Incentive Rewards & Ethics

It might seem intuitively obvious that people should make ethical choices for no other reason than to do the right thing, but the reality is that many people are more influenced by incentives than by questions of right and wrong. Companies that value ethical behavior by their employees sometimes include ethical standards in the company incentive program.

Companies use incentive programs for many purposes, including increasing sales figures and improving productivity. Unfortunately, a poorly designed incentive program can encourage unethical behavior or even make it difficult for employees to earn a living without behaving unethically. For instance, if an automobile repair shop rewards mechanics for getting repair jobs done quickly or puts service consultants on a commission plan, then the mechanics will have an incentive to rush their work and the service consultants will have an incentive to talk customers into getting work they don't really need. In effect, this type of incentive program sends a message to employees to behave unethically and can expose the company to a costly lawsuit.

Companies seeking to improve their ethical performance and their compliance with regulatory requirements have introduced incentives to reward excellence in these areas. The company can recognize managers who put extra effort into explaining and advocating for the company's code of conduct or encouraging a company culture of open communication and transparency. Managers can recognize and reward employees who communicate concerns openly and bring problems to their attention. Scheduled performance reviews can include ethical behavior as a factor affecting promotion and raises.

Not everyone supports the practice of offering incentives for ethical behavior. Many managers and company owners feel that rewarding ethical behavior is rewarding people for something that ought to be a bare minimum standard. In a book called "Strings Attached," philosophy professor Ruth W. Grant argued that incentives promote a culture of self-serving cynicism and that they are often misused as a tool of social control. Some managers feel that ethical behavior is too subjective to be judged fairly.

Supporters of using incentives to reward ethical behavior argue that companies routinely reward people simply for doing what is expected of them. For instance, sales professionals are often paid bonuses for meeting quota. Performance reviews already include factors that are difficult to measure objectively, such as teamwork and creativity. In addition, people are known to respond to incentives whether positive or negative. As such, it makes sense for companies to reward ethical behavior from employees if ethical behavior is what they want to encourage.