The Psychology Behind Unethical Behavior

  • Category EQ

On a warm evening after a strategy off-site, a team of executives arrives at a well-known local restaurant. The group is looking forward to having dinner together, but the CEO is not happy about the table and demands a change. “This isn’t the one that my assistant usually reserves for me,” he says. A young waiter quickly finds the manager who explains that there are no other tables available.

The group tries to move on but is once again interrupted by the CEO. “Am I the only one annoyed by the view? Why is there construction happening today?” he demands to know. The waiter tries to explain, but to no avail. “You really need to up your game here,” the CEO replies. The air is thick with tension. After the waiter walks away, someone makes a joke about the man’s competence. This seems to please the CEO, who responds with his own derogatory quip. The group laughs.

If you were present at that dinner would you let the CEO know that you disapprove of his language and behavior? Would you try to better a better example? Or stay silent?

This scene encapsulates three psychological dynamics that lead to crossing ethical lines. First, there’s omnipotence: when someone feels so aggrandized and entitled that they believe the rules of decent behavior don’t apply to them. Second, we have cultural numbness: when others play along and gradually begin to accept and embody deviant norms. Finally, we see justified neglect: when people don’t speak up about ethical breaches because they are thinking of more immediate rewards such as staying on a good footing with the powerful.

The same dynamics come into play when much bigger lines get crossed in the corporate arena: allegations of corruption at Nissansexual harassment charges in the media sector, privacy breaches at Facebookmoney laundering in the financial sector, and pharmaceuticals’ role in the opioid crisis.

While it is hard, if not impossible, to find evidence that leaders in general have become less ethical over the years, some are sounding the alarm. Warren Buffett, explaining Berkshire Hathaway’s practices in the annual letter shareholders, notes that he and vice chairman Charlie Munger

“…have seen all sorts of bad corporate behavior, both accounting and operational, induced by the desire of management to meet Wall Street expectations. What starts as an ‘innocent’ fudge in order to not disappoint ‘the Street’ — say, trade-loading at quarter-end, turning a blind eye to rising insurance losses, or drawing down a ‘cookie-jar’ reserve — can become the first step toward full-fledged fraud.”

Buffett’s note is important because it’s really about the majority of us:  neither saints nor criminals but well-meaning leaders who sometimes fail to consult their moral compass while speeding ahead in a landscape full of tripwires and pitfalls. For that majority, moral leadership is not simply a question of acting in good or bad faith. It is about navigating the vast space in between.

So how do you know when you, or your team, is on the road to an ethical lapse?  Here’s more on how to identify omnipotence, cultural numbness, and justified neglect in yourself and on your team, and a few tips on fighting each dynamic: 

Omnipotence. Many moral lapses can be traced back to this feeling that you are invincible, untouchable, and hyper-capable, which can energize and create a sense of elation. To the omnipotent leader, rules and norms are meant for everyone but them. Crossing a line feels less like a transgression and more like what they are owed. They feel they have the right to skip or redraw the lines. In the dinner party example above, it is no coincidence that the CEO’s entitled and condescending behavior comes after a day of strategizing and masterminding the next big moves.

Omnipotence is not all bad. Sometimes the rush you get from bold action is what’s required to make breakthroughs or real progress. But, the higher you climb on the ladder, the more it can become a liability. This is especially true if fewer and fewer of the people around you are willing and able to keep you grounded. If no one tells you “no,” you have a problem. One way to gauge whether you’ve reached “peak omnipotence” is if your decisions are met only with applause, deference, and silence.

The psychological counterweight to omnipotence is owning your flaws. It’s a mature capability to look in the mirror and recognize that you are not above it all. Especially if you’re in a leadership position, assume you have weaknesses and think about them regularly.


Sometimes, you’ll need help with this. The best performing executives I see have close colleagues, friends, coaches, or mentors who dare to tell them the truth about their performance and judgment. You should cultivate a similar group of trusted peers who will tell you the truth even when it is unpleasant. In addition, make sure to encourage an “obligation to dissent” among your core team.

Cultural numbness. No matter how principled you are, you must recognize that, over time, the bearings of your moral compass will shift toward the culture of your organization or team.

From my work with police and military units infiltrating criminal groups, I have seen examples of how cultural numbness makes leaders cross lines. It usually starts subtly. Officers need to get to know and infiltrate a new culture. They need to fit in by speaking the language, acting according to code, and dressing to fit in. But, in doing that, they risk going too far — mimicking the culture of the gang members they are out to stop and getting caught up in a group’s values system.

The same kind of “moral capture” takes place in companies, not overnight, but gradually. Psychologically, you’re making a trade-off between fitting into the culture and staying true to what you value.

At first, cultural numbness can take the shape of ironic distance or disillusioned resignation when there is a discrepancy between the two, or between the ideals your company espouses and what you see demonstrated and rewarded. But the mind needs resolution. So, over time, you stop noticing when offensive language becomes the norm or you start to behave in ways that you would never have expected to be part of your repertoire.

Cultural numbness is where I have seen the most severe breakdowns in ethical leadership because it’s so hard to detect. Leaders who have crossed a line never describe this as a clear choice on that path but as wandering down a muddy road, where there they lost track of what was right and wrong. They describe a process where they became numb to others’ language and behavior and then to their own and lost their sense of objectivity. In essence, their warning bells simply stopped ringing.

So, start looking out for signs of moral capture:  those brief moments when you don’t recognize yourself and any other indications that you are subjecting your own personal agency to the deviant norms of the collective. Another regular gut-check you can use involves asking whether you would be comfortable telling a journalist or a judge about what’s going on.

At the same time, you can’t always trust yourself in these situations. As with omnipotence, it can help to get an outsider’s perspective, turning to a trusted friend or family member, who might be able to detect changes in you that you are not able to see. Also remember to regularly extract yourself from your organization to compare and contrast its culture with others and remind yourself that the rest of the world may not work the same way.

Justified neglect. The human mind is skilled at justifying minor incursions when there is a tangible reward at stake — and when the risk of getting caught is low.

On the production line of a pharmaceutical company, for example, a hurried lab assistant forgets to remove all of her makeup. A speck of mascara accidentally drops into a batch of medicine large enough to serve a mid-sized country for a year. For a brief moment, the miniscule impurity draws a thin, yellowish color trail, but then it is gone, impossible to detect. The medicine is life-saving and very valuable, with just a hint of makeup that’s probably harmless.

Would you report the incident? If you were a manager who was quietly asked what to do, would you destroy the batch?  Would you change your mind knowing that patients might suffer or even die from a serious production delay? Would your ballooning production budget and the tenuous financial situation of your company factor into your decision? Would you push the problem up to your superiors knowing that those with a greater stake in the outcome might turn a blind eye to the incident?

Many leaders have faced a choice between getting the reward or doing the right thing. The slippery slope starts right when you begin to rationalize actions and tell yourself and others, “This is an exceptional situation,” or “We have to bend the rules a little to get things done here,” or “We are here to make money, not to do charity.”

These initial slips cascade into more, which turn into habits you know are bad but which start to feel excusable and even acceptable, given the circumstances, and eventually, become part of your moral fabric. It is hard to pinpoint exactly when an important line is crossed, but it’s much easier to course-correct at the very start of the slippery slope than when you are gliding full speed away from what is right.


Remember that power corrodes more than it corrupts, often as a result of clever justifications of ethical neglect. You can combat this psychological dynamic by creating formal and social contracts that obligate both you and your colleagues to do right; rewarding ethical behavior; and defining and sharing your boundaries. The latter could be as simple as making a list of things you will not do for profit or pleasure, keeping it in a convenient place to read regularly, and occasionally showing it to your team as a reminder.


The reality is that, for many leaders, there is no true straight-and-narrow path to follow. You beat the path as you go. Therefore, ethical leadership relies a lot on your personal judgment. Because of this, the moral or ethical dilemmas you experience may feel solitary or taboo — struggles you don’t want to let your peers know about. It can sometimes feel shameful to admit that you feel torn or unsure about how to proceed. But you have to recognize that this is part of work life and should be addressed in a direct and open way.

Even though most companies have some cultural and structural checks and balances, including values statements, CSR guidelines, and even whistleblower functions, leaders must also be mindful of the psychological conditions that push people — including themselves — to cross ethical lines. Understanding the dangers of omnipotence, cultural numbness, and justified neglect are like installing the first few warning signs on the long road of your career. You will inevitably hit some bumps, but the more prepared you are to handle them, the likelier you are to keep your integrity intact.

Merete Wedell-Wedellsborg works as an executive advisor to senior-level leaders and teams. She has practiced clinical psychology and has worked extensively with the financial sector. She is the author of Battle Mind: Performing Under Pressure and holds a Ph.D. in Business Economics and an M.A. in Organizational Psychology.


If Your Company Is Going Through a Public Scandal, Should You Leave?

Having your employer get caught in a public scandal is an agonizing professional experience. Even if your company comes out okay financially, it’s likely to have a tarnished reputation. How do you evaluate whether to stay or go? Where should you draw the line on what you’re willing to be a part of? Does staying constitute an endorsement of the company’s bad behavior when you did nothing wrong? And how should you weigh the company’s diminished standing against your future career prospects?

What the Experts Say
When your company makes headlines for all the wrong reasons, you’re put in an “extremely difficult position,” says Dorie Clark, a marketing strategist and the author of Entrepreneurial You. “All of a sudden, the place you associate with your work, your colleagues, and your projects is overridden in the public imagination,” she says. It becomes a caricature. Your career becomes a gossipy punchline, and that is a very painful feeling for someone who is a serious professional.” It’s natural — and perfectly reasonable — to wonder if you should start looking for a new job. And yet, it’s rarely “super clear cut whether to stay or go,” says Amy Edmondson, a  professor at Harvard Business School. “It’s a personal choice and a judgment call.” As you contemplate whether to remain or look for other opportunities, there are measures you can take to safeguard your reputation and your sanity. Here are some things to consider.

Don’t self-flagellate
First things first: Don’t beat yourself up. Working for a company that’s caught up in an ugly public scandal is stressful, exhausting, and shame-inducing. “You feel besieged,” says Clark. And you often feel guilty by association. Indeed, studies show that the impact of a scandal on employees is far more significant than anyone would have ever thought. Researchers call this the “moral spillover effect.” But unless you were, in fact, writing emissions cheating software for VW or creating fake accounts at Wells Fargo or staying silent when you knew about harassment at Fox News, “you didn’t do anything wrong,” says Edmondson. “You were just there. Don’t be too hard on yourself.” (If you are at fault that is another story.) Pay special attention to your emotional needs during this time; being stigmatized can have serious consequences on your psychological health.

Understand the context
Next, understand whether the negative publicity your company is getting “is a problem you can move past or a body blow that will last for years,” says Clark. Your objective is to grasp the “extent of the scandal.” While it’s impossible to have “perfect clarity,” it’s important to have perspective. “Unless staying somehow condones the scandalous behavior, you shouldn’t feel the need to rush out the door,” she adds. A lot depends on the specifics of the scandal and where you sit within the organization. For instance, let’s say the problem was due to “the isolated behavior of one guy at the top,” and he’s been punished. When actions have been taken to correct misdeeds, it’s logical to assume that the scandal will soon die down, and, therefore, it’s not “necessary or useful for you to leave” right away, if at all. “If you’re going to leave, it should be for reasons relevant today, not for reasons that would’ve been relevant had you had knowledge of them three years ago.” Look forward, not backward. “Many companies have weathered small scandals.”

Take a stand (if necessary)
There’s often no need to leave quickly, but occasionally the situation warrants it. “There could be some scandals that are too inconsistent with your values or are too massive in scale that you feel the need to get out,” says Edmondson. If, for instance, your company’s continuing actions (or inactions) violate your moral and professional code, then you might consider taking a stand, says Clark. Say, for instance, details emerge that your company’s CEO is a serial sexual harasser and, for whatever reason, the board does not remove him. “If you’re a member of the leadership team, then you vote with your feet,” says Clark. Similarly, if your company’s scandal involves a “continuing drip of revelations” where it becomes apparent that the “problem was widespread” and many were complicit, it probably makes sense to start looking elsewhere.

Consider your future
You should also reflect on whether staying at your current company is the right thing for your job satisfaction and career prospects. If the bad press is resulting in an exodus of clients, hurting morale, or necessitating a wave of layoffs that includes colleagues who “are critical to your job happiness,” you need to weigh those things, says Clark. It’s also imperative to consider whether you’ll be able to continue to develop at your organization. Ask yourself: “Is this company so hobbled that my ability to grow and advance is limited?” On the other hand, says Edmondson, the scandal could cause you to think about why you’re there and what you can do to chart a path forward and help turn things around.” A little “soul-searching” is in order, she adds. “If you care about the organization and its potentially positive impact on the world, you can use this as an opportunity to reconnect and recommit yourself to improving it. Think: What can I do to bring my team closer? How can we come together to cope with and manage this challenge? How do we support each other?”

Lay off the networking
Clark is “a big believer in networking” but even she sets limits. When your company is entangled in a public scandal, “it might be a time when you do a little less,” she says. Otherwise, even light chitchat will center on your employer and its blemished reputation. “It’s a conversation piece — it’s like talking about the weather,” she says. “‘Oh, so you work for Wells Fargo? So, how about those fraudulent accounts?’” She recommends taking a temporary hiatus from the networking circuit for a few months. “Maybe during that three-month period, you join Toastmasters and work on your public speaking or you take a course,” she says. “Dial down meeting lots of people until your company is out of the headlines.”

Prepare for the challenges of searching
Contemplating a job search is intimidating in the best of times; when your company is enmeshed in a scandal, it’s downright daunting. “Although many employers would be understanding of why you want to leave, it’s not the easiest time to go out and look for new job,” says Edmondson. That alone is “a pragmatic reason to recommit” to your current company. Recognize that “until the scandal dies down in the public imagination, it’s going to be the thing that hiring managers will want to talk you about,” says Clark. You also need to understand that the “recruiter might view you in the short term at least as damaged goods. You have a brand albatross attached to your back.” If you are leaning toward leaving, you must be ready for the kinds of questions you’ll face. “You’re going to have to tell a story about the scandal and what kind of a culture could have allowed it to happen.” So practice telling that story in as neutral a way as possible.

Own your decision
Whether you stay at your job or resign, you mustn’t feel guilty or embarrassed. “Don’t feel ashamed of your role there if you have been doing good, ethical work,” says Clark. Since your professional and social circles will no doubt be interested in what you decide, she suggests preparing your own “scandal-related elevator pitch” in which you “acknowledge the scandal while simultaneously standing up for your team and your work.” First, she says, “express revulsion” for what happened. “Condemn the behavior that any reasonable person would condemn,” she says. Next, share your personal experience. “Say, ‘I worked there for 12 years and thankfully I never experienced” or saw any [fill in the corporate misdeed]. We ran a great department where the best ideas were allowed to come forward.’” Edmondson concurs. She recommends talking about the experience as “a learning opportunity.” Of course there’s always the option of a polite no comment. “Say, ‘I hope you will understand that it’s exhausting for me to talk about this. I am delighted to talk about something else.’”

Principles to Remember:


  • Attend to your emotional needs. Being stigmatized can have consequences on your psychological and physical health.
  • Understand the extent of the scandal and whether the negative publicity is a problem your company can weather or a crisis that will linger for years.
  • Take a temporary hiatus from the networking circuit. Instead, consider other ways to develop new skills.


  • Rush out the door. The scandal could actually be an opportunity to reconnect to your company’s mission and recommit to your organization.
  • Overlook the scandal’s effect on your career prospects at the company. Reflect on whether your ability to grow and advance is impacted.
  • Feel ashamed of staying if you have been doing good, ethical work. Take pride in yourself and your team.

Case Study #1: Consider your reputation, then make a thoughtful decision
Two years ago, Colin* worked in marketing for a small software company focused on the employment industry. Part of his job included being a public face for the brand. Colin directed social media campaigns, worked closely with the press, and he contributed articles to a large number of online publications.

“I was very happy the first year-and-a-half I worked there,” he says. “I had opportunities to take on new responsibilities and roles often up for grabs in lean startups. As a result I made no effort to conceal my excitement amongst friends and family.”

But over time, his employer “devolved into territory” that Colin found unnerving. The company’s questionable business decisions and deceptive billing practices caused it to develop a negative reputation. Nearly all the major online review sites, scam reporting sites, and even the Better Business Bureau listed numerous complaints against the brand.

Colin knew he needed to understand the extent of the problem. “I inquired with our customer service department and realized the depth of the issue, which was quite unsettling,” he says.

A few months later, the company was in the news when it was sued by a competitor for both copying copyrighted text and website look and feel. “Seeing your company mentioned negatively dozens of times hits you, as does seeing your company mentioned in a court case involving copyright infringement,” he says. “For someone who tries to live his life in an honest and ethical fashion it was difficult.”

He reflected on how the quality of work life would change should he decide to leave. Colin’s colleagues were split on the scandal. “Some tried to rationalize the company’s actions,” he says. “In the end, some left but most stayed.”

In the end, Colin felt his reputation was at stake, so he decided to make a career change. Today he works for a small family-owned agency. He has no regrets about leaving but, he says, the decision to stay or leave a company that’s embroiled in a public scandal is personal and situational.

“If you believe the scandal is warrantless or misdirected, then maybe you can button down the hatches and tough it out,” he says. “However if you are honest with yourself and feel the company is acting in an inappropriate manner, then it is up to you to remove yourself from the situation.

“While companies can withstand scandals, individuals fair much worse,” he adds. “So if a company is tarnishing your personal reputation, your name, your own brand, then you need to get out.”

Case Study #2: Pay careful attention to how senior leadership reacts; prepare how you’ll talk about the scandal to others
Several years ago, Linda* worked in the corporate social responsibility division for a large apparel maker that got caught up in a scandal related to supply chain issues and sweatshop labor.

“It was incredibly disheartening to see my company’s name in the headlines day after day in such a negative light,” says Linda.


She thought about leaving but didn’t want to do anything rash. Yes, her company had made mistakes, but Linda knew that the situation was more complicated than what was being portrayed in the press. Context was important. “My company was involved, but so were a few other companies. And there were other contributing factors that weren’t reported publicly,” she says. “The media didn’t have the full story.”

Linda also recognized that joining a competitor wouldn’t necessarily change her professional trajectory. “These issues are endemic to the industry,” she says. “Any company that has a supply chain faces these challenges to varying degrees.”

Morale at her company was low, but Linda tried to stay focused on her job. “For me personally, I considered [the scandal] a call to action to build policies that would prevent it from happening again,” she says. “Because of my position within the company, I felt empowered to make positive changes.”

Linda was also encouraged by the fact that her company’s executive leadership team seemed determined to address the problem. “They were trying to do something about it — they weren’t just sweeping it under the rug,” she recalls.

Still, she admits that it wasn’t always easy to stay upbeat. “The hardest thing was when I would go to a cocktail party and someone would ask me, ‘How can you work for that company?’ It was draining at times to feel like I had to fight for my company’s reputation.”

To cope, Linda prepared a response. “I acknowledged what had gone wrong, but then I talked about the honest efforts that we’d made to change things. I also mentioned some of the positive things we’d done to improve,” she says.

Linda remained at the company for a few more years after the scandal. “It’s always a personal decision whether to leave, but I feel good that I stayed,” she says.

* Names and identifying details have been changed.

Rebecca Knight is a freelance journalist in Boston and a lecturer at Wesleyan University.  Her work has been published in The New York Times, USA Today, and The Financial Times.