Linda Treviño, distinguished professor of organizational behavior and ethics at the Penn State Smeal College of Business, has been named to the 2015 Ethisphere Institute 100 Most Influential in Business Ethics list.
The Ethisphere Institute focuses on defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust, and business success. Each year, Ethisphere recognizes 100 individuals who have made a material impact in the world of business ethics and compliance.
“I was delighted to be included on Ethisphere's list this year. The list includes relatively few academics. But, being on a list with Pope Francis, Warren Buffet, and Elon Musk seems like a very good thing,” Treviño said.
“I very much appreciate the idea that my work is seen as influential in the field of business ethics. The practical relevance of my work, and speaking to a practitioner audience (as well as an academic audience) has always been important to me.”
Treviño has been a member of the Smeal faculty since 1987. Her extensive research and writing on the management of ethical conduct in organizations is known internationally. Throughout her career, Treviño has taught undergraduates, MBAs, Ph.D. candidates, and executives. She has also been widely quoted in the media on ethics-related topics.
Treviño recently shared her perspectives on several current topics in business ethics.
In a time when business ethics seem to be top of mind, how does something like the Volkswagen (VW) scandal happen?
Treviño: There is so much we don't yet know about what really happened at VW. So, we have to be careful not to assume too much. But, it does seem clear that business ethics was not top of mind for those involved in the emissions scandal. Or, at least it wasn't as top of mind as "apparently" achieving emissions goals and sales targets (which I would guess were tied to performance management targets).
What we do seem to know is consistent with our knowledge about human ethical and unethical behavior in organizations. Top management at VW set really challenging sales goals for "clean" diesel cars in the U.S. And, these diesel cars had to meet U.S. emission standards that were tougher than those in Europe. Engineers, in their attempts to dutifully meet the goals (because goals are highly motivating), found that emission standards could not be met without compromising other goals such as fuel economy and convenience. So, rather than report the failure, someone(s) found a way to cheat the system and decided to move ahead with it.
As in most situations like this, it is likely that many employees knew about the cheating but it went unreported – for years. Why? VW's culture appears to have failed its employees. Employees who might have recognized the ethical problem likely feared speaking up because the clear and strong message about sales and emissions goals came from the top and the culture did not support questioning top management directives. And, meeting the goals was important enough (likely because of the tie to rewards) that those involved were willing to do whatever they could even if it meant that goals were not really being met, but only "appeared" to be met. Nothing short of a multi-year effort to overhaul VW's ethical culture is likely to satisfactorily address the many factors that contributed to this problem.
The general consensus is that corporate social responsibility can increase company profits, and yet we still have company scandals like the VW case. Where, in your experience, is the disconnect?
Treviño: The empirical evidence suggests that corporate social responsibility is positively associated with financial performance. The disconnect often comes with corporate cultures that are too focused on short-term ends (profits) without equal attention to the means employees use to get there and the risks to employee commitment, long-term reputation and performance when employees and their leaders break rules and laws in order to meet short-term goals. We don't yet know exactly what happened at Volkswagen. But, I know enough to say that the messages sent by that corporate culture must have supported engineers pursuing a dishonest fix and then sticking with it for years. A full assessment of the culture will be required in order to fix what's broken there. With colleagues from around the country, I am engaged in a project to help organizations assess their cultures. Those who are interested in what we are doing can go to ethicalsystems.org to keep up with developments.
It seems like there are more business ethics scandals than ever before. Is that true? Or is it that there are more media outlets and more ways of disseminating information than ever before?
Treviño: We don't really know, but based upon my experience, I doubt that there is more bad behavior than before. I've been in this business for almost 30 years and there have been plenty of scandals to keep me busy. In fact, the Old Testament talks about business ethics. So, people have been concerns about these issues for a very long time. Today's 24-hour news cycle and media from multiple sources, all competing for eyeballs, contribute to the strong perception that things have gotten worse. But, I really doubt it. Most people in business still go about their days doing the right thing. That just isn’t very exciting news.
With so much attention on business ethics, are universities spending more time educating their students in that area?
Treviño: Many do and some schools (particularly religiously affiliated schools) even have multiple business ethics courses. But it is still a hard sell in some business schools. I visited a well-known business school not too long ago where business ethics is taught as an unevaluated short course (shorter than all the others) and, not surprisingly, it is not highly rated. I met with a dean who was very skeptical about the value of teaching business ethics. He didn't think it could be taught or evaluated. So, we clearly still have work to do. Several years ago, Penn State initiated an annual “Partners in Business Ethics” conference that brings together Deans and business leaders to discuss the issues facing them and how they can work better together to address ethical issues and improve ethics education in business. Successful meetings have taken place in New York, Texas, Illinois, and Colorado. The next meeting is scheduled for Lawrence, Kansas in the Fall. Smeal is also a leader in teaching ethics outside the classroom through its honor and integrity initiatives.
In your experience, how does student awareness of business ethics today compare with student awareness 10 or 20 years ago?
Treviño: I do think students are more aware of the headlines because of all the regular media and social media attention to scandals. But, I've been disappointed in students' in-depth knowledge of and engagement with current events. I've tried to compensate by including a current events component in my ethics course. That does seem to help students recognize that this is a topic that is with us every day and one that will impact their careers.