The Cheat with the Ace of Clubs, Georges De La Tour, c. late 1620s, Louvre, Paris (Source: Wikimedia Commons)
Ideas for Leaders #227

When Financially Deprived Employees May Shift Moral Standards

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Key Concept

Although moral standards are valued unequivocally, moral behaviour is another story. Under certain conditions, people will let their moral standards shift. New research shows that financial deprivation is one of those conditions and this can have an impact in the workplace.

Idea Summary

Academic research supports the anecdotal evidence that people value moral standards. And yet, academic research also supports the suggestion that people don’t always seem to act in concert with their stated beliefs. There are certain conditions or situations in which people allow themselves to loosen their moral standards.

A team of leading researchers in the field of morality and ethics decided to test whether financial deprivation is one of those conditions. Will people who feel deprived financially compromise their moral standards? Will they cheat more? Will they be more lenient with others who cheat?

To answer these questions, the research team — Eesha Sharma of the Tuck School of Business, Nina Mazar of the Rotman School of Management, Adam Alter of the Stern School of Business and Dan Ariely of the Fuqua School of Business — conducted a pilot survey and five experiments. The result of the research was a mixed bag: financial deprivation is sometimes but not always a reason for lowering moral standards.

Specifically, the research showed that people say that financial deprivation  should not excuse immoral behaviour and that people predict that financial deprivation would not lead them to behave immorally.When financially deprived, however, they will let their moral standards slip, engaging in questionable behaviour. And they will judge others suffering from financial deprivation less harshly.

The research was based on transient financial deprivation (as opposed to chronic financial deprivation). The researchers also emphasize that this transient financial deprivation does not cause people to throw out their moral standards, but rather justify a “shift” of these standards to allow for questionable behaviour. In other words, even when they are cheating, they don’t feel that they are doing something really wrong, but instead are just using what means they can to redress an unfair situation.

This explains why the research showed three conditions under which moral standards are not compromised even in the face of financial deprivation:

  • when cheating won’t help to improve the financial condition
  • when the financial deprivation is deserved
  • when the immoral act is unfair.

Business Application

Moral equivocating in the face of financial deprivation has a number of implications for companies and organizations.

To begin with, companies need to be aware of the impact of deprivation. Companies or executives with the wrong priorities may be overconfident about the power that they have over employees, and specifically unhappy employees. High unemployment, for example, may encourage companies to freeze the wages of front-line employees even though they may be handsomely increasing C-suite compensation. After all, what will employees do: quit? Not necessarily, but given that financial deprivation leads to lower moral standards, employees will find other less ethical ways to respond to an unfair financial situation. Expect office supplies to start disappearing, for example. Or expect productivity to be deliberately lowered.

On the other hand, the research shows that if the deprivation is not unfair, financial hard times won’t be allowed to excuse immoral activity. If a company is facing a financial crisis, and all wages are frozen or lowered, employees won’t necessarily respond by cheating the company at every opportunity.

Likewise, the research suggests that even financial deprived employees won’t attack the company is ways that are patently unfair to the company.

In sum, a company will get what it deserves. If you are cheating your employees financially, or causing unnecessary financial hardship, employees — even the ones who most ardently profess high moral standards — aren’t going to simply turn the other cheek.

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Idea conceived

  • September 2013

Idea posted

  • October 2013

DOI number



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