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Ethics in Budgetary Decision Making

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A paper my academic colleagues and I wrote while MPA students at The University of Oklahoma.

A paper my academic colleagues and I wrote while MPA students at The University of Oklahoma.

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  • 1. Ethics in Budgetary Decision Making Submitted by By: James Crowson, Christina Prejean,Jason Watkins & Leslie VanBuskirk, PSC 5950 Advanced Programs The University of Oklahoma To: Dr. Aimee Franklin November 19, 2010 1
  • 2. Ethics in Budgetary Decision Making 2AbstractUntold public resources are inappropriately used every year dueto the budgetary decisions made by the personnel of public andnonprofit agencies. These actions range across varying degreesof unethical behavior. At times it is perceived harmless actsundertaken for personnel convenience; and others it is aconscience choice to obtain funds for personal gain. Publicadministrators have an obligation to combat the unethical, andoften illegal, use of public monies by their staff.The research project undertaken by this team seeks to determineif formal ethics training causes individuals to adopt thebudgetary behavior prescribed by the organization whichemployees them. This research was carried out as a part of alarger study lead by Dr. Aimee Franklin at the University ofOklahoma.The ethics segment of the project included four Solomon groups.The first group received a pre-test, intervention and post-test(O E O).The second group was surveyed using the pre-test and post-test(O _ O).The third group received the intervention and post-test (_ E O).The fourth group was given the post-test only (_ _ O). Ourfindings indicate that formal ethical training has little or noimpact on individual choices. In some instances statistical dataindicates a negative correlation.The data suggest that individual ethical standards are a muchstronger predictor of ethical behavior than are otherindependent variables.Further research is warranted to discover and implement the mosteffective means of guiding budgetary decisions along ethicalstandards.
  • 3. Ethics in Budgetary Decision Making 3IntroductionFrequent newspaper headlines alert the public to theinappropriate actions of employees of public or nonprofitorganizations. The resulting loss in public support erodes thetrust necessary for such organizations to effectively carry outtheir missions. Effective means to guide ethical budgetarydecision making remains an elusive goal of many organizations.Conversely, attempts to thwart such behavior can lead tocumbersome procedures which hamper the attainment of missioncritical objectives within the organization.These high profile cases are inflammatory to the public but arecarried out by a small percentage of the workforce of anyorganization. Employees of public and nonprofit entities faceconstant pressure to avoid headline making incidents. Thecumulative total of daily, problematic, budgetary decisionmaking procedures causes organizations to surrender significantresources to the questionable choices of their employees.Ongoing research seeks to find the most effective forms ofcurbing inappropriate behavior and guiding the actions ofemployees to the desired choices of the organization. Severalmethodologies are suggested: appealing to the ethics ofindividuals, developing an organizational culture where theexpectations are for employees to follow the desired path, andpunitive actions that deter the undesirable behavior. Thisresearch seeks to add to the cumulative data on ethicalbudgetary decision making.The fundamental question we sought to answer through theexecution of this research study was, “Does organizationalethics training and education change behavior and attitudes ofindividuals in the workplace?”The goal for this research was to discover if ethicalinterventions cause employees of an organization to act in anethical manner when faced with budgetary questions in the courseof their official duties. A research study was undertaken tomeasure the responses of survey participants to variousbudgetary questions and rate their indicated conformation toorganizational expectations.Additionally, groups were established to determine if theethical intervention administered positively impacted theoutcome of participant responses. Our goal for carrying out thisresearch was to identify effective means of guiding behavior to
  • 4. Ethics in Budgetary Decision Making 4adhere to organizationally desired courses of action. As aresult, organizations would be spared countless sums ofresources lost to unethical decisions made by their employeesand the public embarrassment caused by the headline makingincidents that occur as a consequence of those decisions.Literature ReviewIntroductionThis chapter discusses background information to the study ofethics and integrity. Next, we provide definitions of ethics andintegrity. Third, we define unethical behavior. Finally, wereview ethical training for ensuring ethical behavior. Thisreview provides some previous research in the large theoreticalframework of ethics and integrity, as well as narrowly tailoringthis vast field within the smaller context of publicorganizational behavior.The types of publications reviewed are numerous peer-reviewedjournal and academic magazine articles. These articles come froman exhaustive systematic literature review (SLR) that involveddiscovery and a series of decisions to find appropriateliterature. Several electronic sources accessed are as ERIC,EBSCOhost, Social Science Research Network, ArticleFirst,ABI/FORM, Google Scholar, et cetera. Only literature obtainedthrough these and similar sources were included.BackgroundJust the mention of ethics and integrity communicates attitudesand feelings ranging up and down a full spectrum of positive andnegative emotions. Perhaps positive emotions result becausepeople who keep their word honor themselves and their employerswith good, productive results on the job. On the other hand,perhaps a manager feels the cringe of uneasiness whenrecollecting an occasion when an employee stole inventory,money, or something relatively benign as leaving just a littleearly and fudging on their timesheets. Ethics and integrity aretwo hugely important terms discussed and debated both by thegreatest philosophers of recorded history and employees aroundthe morning coffee pot.In virtually any context, one may ask if attitudes toward thepropensity to engage in unethical behavior differ among thosewho are ethical and those who are not. How is ethical orunethical behavior understood? Is unethical behavior becoming
  • 5. Ethics in Budgetary Decision Making 5more acceptable? Is unethical behavior a reflection of one‟ssex, race, class, and age? We reviewed the literature to learnmore about how to begin answering these questions.Many times the values of today‟s society are not the same asthey were just a couple of years ago. Certainly, companies andorganizations struggle with these issues constantly. Becauseemployees are individuals with relative viewpoints on what isright and wrong, they bring with them this relativity and maybehave in ways contrary to what the organization wants. Clearly,what is at the center of the discussion on how to get people todo what they is expected of them is differing views of largerconcepts of morality. Let us turn out attention to understandingthese issues within the larger framework of ethics. DefinitionsEthicsMany people make the mistake of assuming that ethics andintegrity are one in the same. Actually, they are quitedifferent and the distinction is important. Jensen (2009)defines ethics as societal standards of right and wrong both forgroups and individuals that are in a society (p. 16). Thisrather simplistic definition does not explain how it mighttackle tasks or what “standards” might mean. According topopular convention, just because something is right or wrong inone society, does not necessarily require that it is right orwrong in a different society.Although one may agree with Jensen up to a point, it isdifficult to accept completely his definition of ethics becauseit fails to develop a standard by which one may compare rightand wrong. Research by Stansbury (2009) shows practicesacceptable in one place and time in history morph into practicesoutlawed after a period of struggle. One example is Americanchild labor practices in the early twentieth century. There wasa time when governments and businesses saw nothing wrong withchild labor and glossed over the problems that came with suchpractices. Stansbury argues for discourse ethics, that branch ofethics that provides a “framework for evaluating and resolvingmoral claims that stem from differing normative bases” (p. 34).Fieser (2009) goes further than Jensen (2009) and Stansbury(2009) and offers a far more interesting, comprehensive, andpromising definition of ethics. He discusses ethics in terms ofmeta-ethics, applied ethics, and normative ethics. Meta-ethicsis a quest to know the source of morality. For example, do
  • 6. Ethics in Budgetary Decision Making 6civilizations create codes of conduct to regulate behaviorwithin either the framework of an evolutionary worldview?Alternatively, does morality originate in a Supreme Moral LawGiver? Meta-ethics wrestles with these questions.Applied ethics treats specific issues of moral grievances insociety. Particularly virulent and divisive societal problemssuch as the moral issues surrounding abortion, the challenges oftaking care of the environment and being responsible stewards ofthe planet, the rights of animals, the proliferation of nucleartechnology, infanticide and population control, homosexualityand definitions of marriage, and capital punishment. Accordingto Fieser (2009), two ingredients are required for the appliedethics definition: (1) controversy and (2) distinctly moralissue.Normative ethics, which is more in line with the intent of thisresearch, takes a more practical tact. Normative ethics meanscoming to moral standards that regulate right and wrong valuesand duties. It is the philosopher‟s ultimate search for an ideallitmus test of proper behavior. This type of ethics incorporatesthe Golden Rule concept that says, “Do unto others, as you wouldhave them do unto you”. Using this rule, an employee could inferthat they should do their work to the best of their ability,because if the roles reversed, they would expect the same(Fieser, 2009).IntegrityYukl and Van Fleet (1992) define integrity as a personsbehavior lining up seamlessly and consistently with espousedvalues and that the person is honest and trustworthy (p. 151).Becker (1998) says that this definition implies that integrityand honesty are largely synonymous. A deeper analysis ofintegrity will show that this is not necessarily so. He arguesthat his colleagues have confused integrity with honesty andconscientiousness.Therefore, one of the most important contributions of Becker isthat integrity is not treated as a relativistic or neutralphenomenon. He insists that integrity fits within a largerframework of the philosophy of Objectivism (capital “O” byBecker). His concept of integrity is extremely useful because itsheds light on the difficult problem of understanding employeebehavior. He argues that integrity is clearly distinguished fromsubjective ethical attitudes and opinions such as honesty andconscientiousness and thus raises it to a higher level byblending integrity into an objective moral code of values and
  • 7. Ethics in Budgetary Decision Making 7duties (Becker, p. 154).Erhard, Jensen, and Zaffron (2009) demystify the confusion ofthe meaning of integrity. They define integrity as “thecondition of being whole and complete and the necessarycondition for workability, and that the resultant level ofworkability determines for an individual, group, or organizationthe available opportunity set for performance” (p. 62). Theyreduce their definition down to “keeping one‟s word”. In otherwords, they assert that integrity is a person saying they willdo something by a certain time. In their view, integrity existsapart from morality and ethics, and thus they make understandingBecker‟s (1998) ideas easier. What is interesting about theirwork is that they criticize the Golden Rule.Recall from above that Fieser (2009) discussed normative ethicsin terms of the Golden Rule. Erhard et al. (2009) claim that theGolden Rule falls short and has a lack-of-benefit track record.They state that if people actually reciprocated, the world wouldbe a more peaceful and safer place. They explain its failure inthat people are reluctant to apply the rule without assurance ofreciprocity and perceived risks of being a “patsy”. While on thesurface, this definition may seem a bit elementary, theadvantages favor integrity over the Golden Rule. Erhard et al.argue that integrity has no downside. Integrity is beneficial toeach person who behaves according to this standard and has atendency to propagate itself (p. 63).When it comes to the topic of executive compensation, most of uswill readily agree that in many cases, at the very top, it tendsto appear exorbitant. In the recent work of the Ethics ResourceFellows (2010), they offer harsh critiques of rewardingintegrity in the c-suite. They discuss this important aspect ofintegrity when they write about the financial crisis in the fallof 2008 highlighting the misconduct of top executives in theprivate sector. Executives garnered bonus packages that enabledpay minus the results. They argue that this sponsored unethicalbehavior and produced an atmosphere of poor business strategies.Companies that paid severance agreement bonuses created companycultures devoid of integrity and instead decision-making basedon benefits incurred (p. 2).Making decisions based on what the personal return on investment(ROI) will be to oneself is certainly unethical behavior. Erhardet al. (2009) strongly criticize the use of cost-benefitanalysis (CBA) to determining whether one will keep their word.Using a CBA approach virtually guarantees that one will be
  • 8. Ethics in Budgetary Decision Making 8untrustworthy. Their analysis of this type of individual is atthe intersection of 1) honoring one‟s word and 2) unmitigatedopportunism. If Erhard et al. are correct, then we need toreassess the popular assumption that lies at the heart of muchout-of-integrity and untrustworthy behavior in organizations (p.2). Defining Unethical BehaviorJones‟ (1991) study defines unethical behavior as anything doneby a person within the larger framework of their society eitherillegal or morally. Examples are lying, cheating, stealing,assault, or battery, and any form of dishonesty orunconscionable actions that go against mainstream societalnorms. Although some readers may object that intention is anecessary component to any definition of unethical behavior,Gino and Bazerman (2009) answer that intentionality is notnecessarily required for a definition to determine whether abehavior is unethical.Before we discuss intention in unethical behavior, let us lookbriefly at Gino et al.‟s (2009: 1) research questions: 1) underwhat conditions are people likely to ignore the unethicalbehavior of others, and 2) where is the line between notaccepting any exception to ethicality and ignoring anotherperson‟s unethical behavior? Their answers are: 1) individualsare more likely to accept unethical behavior if it occursgradually as opposed to abrupt unethical behavior; and 2) atleast a portion of the acceptance of unethical behavior is dueto in part to implicit bias (p. 708, 717).Gino et al.‟s hypotheses are: 1) people are more likely toaccept the unethical behavior of others if the unethicalbehavior develops gradually over time than if the unethicalbehavior occurs abruptly; 2) people‟s propensity to acceptothers‟ unethical behavior when ethical erosion occurs graduallyis partially the result of implicit biases that preventobservers from noticing the erosion.From their article, they offer a couple of stories about anaccountant to explain these hypotheses. In the first example, anaccountant audits the corporation‟s records for four years.During the first three years, the accountant audits the recordswithout incident. Suddenly during the fourth year, there isclear evidence of unethical and even illegal accountingpractices by the company. The accountant would not sign his nameto these practices. This is obviously the example about
  • 9. Ethics in Budgetary Decision Making 9abruptness.In the second example, the scenario is more akin to Senge‟s(1994) boiling frog syndrome. This is a matter of gradualerosion in the accountant‟s recognition of his client‟sunethical behavior because the corporation‟s unethical practicesoccur over the span of four years (Gino et al., 2009, p. 717).Figure 1 shows examples of abruptness and gradual erosion, whichexplains these hypotheses. Their findings have importantimplications for the broader domain of public and privateorganizations in detecting, deterring, and reporting unethicalbehavior. 4.5 4 3.5 3 2.5 Gradual Erosion 2 1.5 Abrupt Erosion 1 0.5 0 Year 1 Year 2 Year 3 Year 4 Fig. 1. The x-axis shows the number of years the accountant provides services. The y-axis measures the scale of acceptability of erosion in others’ unethical behavior. The data are from “When misconduct goes unnoticed: The acceptability of gradual erosion in others’ unethical behavior” by F. GinoEthical Behavior Training and Controlling for and M. H. Bazerman, 2009, Journal of Researchers have proposed several ways of ensuring sound Experimental Social Psychology, 45, (4), 708-719.ethical behavior in the workplace. These methods include ethicstraining. West and Berman‟s (2004) posit the necessity of ethicsin public administrations. They say that the purpose of ethicstraining is two-pronged: 1) to ensure that organizations avoidembarrassing association with allegations of wrongdoing and 2)to develop in employees tendencies and abilities to behavemorally and legally.The method by which training occurs can be rudimentary orconsist of complex, progressive training modules. Their researchmethod was a 2002 national survey of cities. City managers andchief administration officers in all 544 US cities havingpopulations of 50,000 or more residents received the survey.They found that the mean amount of training was one-half day inlength. They also find that 43.5 percent of the cities surveyedmake ethics training mandatory. Finally, they find that usagedid not vary significantly by region or form of government, but
  • 10. Ethics in Budgetary Decision Making 10large cities were more likely to offer ethics training. ConclusionIn summary, ethics and integrity has a place at any table ofacademic discussion about public administration. We live in atime when many people do not claim that there are any objectivestandards of ethics and morality to which one may appeal.Companies face serious problems head-on when employees who haverelative morale values and duties bring in their behaviors thatare inconsistent with the company‟s standards. This can manifestitself as unethical behavior, and this is what many companiestoday are trying to correct. They are implementing trainingprograms on ethics to try to affect the behavior that should beinnate and inherent in any employee already. Much more researchcan be conducted to determine if training people to be ethicaland have integrity is effective.Research DesignIn the fall of 2010 several MPA students from the University ofOklahoma researched the occurrence of ethical challenges withregard to finances in public organizations. The intent was togain a better understanding of individual attitudes duringpublic budgetary decision-making. Public employees from acrossthe United States were surveyed to test the tendency ofemployees to engage in unethical behavior in the workplace.During the survey respondents were asked basic questions thatplaced the respondent in a position to manipulate public fundsin some fashion. Several scenarios were setup that mimickedcommon challenges that occur within public organizations.The experiment setup is a Solomon 4 group project led by Dr.Franklin at the University of Oklahoma. The project in generalconsisted of 4 groups with three interventions: ethics, sharedvalues and deterrence. This segment of the Solomon 4 researchidentifies the design of the „ethics‟ intervention component.The four ethics related Solomon groups are:Group 1: pre-test, intervention and post-test (O E O)Group 2: pre-test and post-test (O _ O)Group 3: intervention and post-test (_ E O)Group 4: post-test only (_ _ O)The pre-test gathers quantitative responses by asking theparticipants to make a forced choice in three scenarios relatedto complying with regulations governing the use of agency
  • 11. Ethics in Budgetary Decision Making 11provided credit cards. The topics of the three scenarios are:1: Government credit card training2: Misuse of government credit card3: Travel expense managementFigure 1 is the ethics intervention that was utilized for groups1 and 3.Figure 1. ETHICS INTERVENTIONYou work in the supply section of your unit, responsible forpurchasing inventory and maintaining records for all employee-uniform items received. The uniform item inventory is valued at$200,000.Each employee in the supply section is required to attend atraining course. At the training course, they emphasize that thesupply officers are discouraged from taking items that they willuse personally; instead they should have another supply officerfill their requests for personal uniform items. The reason thatsupply officers do not get their own uniform items is to avoidthe appearance of special privileges.At the end of the training, each supply officer signs a documentaffirming their understanding of and willingness to comply withthe rules and regulations that pertain to the supply section.The organization does this to make sure employees will keep anaccurate inventory of employee-uniform items and make sure theyare not given out inappropriately.The post test contains five scenarios that asked respondentswhat action they would take and why. These scenarios ranged fromeasier to identify “right and wrong” choices to insidious “grayarea” right or wrong choices. The scenarios increased progressedin severity and ambiguity with Sc5 being the clearest and Sc8the most vague. The general topics of the scenarios are: 4: Unintentional purchase of personal items with organization tax-exempt account 5: Personal procurement of work related clothing (boots) without explicit need 6: Misuse of organizational trip fund for personal benefit 7: Non-authorized emergency repair expenditures 8: Fiscal year closeout wasteful spendingThe surveys were completed anonymously through use of “SurveyMonkey”, an online research tool. A consent waiver was provided
  • 12. Ethics in Budgetary Decision Making 12upon entry into the website. The participants in Solomon 1 & 2completed the pretest, while 1 & 3 received the intervention,and all groups completed the post test. Eighteen Likert responsequestions were included at the end of the posttest to ascertainparticipant‟s propensity to engage in immoral behavior. Finally,basic demographic questions were asked of all the participants.Researchers within the project were split up into groupsseparated by the intervention and Solomon group (8 groups inall). Again, the focus of this paper is on the ethics component.The „ethics‟ component of group three consists of the followingdocuments: example email, pre-test consent form, ethicsintervention, and post test. Surveys including the pre-test,ethics intervention and post-test were sent out electronicallyutilizing the survey website www.surveymonkey.com. Surveys weresent out with the following protocol: 1. All surveys were sent out via email so that the respondents could reply anonymously. 2. No respondents were compensated for their contribution. 3. An official email sent from Captain W. Jason Watkins (william.watkins3@acc.af.mil), United States Air Force (USAF) F-15E Weapon Systems Officer (WSO), 333rd Fighter Squadron, Seymour Johnson Air Force Base (AFB), North Carolina containing the link to surveymonkey.com and an attachment with the consent form to two official email distribution lists: a. The “all officers list” for the 389th Fighter Squadron and the “all Instructors” list for the 333rd Fighter Squadron. b. The 389th Fighter Squadron consists of approximately 70 officers, (roughly 34 pilots, 34 WSO‟s, 1 doctor, and 1 intelligence officer). They are an operational squadron that employs the F-15E Strike Eagle stationed at Mountain Home AFB, Idaho. c. The next squadron surveyed was the 333rd Fighter Squadron, consists of approximately 50 pilots and WSO‟s. They train newly winged aviators how to fly and operate the F-15E. d. Fighter Squadrons are uniquely comprised of 95% officers. No Air Force enlisted personnel were contacted. e. Officers from both squadrons frequently are in a position to make budget decisions for their sections.
  • 13. Ethics in Budgetary Decision Making 13 f. Note: USAF guidelines permit the use of government email for solicitation for active duty officer graduate surveys. This survey was specific to Solomon group 3 (_E O) with the ethics intervention. 4. An unofficial email was sent out from Jason Watkins to 55 current public employees utilizing “facebook.com”. These employees varied from local, state and federal employees. a. The post test only survey was sent out ((_ _ O), Solomon 4 group). 5. An official email containing the same link previously identified was sent from James Crowson (US Navy, Retired) to >30 military/civilian coworkers at Tinker AFB, Oklahoma. a. This survey was part of the Solomon 1 group ((O E O) pre-test, intervention, and post test). 6. An official email was sent from Leslie VanBuskirk to the professional staff and administrative assistants of the First Baptist Church of Moore in Moore Oklahoma. a. Special permission was obtained from the Church Administrator to survey >40 personnel. Though not a public funded entity, the church is a non-profit and thus shares similar financial obligations as a public organization. b. The surveys that were sent to this group were the O E O Solomon 1 group. 7. Finally, approximately 20 other MPA students sent out surveys to various government employees.The anticipated return rate was >30% of those contacted. Theaverage completion time for the survey is 10 - 15 minutes: 1minute to read the email, 2 minutes to read the consent form, 5minutes for the pre-test (when applicable), 2 minutes to readthe ethics intervention (when applicable), and 10 minutes forthe post test. The completed test data was accessible to Dr.Franklin at the University of Oklahoma.As with any survey there are certain threats to validity andreliability that make research a challenge. Threats to validityin this survey may include the following: 1) Sincerity-some people may not have taken this survey serious because of the amount of attention / time required to complete the survey. These people may quickly complete the survey without answering the questions honestly.
  • 14. Ethics in Budgetary Decision Making 14 2) Integrity- some respondents may a) consider their own morals questionable and may therefore lie on the DCI to compensate; or b) try to impress the researcher or themselves by overestimating their responses on the DCI; 3) Misinterpretation - Finally, some people may answer inaccurately due to unclear understanding of what objective moral standards are.Finally, threats to reliability include the following: 1) lackof oversight – this is required to achieve anonymity, but theanonymous nature of the electronic survey allows for one personto complete the survey multiple times. It is unlikely thatsomeone would do this due to the time and effort involverequired to complete this survey.Results of the ethics subset of the Solomon 4 experiment arelisted below in Table 1. There were 395 total respondents(ethics subset) for the four groups. Each group was roughlyequal in size ranging from 21.8% to 28.1% per group. TABLE 1: Frequencies Frequen Percen Valid Cumulativ cy t Percent e Percent Vali OEO 100 25.3 25.3 25.3 d _EO 111 28.1 28.1 53.4 O_O 98 24.8 24.8 78.2 _ _ 86 21.8 21.8 100.0 O Tota 395 100.0 100.0 lAnalysis and FindingsThis section begins with a description of the statistics andvariables that were utilized. That follows with an analysis andtest of the hypotheses and concludes with a discussion of thepros and cons of the research design. The four hypothesesanalyzed here are: 1. Ha1: Do attitudes towards the propensity to engage in unethical behavior differ among those who are ethical and those who are not? 2. Ha2: Is unethical behavior becoming more acceptable? 3. Ha3: Is unethical behavior a reflection of ones race, sex, and age?
  • 15. Ethics in Budgetary Decision Making 15 4. Ha4: Does ethical training have any effect on one‟s positive ethical decision making?Table 2 lists the total responses for each of the 8 scenarios. TABLE 2: Statistics Sc TaxExem BootsSu HITra EmergRep EOYFur 1 Sc2 Sc3 pt pply vel air nNo.Val 19 198 198 364 362 361 361 359id 7No. 19 197 197 31 33 34 34 36Missin 8gMean 0. 0.3 0.8 2.89 2.54 3.83 2.44 1.89 77 7 4Std. 0. 0.4 0.3 1.179 1.366 0.641 1.058 1.246Deviat 42 84 69ion 1Minimu 0 0 0 0 0 0 0 0mMaximu 1 1 1 4 4 4 4 4mRecall that Scenarios 1, 2, and 3 were part of the Pre-test.These groups represent roughly 50% of the respondents. The pre-test dependent variables forced a dichotomous response and werecoded either 0 or 1. 1 represents a positive choice, 0represents a negative or inappropriate response.Thus Sc1 received a trend towards positive responses with 0.77,Sc2 trended toward the negative at 0.37, and Sc3 had the highestamount of positive responses at 0.84. Since one scenario leansstrongly toward inappropriate response (Sc2), then thisinformation suggests that there is no predisposition towardscorrect or incorrect behavior before the intervention.The post test dependent variable scenarios were codeddifferently. Open ended questions were asked of each of therespondents. Research group members independently categorizedthe respondents‟ answers. A minimum of four researcherscategorized each respondent‟s answer to ensure validity. A scoreof 0 through 4 was attached to each category. „1‟ representedthe least desirable score, while „4‟ represented a positive ordesirable response. A „0‟ score was attached to indecisiveresponses.A cursory look at Table 2 shows Sc6 generated a high percentage
  • 16. Ethics in Budgetary Decision Making 16of positive responses, while Sc8 leaned toward the leastdesirable with a mean of 1.89. Sc4, 5, and 7 appear fairlysplit. We‟ll take a closer look at why shortly.The independent variables in this study were collect in the 18Likert questions assessing attitudes and behaviors of therespondents and demographics. The first 6 attitude questionswere given a score of 0 – 4, with „4‟ demonstrating an attitudecommensurate with positive choices, while „1‟ towards immoralchoices. Again „0‟ was left for undecided or neutral responses.The second 12 behavior related questions and the last 9demographic were assessed using the same methodology.The first hypotheses can be analyzed by closely examining therelationships between the 18 IVs and all 8 DVs. [Ha1: Doattitudes towards the propensity to engage in unethical behaviordiffer among those who are ethical and those who are not?]Statistics relating to the first 12 IVs help one to determineone‟s tendency in unethical relationship.By examining responses the 5 post test scenarios vs. the IV thefollowing information can be suggested: Sc4 and 7 show nostatistical significance, but Sc5 shows statistical significanceversus attitudes at the .001 level and behaviors and sociallydesirable actions at the .005 level.Additionally, Sc6 (Hawaii travel) shows significance vs.behaviors at the .001 level and socially desirable behavior atthe .005 level.Finally, Sc 8 (EOYfurn) also shows significance vs. sociallydesirable behavior at the .001 level. Recall that Sc8 high thehighest level of negative responses. From the statistics a linkcan be drawn from socially undesirable actions to the negativeresponses. TABLE 3: Correlations RAttit RBehav RSocD Spearmans Sc4 Correlation 0.059 0.04 0.059 rho TaxExempt Coefficient Sig. (1- 0.07 0.158 0.07 tailed) N 629 628 627 ** Sc5 Correlation .112 .083* .070* BootSupply Coefficient Sig. (1- 0.003 0.019 0.04 tailed) N 628 627 626
  • 17. Ethics in Budgetary Decision Making 17 Sc6 Correlation 0.009 .097** .074* HITravel Coefficient Sig. (1- 0.406 0.008 0.033 tailed) N 627 626 625 Sc7 Correlation -0.013 -0.023 0.058 EmergRepair Coefficient Sig. (1- 0.374 0.284 0.072 tailed) N 626 625 624 Sc8 EOYFurn Correlation 0.064 0.034 .098** Coefficient Sig. (1- 0.054 0.199 0.007 tailed) N 622 621 620 **. Correlation is significant at the 0.01 level (1-tailed). *. Correlation is significant at the 0.05 level (1-tailed). TABLE 4: Coefficientsa Model Standardi zed Unstandardized Coefficie Coefficients nts Std. B Error Beta t Sig. 1 (Consta .622 .562 1.106 .269 nt) Militar .067 .071 .063 .944 .346 y Decade -.001 .003 -.035 -.580 .562 Gender -.054 .069 -.051 -.783 .434 Color .095 .069 .077 1.384 .168 RSocD .296 .108 .164 2.730 .007 RAttit .050 .051 .055 .978 .329 RBehav .268 .116 .136 2.315 .021 a. Dependent Variable: IndexPostA quick glance at Table 4 also shows statistical significancebetween socially desirable actions and behavior versus the 5post test dependent variables. So what does this mean? Perhaps astronger indicator of ethical behavior can be ascertained fromscreening versus on-the-job training. Let‟s take a look at howthe ethics intervention groups (_ E O and O E O) did in the post
  • 18. Ethics in Budgetary Decision Making 18test scenarios versus the non-intervention groups in the posttest scenarios (O_O and _ _ O). TABLE 5: Crosstab Sc 8: EOYFurn 2- 0 - 1 - other n/dec purch items 3 ask 4 wait TotalSolomon OEO Count 2 49 8 5 16 80 % 2.50% 61.30% 10.00% 6.30% 20.00% 100.00% within Solomon _EO Count 1 70 14 6 16 107 % 0.90% 65.40% 13.10% 5.60% 15.00% 100.00% within Solomon O_O Count 1 49 18 2 16 86 % 1.20% 57.00% 20.90% 2.30% 18.60% 100.00% within Solomon _ _ O Count 2 35 14 4 31 86 % 2.30% 40.70% 16.30% 4.70% 36.00% 100.00% within SolomonTotal Count 22 349 90 28 146 635 % 3.50% 55.00% 14.20% 4.40% 23.00% 100.00% within SolomonPrior to analyzing the data, one would expect the intervention(i.e. the training) to have some positive effect on therespondents, but this is not the case. In fact, it appears theopposite effect occurred. If we take a look at Table 6 (Sc8),both intervention groups combined had over 60% respondents dothe inappropriate action; purchase furniture with funds whenthey explicitly knew the funds had been allocated for thefollowing year.The pre-test post-test group posted close numbers but wasactually less at 57% and the post test only group, the group onewould expect to perform the worst because it had zeroforewarning, performed significantly better at just 41%respondents choosing the inappropriate activity. How is thispossible? Perhaps, this can be explained by the nature of thescenario. It could be argued that by making the purchase for the
  • 19. Ethics in Budgetary Decision Making 19company (the bad action) may have been misconstrued by many ofthe respondents. This may be because one may feel like they arepartaking in an activity that benefits the organization. Thisis the “gray area” in ethics that so often many people violate,and at a minimum this data demonstrates at least that point. Italso highlights the fact that ethical training may not be asuseful as one would hope it would be.This takes us to our next hypothesis: Ha2: Is unethical behaviorbecoming more acceptable? For this test, we will simply analyzethe frequency of incorrect responses in scenarios 1-8. Sc1should have been a relatively clear right vs. wrong decision,yet only 77% of respondents chose the legal behavior. Sc2 wasless defined in terms of right vs. wrong and only had 36% of therespondents choosing the financially legal action. Sc3 drewonly 83% of correct responses.The post test data was equally baffling. Only one scenario, Sc5(the Hawaii travel scenario) generated consistent data in whichthe respondents chose the positive course of action. Perhaps,business constraints which are present in the modern workforcehave driven a push toward generally accepted unethical behaviorin the workplace. The results of this study are inconclusive todetermine this hypothesis, but demonstrate the need that furtherstudy is required here.Next, let‟s examine our third hypothesis Ha3: Is unethicalbehavior a reflection of ones race, sex, class and age? Tobegin with let‟s take a look at whether race was a factor in theresults. This study classified respondents by either white ornon-white. Ninety-four of the 688 respondents did not answer thedemographic question on race. Of the respondents that answeredthe results are as follows: TABLE 7: Race response Positive Negative (4) (1) Sc4 Tax Non- Exempt White 43.50% 3.10% White 38.80% 5.10% Sc5 Non- BootsSupply White 39.40% 23.10% White 41.10% 18.70% Sc6 HI Non- Travel White 88.80% 3.10%
  • 20. Ethics in Budgetary Decision Making 20 White 92.50% 0.50% Sc7 Non- EmergRepair White 25.20% 15.10% White 18.70% 14.10% Non- Sc8 EOYfurn White 23.30% 53.50% White 22.90% 55.80%Note that in Sc4 and Sc7 non-white respondents appear to have ahigher rate of positive responses (43.5% vs. 38.8% and 25.2% vs.18.7% respectively). Sc5 and Sc6 show white respondents with aslight higher positive response rate. Sc8 appears approximatelyequal. The regression analysis shows a relationship existsbetween “color” and the DVs (reference Table 4) although at .168it is not a very strong relationship.Given the inconsistency in the results of the 5 post testscenarios coupled with the missing data from 94 respondents, nocritical analysis based off of race can be inferred from thisstudy. If one were to make on observation based strictly off thereported results however, it appears race really made nodifference here anyway.Next let‟s take a look to see whether sex made a difference inthis study. Similar to the race question, 96 respondents (14%)chose not to answer the sex question, rendering this datainconclusive. However observations can still be made with theavailable data. Reference Table 8 on the response differencesbased on gender. TABLE 8: Gender response Positive Negative (4) (1) Sc4 Tax Exempt Female 36.10% 3.60% Male 43.00% 5.10% Sc5 Boots Supply Female 41.00% 13.10% Male 41.50% 25.70% Sc6 HI Travel Female 93.60% 0.40% Male 90.70% 1.50% Sc7 Emerg Repair Female 19.50% 13.50% Male 20.40% 15.60%
  • 21. Ethics in Budgetary Decision Making 21 Sc8 EOYfurn Female 19.80% 59.50% Male 25.50% 51.70%While the statistics appear close in the gender responses, thereare some distinct differences. In every scenario but Sc8 femaleshad a lower percentage of negative responses. Sc8 however drew alarge margin of negative responses over males (7.8% higher).Recall that Sc8 had the highest propensity for unethicalresponse rates to begin with. Also recall that the scenarioswere setup such that the delineation between correct versusinappropriate behavior increased in ambiguity with Sc8 the leastclear. Perhaps (based off of this data) that females are morelikely to make the socially preferred choice when ethicalguidelines are clear, but less likely when they are not clearlydefined.Also of note is the higher rate of male negative responses andpositive responses in nearly everyone scenarios. Perhaps malesare more likely to side with one extreme or the other, whilefemales are more likely to look for other creative options (note:the middle choices are not present on these tables).Perhaps age played a role in the ethical dilemma presented here.The independent variable we will analyze here is based off ofage by decade. The dependent variable we will look at here isSc5 Boots Supply. TABLE 9: Sc5 Age by Decade Born Response Positive Negative (4) (1) Sc5 BootsSupply 1940s 26.90% 19.20% 1950s 45.30% 10.50% 1960s 47.70% 18.90% 1970s 39.80% 21.40% 1980s 37.40% 25.10%Note that from 1950s era and on, each decade appeared to receivefewer positive responses and greater negative responses. Itappears that as respondents born in earlier decades displayed atpropensity towards higher ethical standards. Perhaps this dataalso supports Ha2.Finally, let‟s take a look at our final hypothesis: Ha4: Doesethical training have any effect on one‟s positive ethical
  • 22. Ethics in Budgetary Decision Making 22decision making? For this hypothesis we tested whetherrespondents signed an ethics agreement and had frequent meetingsto discuss policies and procedures. Let‟s take a look at what wefound:TABLE 10: Signed an ethics agreement Positive Negative (4) (1)Sc4 TaxExempt No 37.90% 3.70% Yes 41.50% 4.80%Sc5BootsSupply No 37.90% 21.90% Yes 43.10% 18.90%Sc6 HITravel No 92.30% 1.40% Yes 90.90% 1.00%Sc7EmergRepair No 19.30% 17.40% Yes 21.50% 12.90%Sc8 EOYfurn No 23.50% 56.70% Yes 22.10% 54.70%The data shows marginal differences between those that signed an“ethics” agreement and those that did not. Sc4 actually had a 1%increase in negative responses with those that signed an ethicsagreement, but also had a 3.5% increase in positive responses.Sc5,6,7 and 8 each saw a very slight decrease in negativeresponses, with Sc7 (Emergency Repair) having a difference ofroughly 5%. Perhaps this may be attributed to the threat of ahigh cost/high visibility financial issue associated with thescenario itself.It should also be noted that every scenario received a marginalincrease in positive responses, but Sc7 and Sc8 (more ethicallychallenging scenarios) received fewer positive responses withrespondents that signed an ethics agreement. Perhaps employeesof today‟s workforce are more likely to knowingly break therules.Millions of taxpayer dollars are spent training governmentemployees on ethical guidelines, but is the money going to gooduse? In order to further test Ha4 we examined the frequency ofmeetings which discussed organizational policies and procedures.Reference Table 11 for the following discussion:
  • 23. Ethics in Budgetary Decision Making 23 TABLE 11: Frequency of Policy Meetings Positive Negative (4) (1)Sc4 TaxExempt Infrequent 37.10% 4.80% Annual 31.30% 9.00% Monthly 35.90% 2.80% Weekly 47.50% 3.40% Daily 45.80% 6.30%Sc5BootsSupply Infrequent 30.60% 22.60% Annual 38.80% 19.40% Monthly 43.30% 16.60% Weekly 39.20% 24.40% Daily 46.90% 18.80%Sc6 HITravel Infrequent 95.20% 1.60% Annual 86.60% 1.50% Monthly 92.20% 0.50% Weekly 93.20% 1.70% Daily 88.40% 1.10%Sc7EmergRepair Infrequent 17.70% 21.00% Annual 26.90% 14.90% Monthly 18.10% 13.40% Weekly 23.30% 14.80% Daily 16.80% 12.60%Sc8 EOYfurn Infrequent 15.00% 65.00% Annual 19.40% 61.20% Monthly 24.20% 54.40% Weekly 23.90% 51.70% Daily 23.40% 53.20%The data collected on the frequency of policy reinforcementshows some remarkable trends. Note that in nearly every scenarioa marked improvement in both positive responses along with adecrease in negative responses occurs until a certain point thengets slightly worse. Specifically, the respondents that had“monthly” reinforcement of the rules appeared to outperform theother groups in every scenario except for Sc6 where every groupperformed well. The same proves true for positive responses aswell. This shows that training may be beneficial to an extent,
  • 24. Ethics in Budgetary Decision Making 24but then experiences diminishing returns when the frequency isramped up to greater than monthly exposure.As with any study, there were certain strengths and weaknessesparticular with this study. The strengths of this study were inthe data pool itself. There was a strong cross section ofvarious employees in public and non-profit organizations acrossthe U.S. The respondents were representative of today‟sworkforce at all levels. This gave us strong insight into theethical values of public employees.Another strength was the quality of responses that weregenerated by the five post test questions. This allowed for oneto naturally answer the question without being forced into amultiple choice or forced answer that may have beeninappropriate for the particular respondent. This provided forhonest open ended responses to the questions resulting in highquality answers. Other strengths included anonymity, validitytests, and data analysis capability with the Solomon 4construct.Weaknesses with this study included the following: 1) no controlmeasure for multiple completions 2) although there were 688respondents, the sample size was not large enough to accuratelyrepresent the modern workforce 3) a large number of militaryrespondents (roughly 50%) which may have skewed data on militarysensitive budget issues and 4) the intervention may not havebeen reflective of actual ethics training or education in theworkplace.ConclusionOverall, the study looked into if formal ethics training had apositive effect on desired behavior of workers in publicorganizations.Our first hypothesis looked at if attitudes towards thepropensity to engage in unethical behavior differed among thosewho are ethical and those who are not. In scenarios four andseven, no statistical significance was noted, yet scenario fiveshowed significance in attitudes and socially desirablebehavior. Not surprisingly, a high amount of participants fromthe Hawaii travel scenario (a situation where the participantwould benefit greatly from unethical behavior), the participantsdid choose the desired response. We gathered that there is adefinite connection and correlation between socially undesirableactions and negative responses.
  • 25. Ethics in Budgetary Decision Making 25Although our research team expected the ethics training to havea positive impact on the participants, we discovered the exactopposite. In fact, over half of the respondents took part ininappropriate action, showing that there are often gray areas inethics that cause people to justify their actions andparticipate in unethical behavior.For our second hypothesis, we discovered that much more studyneeds to be made to determine whether or not unethical behavioris becoming more acceptable in today‟s society.In our third hypothesis, regarding whether or not unethicalbehavior is a reflection of one‟s race, sex, class, and age, wehad some interesting findings. Males reported having a muchhigher percentage of negative responses, showing that femalesare more likely to participate in ethical behavior than males.For hypothesis four, determining whether or not training has anyeffect on one‟s positive ethical decision making, our studyshowed that training was only beneficial to a certain extent,and when training frequency exceeds a monthly basis, its effecton those within the organization decreases.Overall, we found that one‟s upbringing, morals, and priorbeliefs on ethical behavior are a much stronger predictor ofethical behavior than any other independent variables that couldbe used in research (such as ethics training). It is importantfor organizations and public leaders to continue to strive formore ethical behavior and conduct, yet more research should bedone on what age and level (i.e. elementary education), thatthis type of ethical training should begin.
  • 26. Ethics in Budgetary Decision Making 26Annotated BibliographyAnechiarico, F. & Goldstock, R. (2007). Monitoring integrity and performance. Public Integrity, 9, (2), 117-132.This article explores how the use of independent private sectorinspector general‟s (IPSIGs) can connect “corruption controlwith performance management” in public organizations (118). Theauthors begin the article with a literature review on corruptionin public agencies specifically focusing on the positive andnegative consequences of regulatory controls. The authors offerIPSIG‟s as an efficient and effective way to increaseperformance and integrity in public organizations. The IPSIG‟sused in New York City to monitor the contractors that weretasked with cleaning up Ground Zero.Several benefits to using IPSIG‟s are listed but the main focusis curbing corruption and increasing efficiencies in theprocurement process. The IPSIG‟s monitored the work, audited theinvoices, and created documentation standards that wouldfacilitate the auditing process. The IPSIG‟s oversight was notonly for corruption purposes but also for increased performance.This article could be beneficial when discussing the importanceof audit processes in deterrence on undesirable/unethicalbehavior.Chen, Yuh-Jia and Tang, Thomas Li-Ping. (2006) “Attitude toward and propensity to engage in unethical behavior: measurement invariance across major among university students.” Journal of Business Ethics, 69, (1), 77-93.The central thesis of this article was the study of attitudestoward unethical behavior and one‟s tendency to participate inunethical behavior. The participants are measured in 1, theirattitude toward unethical behavior, 2, their propensity toengage in unethical behavior, and 3, the propensity to engage inunethical behavior among university students.The purpose of the study is to investigate the “psychometricproperties of and the relationships among the measures so thatfuture researchers can apply these tools in testing…unethicalbehavior” (78). The research focused on a few selected,deliberate, intentional unethical behaviors in the financesector, which is related to white collar crime cases reported inthe news media. In the research, the participants were studentsat a regional state university in southeastern U.S., with aMajor in Business or Psychology. The age of the participants
  • 27. Ethics in Budgetary Decision Making 27varied between 18 and 57 and years of education were between 13and 18 years.The results of the study reported that male students considertheft, corruption, and deception as more ethical than femalestudents, and showed a higher tendency to act in unethicalbehavior than their female peers. This study showed that femalesare more ethical than males. The authors concluded that “some ofthese students may have the intelligence to recognize whetherthe issues are ethical or unethical”, yet, “they may not havethe smarts and wisdom to make a good and ethical decision”(p.89). More Business students were reported as engaging inunethical behavior than Psychology students.The authors conclude that it is possible that this is due to thefact that Business students receive training in the area ofsocial responsibility and managerial ethics, whereas psychologystudents have not. This may be the reason for why Businessstudents have lowered their likelihood of participating inunethical behavior.Douglas, J.W. and Franklin, A.L. (2006) Putting the brakes on the rush to spend down end of the year balances: carry forward money in Oklahoma state agencies. Public Budgeting & Finance, 26, (3), 46-64.In this article, the authors describe the motivations behindwasteful government spending at the end of fiscal years. Themost widely held reason for an agency‟s “rush to spend down endof year balances” is the risk of receiving a budget cut in afollowing year due to the perception that the agency couldoperate on a smaller budget. The policy of allowing budgetsurpluses to lapse back into the general fund can often beattributed to such wasteful spending and the discouragement ofsaving.Using agency theory, the authors analyze the effects Oklahoma‟s1997 policy of allowing government agencies to carry over andreprogram year-end budget surpluses to their next fiscal year.There is an obvious conflict between the interests oflegislators who allocate funds and the agencies that use thosefunds. Legislators are politicians who try to appear fiscallyresponsible while agencies simply want to provide their servicesunhindered. By allowing agencies to retain its surpluses, thelegislature sends a positive signal to the agencies and betteraligns its interests to theirs.The authors gathered data from face-to-face and telephone
  • 28. Ethics in Budgetary Decision Making 28interviews with chief finance officers from 45 state governmentagencies in Oklahoma in 2001. The questions posed included whythey thought the 1997 Oklahoma law was implemented and what thecosts and benefits of the law were.The authors found that respondents overwhelmingly found greaterbenefits to the law than costs. For example, the majorityexplained the benefits as allowing greater spending flexibility,reducing wasteful end-of-year spending, and encouraging savings.Many appreciated the ability to use their budget surplus as asort of contingency fund for unforeseen expenses in the earlystages of the next fiscal year. A minority complained about theincreased paperwork burden for reprogramming their funds and theinherent potential of future budget cuts because of the merefact of having a surplus.In the end, the authors do, in fact, find evidence that the 1997Oklahoma law reduced end-of-year spending sprees, increasedagency saving, increased flexibility, and promoted betterplanning. This article is extremely relevant to the currentresearch project regarding the misappropriation of governmentfunds. Specifically, the article provides an answer to theethical dilemma government employees face with regard to zeroingout their agency‟s budget at the end of the fiscal year.Egan, Vincent and Taylor, David. (2010) “Shoplifting, unethical consumer behaviour, and personality.” Personality & Individual Differences, 48 (8), 878-883.The central thesis of this article was to study thecharacteristics of shoplifters. The authors studied thepersonality, attitudes in unethical consumer behavior, andemotional status of the participants in the study.The sample studied was of 114 shoppers in England, and broke upthe „emotional status‟ into categories of emotional stability(ES), extraversion (E), agreeableness (A), conscientiousness(C), and intellect (I). The research conducted involved thedivision of participants into those that have never shoplifted,those that shoplifted over a year ago, and those that shopliftedwithin the past year of the study conducted. Egan and Vincentdescribe how the criminal act of shoplifting are oftenoverlooked because they are seen as “victimless crimes”, whichare “often used to excuse offending, but become victim once oneconsiders persons involved in the criminal supply chains, andmay be driven by thoughtlessness, which underlies many criminalcognitions” (p.882).
  • 29. Ethics in Budgetary Decision Making 29All participants completed four questionnaires. The first, theInternational Personality Item Pool, required them to show on afive point scale, how accurately ten statements applied to theirown personality. The second, “consumer ethical beliefs scale”,was made up of 27 statements, which each addressed differenttypes of unethical consumer behavior. The third, “Theshoplifting attitudes scale”, included seven statements of howparticipants felt about shoplifting, and the third,“Demographics”, required the participants to state their age,sex, occupation, income, and level of education.The results of this study found that those lower in ES, high inE, low on A, C, and I, were more tolerant of unethical consumerbehavior and shoplifting and more optimistic about shoplifting,and more eager to report engaging in another type of unethicalconsumer activity. These results “suggest that UCB reflectstransient opportunism possibly reducing with maturation andeducation, whereas dishonest consumer behavior involves genericpredictors of anti-social tendencies” (p. 878). Exactly 40%shoplifted, 14% were currently active, and shoplifters were allmale and younger than those not.The authors concluded that “personality characteristics are amore important predictor of attitudes to shoplifting andunethical consumer behavior than low socio-economic classitself, and that the underlying trait influencing both types ofoffence is low A” (p. 882).Ethics Resource Fellows . (2010, March). Ethical Leadership and Executive Compensation: Rewarding Integrity in the C-Suite. Retrieved Sep 1, 2010, from Ethics Resource Center: www.ethics.org/fellowsThis article identifies a contributing factor to the financialcrisis in the fall of 2008: ethical misconduct by the topexecutives in the private sector. When economic times are good,ethics violations appear to run amuck. These ethical problemspublicly reared their ugly head when financial markets hitrecord lows in the fall of 08‟. Top executive pay went from anaverage of $750,000 per annum to $10.9 million despite flawedbusiness strategies (pg. 2).Executives garnered bonus packaged that fostered enabled paywithout results. This sponsored reckless CEO behavior andinculcated an atmosphere of poor business strategy. Thisresulted in heavy debt, failed business, and large losses of
  • 30. Ethics in Budgetary Decision Making 30jobs.Additionally, organizations which paid excessive bonuses and“golden parachute” severance packages instilled an atmospherethat lacked integrity from the top down. Even mid-level workersat Enron for example engaged in disreputable behavior (cheating,fraud).The excessive payouts to CEOs despite a failing economy haveignited public outrage. Through Troubled Assist Relief Program(TARP), the federal government stepped in to aid large financialinstitutions, but despite receiving billions of taxpayer money,top executives were still receiving multi-million dollarseverance packages, etc.Some political leaders have argued for more governmentintervention. This proposal has struck a heated philosophicaldebate among many Americans. The Ethics Resource Center (ERC)Fellows program proposes a different solution. A solutioncentered on positive ethics practices. These are: 1) “establishan ethics committee of the board” 2) “recruit knowledgeableethics professionals for board seats” 3) “call on internalethics and compliance personnel to develop metrics to measureethical culture” 4) “establish financial incentives for ethicalleadership by the CEO” 5) “insist on transparency bycommunicating clearly about compensation packages” 6) considerpay equity, limits on executive pay and CEO pay caps 7) preparefor long term strategy that will last during feast and famine(pg. 16).Franklin, A.L. (2000) “An examination of bureaucratic reactions to institutional controls.” Public Productivity and Management Review, 24, (1), 8-21. Lead Article.In this article, the author researches efforts by governmentofficials to improve bureaucratic operations and governmentagencies‟ acceptance or rejection of those efforts. Morespecifically, she analyzes the effect of institutional controlson the behavior of government agencies. She considers thesuccess and failure of a new policy of “strategic planning” and“performance measurement” in bureaucratic organizations inArizona and Texas.The author considers the question of whether or not theindividuals who are responsible for the implementation of thelatest government “fads” in management are committed to reformor simply complying with mandates, hoping they could wait long
  • 31. Ethics in Budgetary Decision Making 31enough for the policies and the legislators who enacted them todisappear. As part of a comprehensive budget reform effort,Arizona and Texas began requiring agencies to submit strategicplans that included performance measures to executive andlegislative budget offices.In her research, the author found that commitment towards theimplementation of this new policy increased when a strongadvocate in the agency identified with the policy and fosteredcommitment throughout. Commitment also increased once the valueof the policy was realized, especially through its increased usein the agency. However, commitment towards change decreasedwhen a “one size fits all” approach was used in theimplementation of the policy at different agencies.Finally, the author found that agency reaction to institutionalcontrols can be categorized in two ways: (a) a commitment to thepolicy based on perceived value, and (b) an attitude of simplecompliance based on the lack of perceived value. The attitudeof simple compliance can be changed to one of commitment ifperceived value is increased and greater flexibility in policyimplementation is allowed, leading to the laterinstitutionalization of the policy.These findings can be utilized in the current research projectas the group focuses on how to implement controls against themisuse of government funds. For example, controls that forceaccountability may initially appear cumbersome and unnecessary,but with the right actions, members‟ perceived value of thecontrols will increase and attitudes will change towardcommitment to the new change.Gino, Francesca and Bazerman, Max H. (2009). When misconduct goes unnoticed: The acceptability of gradual erosion in others‟ unethical behavior. Journal of Experimental Social Psychology, 45, (4),708-719.Gino and Bazerman carried out a series of four studies tosupport their primary hypothesis that individuals are morelikely to accept unethical behavior if it occurs gradually thanif it presents abruptly. The slippery slope, as they labelbehavior that slips from pressing the boundaries into illegal orunethical, allows the observer to become accustomed to eachdegradation of ethicality before it slips to the nextlevel. Abrupt presentation of unethical behavior was morelikely to be distinguished as such. The second hypothesis ofthis research team was also supported through statistical
  • 32. Ethics in Budgetary Decision Making 32data. This hypothesis proposes that at least a portion of theacceptance of unethical behavior in the slippery slope model wasdue to implicit bias. The acceptance was neither intentionalnor conscious. The authors suggest multiple follow up studiesto further explain their findings.Grasmick, H.; Tittle, C.; Bursik, Jr. R.; and Arneklev, B. (1993) “Testing the core empirical implications of Gottfredson and Hirschi‟s general theory of crime.” Journal of Research in Crime and Delinquency, 30 (1), 5-29.In their book, A General Theory of Crime, Michael Gottfredsonand Travis Hirschi propose that low self-control combined withthe opportunity to commit crime is the major cause of crime.The authors of this article attempted to test this argument byinterviewing a random sample of 395 adults in Oklahoma City in1991.Gottfredson and Hirschi argued that problems during earlychildhood socialization in the family (i.e., parents failing toadequately monitor their children) can create a lasting criminaldisposition called low self-control. This trait can consist of(1) impulsivity, (2) a preference for simple rather than complextasks, (3) risk seeking, (4) a preference for physical ratherthan cerebral activities, (5) a self-centered orientation, and(6) a volatile temper. However, this trait by itself is not theprimary determinant of crime; it must be combined with theopportunity to commit crime.Grasmick, et al. conducted face-to-face interviews with therespondents and had the respondents fill out paperquestionnaires. The questionnaire contained 24 statements thatmeasured the six traits of low self-control. An example of onestatement is: “I often act on the spur of the moment withoutstopping to think.” Interviewees were asked to respond usingthe categories (4) strongly agree, (3) agree somewhat, (2)disagree somewhat, or (1) strongly disagree.From these answers, the researchers assigned a Low Self-Controlscore to the individual. The respondents were then askedquestions regarding their criminal behavior over the past 5years, such as: “used or threatened to use force against anadult to accomplish your goals.”Finally, they were asked questions regarding crime opportunityover the past 5 years, such as “exposure to situations in whichcommitting an act of force or fraud would have been possible to
  • 33. Ethics in Budgetary Decision Making 33do easily.” After coding the respondents‟ answers, theresearchers found that Gottfredson and Hirschi were correct inthe prediction that low self-control combined with crimeopportunity will have a significant positive effect on self-reported crime. However, inconsistent with Gottfredson‟s andHirshi‟s theory, the researchers found that criminal opportunityby itself has a significant positive effect on self-reportedcrime, beyond its interaction with low self-control.The findings in this article are highly relevant to the study ofthe misuse of government funds. First, knowing that a person oflow self-control has a higher propensity to engage in criminalbehavior given the opportunity to commit a crime, one can screenagainst such people from entering the government work force.Additionally, the research indicates that the simple opportunityto commit a crime, such as fraud in the public sector, can leadto such criminal behavior and can be guarded against byminimizing such opportunities.Halbesleben, Jonathon R.B., Buckley, Ronal, M., and Sauer, Nicole, D. (2004). The role of pluralistic ignorance in perceptions of unethical behavior: An investigation of attorneys and students perception of ethical behavior. Ethics & Behavior, 14 (1), 17-30.The authors Halbesleben, Buckley, and Sauer of University ofOklahoma, goal was to test the hypotheses originally establishedby Buckley, Harvey, and Beu, regarding Pluralistic Ignorance.The purpose of the study was to establish an accurate empiricalstudy of their research, to expand the research, in order toshow correlation between people attitudes, personal viewpoints,and ethical dilemmas; also to determine if pluralistic ignorancecan somehow be reduced.“Pluralistic ignorance is a social comparison error whereby an individual holds an opinion but mistakenly believes that others hold the opposite opinion” (Allport, 1924, 1933; Halbesleben. 2000; Prentice & Miller. 1996).The pluralistic ignorance fallacy that one own perception orviewpoint is higher than that of his peers leads into amisinterpretation of society as a whole.The original study conducted by Buckley et al selected a groupof college students (for extra credit) and asked them threequestions relating to ethical behavior both good and bad. The
  • 34. Ethics in Budgetary Decision Making 34questions focused on the individual ethical standing, how theyviewed their fellow classmate‟s ethics, and those in thebusiness arena.The results of this experiment concluded that the participantsfelt that they were more ethically sound than their peers andthat the typical business person was considerably more unethicalthan his peers. One can infer that this perception is due tothe un-relentless media that focuses on corrupt individualsrather than those portraying positive examples of ethicalbusiness practices. The authors take this pre-existing studyand conduct an altered experiment on attorneys. This was todetermine their opinion of themselves, their peers in state, andthose attorneys out-side of state.The conclusion of the experiment was similar to that of thestudents; Halbesleben, Buckley, and Sauer continued theirexperiment to the next level. In the second part of theexperiment the authors attempted to verify that if moreexperienced lawyers were less pluralistically ignorant. Thisprofessional article is related to Ha4 of social conformity, itdescribes how the opinion and norms of others can directlyaffect the actions and attitudes of others.Jensen, M. C. (2009, Fall). Integrity is a Matter of a Persons Word. Rotman Magazine , pp. 16 -19.This article articulates the importance of integrity within anindividual, organization, and systems or products. The author,Michael Jensen, a Professor at Harvard Business School explainsthe difference between integrity, ethics, and morality. Heexplains the impact integrity has on individual andorganizational productivity.Jensen explains that the concept of integrity is similar to theconcept of gravity. It is something that exists. There is notgood or bad integrity, there is just integrity. A person orthing either possesses it or does not. Like gravity, integritysimply exits.In contrast, a positive and negative value can be applied tomorality and ethics. Morality, Jensen explains “refers tosociety‟s standards of right and wrong behavior for individualsand groups within that society” (pg.16). Ethics “refers to thenormative set of values that apply to all members of a group ororganization” (pg.16).Jensen defines integrity and its vital importance in a concept
  • 35. Ethics in Budgetary Decision Making 35he coins as “workability”. He defines integrity as “a state orcondition of being or whole, complete, unbroken, unimpaired,sound, and in perfect condition” (pg.17). A person or thing is“complete or whole when they honor their word” (pg. 16). Peoplethat cannot stick to their word will violate it by displaying“out-of-integrity” behavior. This affects performancecapability of that person or object.Jensen correlates the amount of integrity an object or personpossesses to the “workability” or performance capability of thatperson or object. If a person possesses integrity thenworkability is greatly enhanced. This is because the person isreliable, predictable and can be trusted. This limits theeffort required in oversight and accountability measures.Finally, Jensen explains that business models such as cost-benefits analyses create an out-of-integrity behavior withinpeople and organizations. A cost-benefits analysis may create afalse justification to violate one‟s word. It potentially maycreate the rationalization “I will not honor my word when itcomes down to do so if the costs of doing so are less than thebenefits” (pg.19). Jensen explains this type of philosophy isthe root cause for subprime mortgage crisis. The system lackedintegrity at every level.Additionally, current political policies (like assistinghomeowners that can‟t pay their mortgage) are rewarding out-of-integrity behavior. If people and organizations can startsticking to their word, then perhaps our economy will improve.Roberts, R. (2009). The rise of compliance-based ethics management: Implications for organizational ethics. Public Integrity , 11 (3), 261-271.Author Robert Roberts delves into the theories behind complianceand integrity-based approaches of the ethical programs in publicorganizations. Citizens of various eras have been privy to someform of corruption of public officials or organizations thatsupport the interest of the people. This breach of theAmericas trust in big government and government officials havediminished significantly over the past 50 years. Certainsanctions and programs were deemed necessary in order to protectthe taxpayer‟s money and to restore the trust of the averageAmerican Citizen in their government.The author premise states that compliance-based programs relievethe organization of miscreant behavior and places the blame on
  • 36. Ethics in Budgetary Decision Making 36the individuals who committed the offense. According toRoberts, compliance-based programs are indeed a means to reducelow-road violations in organizations; however it is not aneffective approach to enhance more positive ethical andintegrity based attitudes of organizations (Roberts, 2009).Although the implementation of integrity-based programs are morecostly to the organization, it places a higher emphasis oncreating a more prudent and ethical institution overall. Theauthor gives various examples of how organizations that usecompliance-based programs, are actually creating more convolutedbureaucracy; thereby enabling the corrupt organization toabsolve their corruption under the protection of compliance law.This article is related to Ha2, whereas the various types ofcontrols used by organizations can alter inappropriate behavior.Schweitzer, Maurice E.; Ordóñez, Lisa; and Douma, Bambi. (2004) Goal setting as a motivator of unethical behavior. The Academy of Management Journal, 47, (3), 422-432.The main focus of the research done by Schweitzer, Ordonez, andDouma was to determine the effects of goal setting on unethicalbehavior. They carried out laboratory experiments evaluatingwhich subjects were most susceptible to overstating theirachievements which they surmised was a form of unethicalbehavior. The subjects were divided into three categories:those told to do your best, those with a set goal, and thosewith a set goal who received a financial reward for meeting thegoal.They found that setting a goal was more likely to lead tounethical behavior than someone who was „trying theirbest‟. There was little evidence that monetary gain in goalsetting changed the propensity to make false claims.Additionally, the research demonstrated that the closer anindividual came to a goal the more likely they were to behaveunethically and lie about their attainment of that goal. Theindividuals who set a goal but missed it by wide margins wereless likely to falsely claim to have attained the goal. Theauthor‟s believe the stress of just missing the mark was greaterthan the psychological stress the individuals experienced as aresult of their overstatements. This is important research inattempts to curb unethical behavior in public organizationsbecause it demonstrates times when individuals may be mostvulnerable to such actions.
  • 37. Ethics in Budgetary Decision Making 37Sekerka, Leslie E. and Zolin, Roxanne. (2007) Rule-bending. Public Integrity, 9, (3), 225-243.The study presented in this article investigates therelationship between the application of prudential judgment,which encompasses two components, practical deliberation andconsideration of others, and the willingness of subjects toengage in rule bending. Rule bending occurs when part of therule is adhered to but other aspects arecircumvented. Generally respondents engaged in rule bending dueto a perceived organizational threat or for personalconvenience.Research showed a correlation between the subjects‟ perceivedthreat to the organization by rule bending practices and theirwillingness to engage in such activities. Out of 10respondents, 7 were ruled to have engaged in actions deemed tobe rule bending. The other 3 described work situations wherethey used practical deliberation and consideration of others orprudential judgment, to find an avenue of solving theirdifficulty within the confines of the established rules.There are limitations to the conclusions drawn by theresearchers due to the low number of subjects surveyed butwarrants further study.Sims, Ronald R. (1992) Linking groupthink to unethical behavior in organizations. Journal of Business Ethics, 11, (9), 651- 662.This article discusses the importance of groupthink incontributing to unethical behavior in organizations. Janis(1972) wrote groupthink is “a mode of thinking that peopleengage in when they are deeply involved in a cohesive in-group,when the members‟ striving for unanimity override theirmotivation to realistically appraise alternative courses ofaction.” Janis and Mann (1977) added that groupthink is “acollective pattern of defensive avoidance.”Janis (1972) suggests that four groups of policy advisors weredominated by concurrence thinking or groupthink and displayedcharacteristic symptoms of defensive avoidance: NevilleChamberlain‟s inner circle that supported an appeasement policywhen dealing with Hitler; President Truman‟s advisors whosupported escalating the war in Korea; President Kennedy‟s innercircle which supported the Bay of Pigs invasion; and PresidentJohnson‟s advisors who supported escalating the war in Vietnam.
  • 38. Ethics in Budgetary Decision Making 38In each case, a group pushed a certain agenda althoughintelligence given to the group had shown that the agenda wouldlead to disastrous results.The author reveals how groupthink contributed to unethicalbehavior in three organizations: Beechnut, E.F. Hutton, andSalomon Brothers. At Beechnut, senior management approved theselling of cheap, adulterated concentrate in order to savemillions although the company‟s consistent marketing theme since1891 was the company provided high quality, natural ingredients.Beechnut management stonewalled government investigators inorder to unload $3.5 million of “fake” apple juice, which led tocriminal charges.In the case of E.F. Hutton, due to a company money managerknowingly writing bad checks to earn millions in interest(a.k.a. check kiting), the company pleaded guilty to twothousand counts of wire and mail fraud, repaid banks andinvestors $9 million, and paid a fine of $3 million. At SalomonBrothers, a group of top-level executives were involved inillegal bond bidding in Treasury auctions.Some of the country‟s most highly educated executives and moneymanagers became involved in unethical behavior due to groupthinkfostered by what Wolfe (1988) labels bottom-line mentality.Financial success is the only value to be considered in suchline of thinking.The author adds that groupthink occurs when arrogance, over-commitment, and loyalty assist a group to excel above theethical interests of the organization. To mitigate unethicalbehavior, Sims stresses that organizations must promote positiveand ethical cultures, encourage genuine debate, and programconflict into decisions via the devil‟s advocate decisionprogram (Cosier and Schwenk, 1990) or the dialectic decisionmethod (Cosier and Schwenk, 1991). Janis (1972) offers fourprescriptions for reducing the probability of groupthink; eachof the four encourages group members to evaluate alternativescritically and discourage unanimity.Vance, N. R., &Trani, B. V. (2008). The ethical grounding to 21st century public leadership. International Journal of Organization Theory and Behavior, 11, (3), 372-380.In this article the authors examine the three main ethicalapproaches to decision-making used in public leadership.Character-based ethics, rule-based ethics, and result-based
  • 39. Ethics in Budgetary Decision Making 39ethics are compared and contrasted, though the authors “supporta more demanding form of consequential thinking which includesthe considerations of Utilitarianism” (373). Therefore, not onlyshould elected and appointed officials consider maximizingbenefits, but also have “inclusive considerations” in theirdecision-making approach (374-375).Furthermore, the authors contend that “the ends justify themeans” is not a complete enough ethical consideration. Theauthors use Abraham Lincoln as an exemplar to utilitarianism,specifically examining ethical decision-making approach to theEmancipation Proclamation. It is argued that Lincoln held off onfreeing the slaves until the proclamation could benefit theUnion the most. “In making the correct choice of action at theright time, Lincoln demonstrated his firm grasp of results-basedethics and his ability to understand the world in the longterm”(378).The authors conclude the article addressing the globalization ofpublic policy and the possible benefit of public confidence inofficials that use a results-based/utilitarianism ethicalapproach. This article is a good source for identifying basicethical approaches used by elected and appointed officials.West, Jonathan P., Berman, Evan M. (2004). Ethics training in U.S. cities: Content, pedagogy, and impact.” Public Integrity, 6, (3), 189-206.The writers of this article propose the necessity of ethicstraining in public administration. The article says that thepurpose of ethics training is two-pronged: 1) to ensure thatorganizations avoid embarrassing association with allegations oflegal wrongdoing and 2) to develop in employees tendencies andabilities to behave morally and legally. The method by whichtraining occurs is can be rudimentary or consist or complex,progressive training modules.The research method use in this study was a 2002 national surveyof cities mailed to city managers and chief administrationofficers (CAOs) in all 544 U.S. cities having populations of50,000 or more. They find that the mean amount of training isapproximately one-half day. They also find that 43.5 percent ofthe cities surveyed make ethics training mandatory. Finally,they find that usage did not vary significantly by region orform of government, but large cities were more likely to offerethics training.
  • 40. Ethics in Budgetary Decision Making 40Wilson, Barbara A. (2008). Predicting intended unethical behavior of business students. Journal of Education for Business, 83, (4), 187-195.The objective of this study was to know the likelihood thatbusiness students would intend to behave unethically given 4hypothetical situations in their work environments. Thus, thisstudy measured students‟ intended behavior. A variation of thetheory of planned behavior is used as the model to research thestudents‟ behavior. The dependent research variable was intendedunethical behavior, and the independent research variable was anexpanded definition of beliefs about behavior. Samples ofstudent behavior include decisions about a 3-day week, acceptingLakers‟ tickets, doing homework on the job, and visiting one‟ssister.The results of the research indicate that belief toward one‟sbehavior was the most powerful predictor of intent in all foursituations. Subjective norms were the weakest predictor ofintent.

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