Hiring ethical employees

In A Behavioural Economics Perspective on Compliance  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3929624  Sheheryar Banuri (of the University of East Anglia) “reviews the behavioural economics perspective on compliance with rules (broadly) and with whistle-blowing and antitrust compliance (more specifically) culminating in a series of recommendations for organizations seeking to improve employee compliance and detection of potential infringements of the law.” The author focuses on: “four main points: First, is the importance of voluntary compliance (as opposed to enforced compliance). This is important because it carries a broader set of actions than enforced compliance (which typically pertains to behaviour that is observable).  Highlighting non-pecuniary rewards, such as benefits to society, reputational gains, and career impacts, are critical. Second, is the importance of perceptions and beliefs.  Focusing on whistle-blower protections and correcting beliefs regarding the risks (and potential losses) associated with reporting are critical. Third, beliefs are typically the result of social norms: shared expectations of behaviour.  Collecting information on norms and correcting misperceptions is an important way to increase compliance.  Fourth, selecting the right workers.  Selecting workers with strong preferences for compliance (those that are more pro-socially motivated) allows for increases in compliance without the need of strong monetary incentives.”

This issue “remains largely unaddressed in the literature on compliance, is the role of selection.”

More can be done regarding this area.

In an earlier post I noted that companies should create or enhance  ethics questions for employment interviews.

In some companies hiring interviews include a C&E component. A typical question of this sort is to ask the interviewee to describe a C&E challenge that she faced and how she addressed it.  Of  course, in doing this the questioner should make it clear that she is not asking for confidential information about any other company. Another approach is to present the interviewee with a hypothetical ethics quandary and to ask how she would deal with it.

This practice has several benefits:

– It helps the employer determine whether ethics is a strength or weakness for the candidate, which could impact the decision of whether to hire her.

– It sends a message to employment candidates that C&E is important to the company, which hopefully they will remember if they get the job.

– It sends a message within the company generally – and particularly to those who conduct interviews  – that C&E is important to the company. ,.

In my view this is a good practice. I also believe it should be a two-way street, meaning employees should also ask questions of their prospective employers.

This might be a question about the C&E program generally: Is it strong?  Is the tone at the top healthy?  Or, how does the workforce generally view C&E?

Another approach is to ask about risks of misconduct in the company’s industry.  Even where a company seems ethical, one might want to do extra due diligence if  the company’s competitors as well as others with whom they deal (customers, suppliers and others)  are routinely engaging in corrupt dealings.  Also, note that that the questions – whether posed by the candidate or employer – should vary by position, at least for higher-ups.  Certainly this would be true with interviews of board members, and maybe others near “the top.”  There are many other topics the candidates might ask about but one should not be seen as conducting an investigation. A balance should be struck.

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