi label khusus salah harus OK — terutama jika mereka dihargai untuk beberapa kisah. Cerukan disengaja, misalnya, tidak diharamkan di Hutton. Sejak perusahaan telah tidak terbilang macamnya ilegalitas mereka, itu bisa kemudian mengaku bersalah sendiri sementara melindungi karyawannya dari penuntutan.

Eksekutif puncak jarang bertanya bawahan mereka melakukan hal-hal bahwa mereka berdua tahu melawan hukum atau terlihat tidak bijaksana. Tetapi pemimpin perusahaan kadang-kadang meninggalkan hal-hal yang tak terkatakan atau memberikan kesan bahwa ada hal-hal yang mereka tidak mau tahu tentang. Dengan kata lain, mereka dapat tampak, apakah sengaja atau tidak, untuk menjauhkan diri dari keputusan-keputusan taktis bawahan mereka untuk menjaga mereka sendiri tangan bersih jika sesuatu berjalan serba salah. Sering mereka memikat ambisius manajer tingkat yang lebih rendah oleh menyiratkan bahwa imbalan kaya menunggu orang-orang yang dapat menghasilkan hasil tertentu- dan bahwa cara-cara mencapai mereka tidak akan memeriksa terlalu dekat. Sarapan kontinental yang sederhana pergelangan tangan-menampar dari petugas yang terperangkap dalam konflik kepentingan menyolok dikirim pesan yang jelas ke manajer lain tentang manajemen puncak apa benar-benar berpikir itu penting.

Bagaimana manajer menghindari menyeberangi garis yang jarang tepat? Sayangnya, kebanyakan tahu bahwa mereka telah melampaui hanya ketika mereka sudah terlalu jauh. Mereka memiliki pedoman tidak dapat diandalkan tentang apa yang akan diabaikan atau ditoleransi atau apa yang akan dikutuk atau diserang. Ketika Manajer harus beroperasi di perbatasan keruh, pedoman mereka paling dapat diandalkan adalah prinsip lama: ketika dalam keraguan, jangan.

yang mungkin tampak seperti cara yang pemalu untuk menjalankan bisnis. Satu dapat membantah bahwa jika itu benar-benar mengambil memegang antara manajer tengah yang menjalankan kebanyakan perusahaan, ini mungkin mengambil enterprise keluar dari usaha bebas. Tetapi ada perbedaan antara mengambil risiko ekonomi berharga dan mempertaruhkan tindakan ilegal untuk membuat lebih banyak uang.

perbedaan antara menjadi sukses dan menjadi Statistik terletak dalam pengetahuan — termasuk diri-pengetahuan — tidak berani. Bertentangan dengan mitologi populer, manajer tidak dibayar untuk mengambil risiko; mereka dibayar untuk mengetahui risiko yang berharga mengambil. Juga, memaksimalkan keuntungan adalah prioritas kedua perusahaan, bukan yang pertama. Yang pertama adalah memastikan kelangsungan hidup.

semua manajer risiko memberikan terlalu banyak karena permintaan perusahaan apa yang mereka dari mereka. Tapi atasan sama yang terus menekan Anda untuk berbuat lebih banyak, atau untuk melakukannya lebih baik, atau lebih cepat, atau kurang mahal, akan berubah pada Anda harus Anda menyeberangi garis kabur antara benar dan salah. Mereka akan menyalahkan Anda untuk melebihi petunjuk atau untuk mengabaikan peringatan mereka. Para manajer yang cerdas sudah tahu bahwa jawaban terbaik untuk pertanyaan, "seberapa jauh terlalu jauh?" adalah tidak mencoba untuk menemukan out.

beralih ke alasan kedua mengapa orang mengambil risiko yang perusahaan mereka mendapat masalah, percaya bahwa etis adalah orang atau korporasi terbaik kepentingan hampir selalu hasil dari pandangan paroki dari apa kepentingan mereka. Misalnya, Alpha industri, Massachusetts produsen peralatan microwave, dibayar $57,000 kepada manajer Raytheon, pura-pura untuk laporan pemasaran. Angkatan Udara penyidik dibebankan bahwa laporan adalah sebuah tipu muslihat untuk menutupi suap: Alpha ingin perihal manajer Raytheon diawasi. Tapi kontrak tersebut akhirnya biaya Alpha lebih banyak daripada yang mereka dibayar untuk laporan. Setelah perusahaan didakwa untuk penyuapan, kontrak yang dihentikan dan keuntungannya segera menghilang. Alpha tidak unik dalam pelanggaran ini: pada tahun 1984, Pentagon dihentikan 453 perusahaan lain karena melanggar peraturan pengadaan.
Manajer ambisius mencari cara untuk menarik perhatian yang menguntungkan, sesuatu untuk membedakan mereka dari orang lain. Sehingga mereka mencoba untuk mengungguli rekan-rekan mereka. Beberapa mungkin melihat bahwa hal ini tidak sulit untuk terlihat sangat baik dalam jangka pendek dengan menghindari hal-hal yang melunasi hanya dalam jangka panjang. Misalnya, Anda dapat berhemat pada pemeliharaan atau pelatihan atau layanan pelanggan, dan Anda bisa lolos dengan itu-untuk sementara.

kebenaran yang menyedihkan adalah bahwa banyak Manajer telah dipromosikan berdasarkan "besar" hasil yang diperoleh dengan cara tersebut hanya, meninggalkan disayangkan penerus untuk mewarisi angin puyuh tak terelakkan. Karena ini adalah tidak selalu hanya dunia, masalah-masalah yang membuat orang-orang seperti yang tidak selalu ditelusuri kembali kepada mereka. Perusahaan tidak bisa ditipu dengan cara ini. Mereka harus prihatin dengan hasil yang lebih dari sekedar. Mereka harus terlihat sangat keras bagaimana hasil yang diperoleh.

jelas, dalam kasus Hutton's ada ulasan tersebut, tetapi manajemen memilih untuk menafsirkan positif apa penyidik pemerintah kemudian ditafsirkan pembendungan. Ini memunculkan dilema yang lain: Manajemen cukup alami berharap bahwa salah satu tindakan batas akan diabaikan atau setidaknya ditafsirkan bermurah hati jika melihat. Perusahaan harus menerima sifat manusia untuk apa itu dan melindungi diri dengan pengawas untuk mengendus kemungkinan kesalahan.

Lembaga audit yang independen yang laporan ke luar Direksi dapat memainkan peran tersebut. Hal ini dapat memberikan yang kurang nyaman, tapi lebih meyakinkan, review bagaimana manajemen keberhasilan yang dicapai. Ketidaknyamanan dapat dianggap sebagai murah asuransi dan berfungsi untuk mengingatkan semua karyawan yang nyata kepentingan perusahaan yang dilayani oleh jujur perilaku dalam tempat pertama

alasan ketiga mengapa risiko yang diambil, percaya bahwa satu mungkin bisa pergi dengan itu, adalah mungkin yang paling sulit untuk menangani karena itu sering benar. Banyak perilaku terlarang lolos deteksi.
kita tahu bahwa hati nurani sendirian tidak menghalangi setiap orang. Sebagai contoh, Bank Nasional pertama Boston mengaku bersalah atas pencucian satchels $20 tagihan senilai $1.3 miliar. Ribuan satchels harus memiliki berlalu melalui bank pintu tanpa insiden sebelum skema terdeteksi. Lalu lintas yang agak berat, tanpa diketahui melahirkan kepuasan.

Bagaimana kita dapat mencegah kesalahan yang tidak mungkin untuk dideteksi? Membuatnya lebih mungkin untuk dideteksi. Memiliki hari ini "penemuan" proses — di mana pengacara penggugat bisa sisir melalui catatan perusahaan untuk mencari memberatkan bukti — telah digunakan ketika Manville tersembunyi bukti-bukti tentang asbestosis, mungkin telah menutup-nutupi tidak. Sadar akan kemungkinan deteksi, Manville akan memilih kursus yang berbeda dan bisa sangat baik menjadi berkembang hari tanpa perlindungan Pengadilan Kepailitan.

jera paling efektif adalah bukan untuk meningkatkan tingkat keparahan hukuman bagi mereka yang terperangkap tetapi untuk meningkatkan kemungkinan dirasakan tertangkap di tempat pertama. Misalnya, Polisi telah menemukan bahwa parkir mobil patroli kosong di lokasi mana pengendara sering kali melebihi batas kecepatan mengurangi frekuensi mempercepat. Mengurangi lingkungan "kejahatan watch" tanda-tanda bahwa orang-orang tampilan rompakan.

hanya meningkatkan frekuensi audit dan pemeriksaan spot adalah penangkal, terutama bila dikombinasikan dengan tiga teknik sederhana lainnya: penjadwalan audit tidak teratur, membuat setidaknya setengah dari mereka tanpa pemberitahuan, dan menyiapkan beberapa pemeriksaan segera setelah orang lain. Tapi lebih besar tongkat, fakta yang menimbulkan pertanyaan yang pendekatan adalah biaya lebih sering pemeriksaan spot biaya-efektif.

kesalahan manajerial yang umum adalah untuk berasumsi bahwa karena sering audit mengungkap sedikit perilaku yang keluar dari barisan, kurang sering, dan karena itu kurang mahal, audit sudah cukup. Namun kondisi ini menghadap ke efek jera penting memeriksa sering. Intinya adalah untuk mencegah kesalahan, bukan hanya untuk menangkap itu

pelanggaran yang terdeteksi harus tidak ditangani dengan diam-diam. Manajer harus mengumumkan kesalahan dan bagaimana individu yang terlibat akan dihukum. Karena penghalang utama untuk perilaku ilegal atau tidak etis dirasakan probabilitas deteksi, Manajer harus membuat sebuah contoh dari orang-orang yang terdeteksi.

membiarkan melihat keempat alasan mengapa perusahaan kesalahan cenderung terjadi, sebuah keyakinan bahwa perusahaan akan membenarkan tindakan yang diambil dalam kepentingan dan bahkan akan melindungi para manajer yang bertanggung jawab. Pertanyaan kita harus berurusan dengan di sini adalah, bagaimana kita menjaga perusahaan kesetiaan dari pergi mengamuk?
yang tampaknya menjadi apa yang terjadi di Manville. Sekelompok kecil dari eksekutif dan suksesi Direktur medis perusahaan terus fakta tentang kualitas mematikan asbes dari menjadi pengetahuan umum selama beberapa dekade, dan mereka berhasil untuk hidup dengan pengetahuan itu. Dan pada Manville, perusahaan — atau benar-benar, perusahaan manajemen senior — melakukan membenarkan keputusan mereka dan melindungi karyawan.

Sesuatu yang sama tampaknya terjadi di General Electric. Ketika salah satu proyeknya rudal berlari lebih besar daripada Angkatan Udara telah setuju untuk membayar biaya, manajer tengah diam-diam beralih biaya-biaya tersebut ke proyek-proyek yang masih beroperasi di bawah anggaran. Dalam kasus ini, loyalitas yang mengamuk adalah terutama untuk divisi: Manajer ingin hasil unit mereka terlihat baik. Tapi GE, dengan salah satu reputasi terbaik dalam industri AS, berlumuran skandal dan membayar denda sebesar $1,04 juta.

salah satu aspek yang paling mengganggu GE kasus adalah perusahaan pengakuan bahwa mereka yang terlibat adalah benar-benar akrab dengan standar etika perusahaan sebelum peristiwa itu terjadi. Hal ini menunjukkan bahwa praktek menyatakan kode etik dan mengajar mereka untuk Manajer tidak cukup untuk mencegah perilaku yang tidak etis. Sesuatu yang kuat diperlukan.

Top manajemen mempunyai tanggung jawab untuk mengerahkan kekuatan moral dalam perusahaan. Senior eksekutif bertanggung jawab untuk menarik garis antara kesetiaan kepada perusahaan dan tindakan melawan hukum dan nilai-nilai masyarakat di mana perusahaan harus beroperasi. Lebih lanjut, karena yang garis ca
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The idea that an action is not really wrong is an old issue. How far is too far? Exactly where is the line between smart and too smart? Between sharp and shady? Between profit maximization and illegal conduct? The issue is complex: it involves an interplay between top management’s goals and middle managers’ efforts to interpret those aims.
Put enough people in an ambiguous, ill-defined situation, and some will conclude that whatever hasn’t been labeled specifically wrong must be OK—especially if they are rewarded for certain acts. Deliberate overdrafts, for example, were not proscribed at Hutton. Since the company had not spelled out their illegality, it could later plead guilty for itself while shielding its employees from prosecution.

Top executives seldom ask their subordinates to do things that both of them know are against the law or imprudent. But company leaders sometimes leave things unsaid or give the impression that there are things they don’t want to know about. In other words, they can seem, whether deliberately or otherwise, to be distancing themselves from their subordinates’ tactical decisions in order to keep their own hands clean if things go awry. Often they lure ambitious lower level managers by implying that rich rewards await those who can produce certain results—and that the methods for achieving them will not be examined too closely. Continental’s simple wrist-slapping of the officer who was caught in a flagrant conflict of interest sent a clear message to other managers about what top management really thought was important.

How can managers avoid crossing a line that is seldom precise? Unfortunately, most know that they have overstepped it only when they have gone too far. They have no reliable guidelines about what will be overlooked or tolerated or what will be condemned or attacked. When managers must operate in murky borderlands, their most reliable guideline is an old principle: when in doubt, don’t.

That may seem like a timid way to run a business. One could argue that if it actually took hold among the middle managers who run most companies, it might take the enterprise out of free enterprise. But there is a difference between taking a worthwhile economic risk and risking an illegal act to make more money.

The difference between becoming a success and becoming a statistic lies in knowledge—including self-knowledge—not daring. Contrary to popular mythology, managers are not paid to take risks; they are paid to know which risks are worth taking. Also, maximizing profits is a company’s second priority, not its first. The first is ensuring its survival.

All managers risk giving too much because of what their companies demand from them. But the same superiors who keep pressing you to do more, or to do it better, or faster, or less expensively, will turn on you should you cross that fuzzy line between right and wrong. They will blame you for exceeding instructions or for ignoring their warnings. The smartest managers already know that the best answer to the question, “How far is too far?” is don’t try to find out.

Turning to the second reason why people take risks that get their companies into trouble, believing that unethical conduct is in a person’s or corporation’s best interests nearly always results from a parochial view of what those interests are. For example, Alpha Industries, a Massachusetts manufacturer of microwave equipment, paid $57,000 to a Raytheon manager, ostensibly for a marketing report. Air force investigators charged that the report was a ruse to cover a bribe: Alpha wanted subcontracts that the Raytheon manager supervised. But those contracts ultimately cost Alpha a lot more than they paid for the report. After the company was indicted for bribery, its contracts were suspended and its profits promptly vanished. Alpha wasn’t unique in this transgression: in 1984, the Pentagon suspended 453 other companies for violating procurement regulations.
Ambitious managers look for ways to attract favorable attention, something to distinguish them from other people. So they try to outperform their peers. Some may see that it is not difficult to look remarkably good in the short run by avoiding things that pay off only in the long run. For example, you can skimp on maintenance or training or customer service, and you can get away with it—for a while.

The sad truth is that many managers have been promoted on the basis of “great” results obtained in just those ways, leaving unfortunate successors to inherit the inevitable whirlwind. Since this is not necessarily a just world, the problems that such people create are not always traced back to them. Companies cannot afford to be hoodwinked in this way. They must be concerned with more than just results. They have to look very hard at how results are obtained.

Evidently, in Hutton’s case there were such reviews, but management chose to interpret favorably what government investigators later interpreted unfavorably. This brings up another dilemma: management quite naturally hopes that any of its borderline actions will be overlooked or at least interpreted charitably if noticed. Companies must accept human nature for what it is and protect themselves with watchdogs to sniff out possible misdeeds.

An independent auditing agency that reports to outside directors can play such a role. It can provide a less comfortable, but more convincing, review of how management’s successes are achieved. The discomfort can be considered inexpensive insurance and serve to remind all employees that the real interests of the company are served by honest conduct in the first place.

The third reason why a risk is taken, believing that one can probably get away with it, is perhaps the most difficult to deal with because it’s often true. A great deal of proscribed behavior escapes detection.
We know that conscience alone does not deter everyone. For example, First National Bank of Boston pleaded guilty to laundering satchels of $20 bills worth $1.3 billion. Thousands of satchels must have passed through the bank’s doors without incident before the scheme was detected. That kind of heavy, unnoticed traffic breeds complacency.

How can we deter wrongdoing that is unlikely to be detected? Make it more likely to be detected. Had today’s “discovery” process—in which plaintiff’s attorneys can comb through a company’s records to look for incriminating evidence—been in use when Manville concealed the evidence on asbestosis, there probably would have been no cover-up. Mindful of the likelihood of detection, Manville would have chosen a different course and could very well be thriving today without the protection of the bankruptcy courts.

The most effective deterrent is not to increase the severity of punishment for those caught but to heighten the perceived probability of being caught in the first place. For example, police have found that parking an empty patrol car at locations where motorists often exceed the speed limit reduces the frequency of speeding. Neighborhood “crime watch” signs that people display decrease burglaries.

Simply increasing the frequency of audits and spot checks is a deterrent, especially when combined with three other simple techniques: scheduling audits irregularly, making at least half of them unannounced, and setting up some checkups soon after others. But frequent spot checks cost more than big sticks, a fact that raises the question of which approach is more cost-effective.

A common managerial error is to assume that because frequent audits uncover little behavior that is out of line, less frequent, and therefore less costly, auditing is sufficient. But this condition overlooks the important deterrent effect of frequent checking. The point is to prevent misconduct, not just to catch it.

A trespass detected should not be dealt with discreetly. Managers should announce the misconduct and how the individuals involved were punished. Since the main deterrent to illegal or unethical behavior is the perceived probability of detection, managers should make an example of people who are detected.

Let’s look at the fourth reason why corporate misconduct tends to occur, a belief that the company will condone actions that are taken in its interest and will even protect the managers responsible. The question we have to deal with here is, How do we keep company loyalty from going berserk?
That seems to be what happened at Manville. A small group of executives and a succession of corporate medical directors kept the facts about the lethal qualities of asbestos from becoming public knowledge for decades, and they managed to live with that knowledge. And at Manville, the company—or really, the company’s senior management—did condone their decision and protect those employees.

Something similar seems to have happened at General Electric. When one of its missile projects ran up costs greater than the air force had agreed to pay, middle managers surreptitiously shifted those costs to projects that were still operating under budget. In this case, the loyalty that ran amok was primarily to the division: managers want their units’ results to look good. But GE, with one of the finest reputations in U.S. industry, was splattered with scandal and paid a fine of $1.04 million.

One of the most troubling aspects of the GE case is the company’s admission that those involved were thoroughly familiar with the company’s ethical standards before the incident took place. This suggests that the practice of declaring codes of ethics and teaching them to managers is not enough to deter unethical conduct. Something stronger is needed.

Top management has a responsibility to exert a moral force within the company. Senior executives are responsible for drawing the line between loyalty to the company and action against the laws and values of the society in which the company must operate. Further, because that line ca
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