Ethics in the Construction Industry: How to prevent unethical decisions?

In order to prevent disasters, such as Rana Plaza, kickbacks, corruption in all its forms and shoddy workmanship, here are some recommendations as to what can be done in order to minimize it and improve the culture of companies (establishing ‘guardrails’).

Restricting Bonuses for Finishing Ahead of Schedule

While it is good to finish ahead of schedule, it is not good if the workmanship will lead to disaster down the road. One idea could be to have a claw-back provision for all projects that workers and managers have participated in where they have received a bonus for finishing ahead of schedule. If something happens where there is a structural failure due to poor workmanship, the workers (better said, the managers) involved would have to pay-back their bonus in full, even if it was another worker on the project that caused the flaw. This would make workers speak up if they see or know a project is not being built properly. In some countries, if a poorly built project leads to loss of life, the people in charge or even some workers (i.e. managers, supervisors, etc.) can face criminal prosecution. It is essential that workers know this is a consequence for acting unethically.

Kickbacks and Bribes

In many less developed countries, it is common for officials to demand a company pay a kickback in order to win contracts. This will add to the cost of the project and can cause more problems for the company down the road, not to mention the country itself. Many employees will simply add the bribe into the cost of the contract by inflating the price, thereby hiding the kickback. Employees must understand that companies do get audited and it is not difficult for irregularities to be found on the company’s books, such as inflated prices. Besides higher prices, it will end up costing the company more funds if other “business” fees arise during the life of the project. Employees (i.e. management) must understand that by participating in a corrupt culture, they are only throwing fuel on the fire and in the long run, they will contribute to the endemic corruption that often permeates through such societies. In other words, turning away from projects in which government officials ‘extort’ in order to obtain contracts will prove beneficial to the company by reducing the associated risks as well as to the host country.

In the case of a developed country with reliable courts and law enforcement, the employee should report such corruption not only to the corporate headquarters, but to the relevant authorities as well. Since some less developed countries tend to be so corrupt, it can be dangerous to report crooked officials to law enforcement. In this type of circumstance, the corporate headquarters should be notified only and the employee should be recognized of doing so (something like an ethic’s hero).

The employee(s) who violate anti-corruption laws will be held accountable and disciplinary action could include termination and criminal prosecution.

Improving Hiring Practices and Enforcing Training

Although a little bit orthodox, it will be useful to have employees when hired to take some short courses on the experiments by Asch, Milgram, and Zimbardo and how our human nature works. They will be shown how such lessons are applied to our industry, as discussed in previous paragraphs. The employees will also have annual computer-based-training that will include construction disasters that have happened throughout the year and what caused the disaster, as well as loss of life and what happened to those responsible. We cannot simply post and pray the employees will read about it. It must stay fresh in their heads and they must realize how serious the consequences are not just for the company, but for the employees as well.

In order to prevent loss of life and to make sure all employees understand what kind of actions are acceptable and what are not, all employees will have to undergo training when hired and will have to take remedial lessons at least once a year.

Additionally to training on ethics, it will be require having a very strong training program on the company’s procedures. It is found quite often that people make decisions that are contrary to a company’s process, beliefs or core values because they simply are unaware of them.

Awareness of the Company’s Code of Ethics

This is related to what is mentioned in the last paragraph: some firms do not teach their ethics policy at all. They simply “print, post, and pray” hoping that their code of ethics will be understood and followed. It is essential for a company to not only tell employees about the ethics policy, but to train employees as well. All prospective applicants will be asked what they know about the company’s code of ethics. After all, any time a person applies for any position at any company, it is expected of them to have done some reading up on the company before they have an interview or even before the application process. This will show prospective applicants our company is serious about ethics. The employees will also be trained during orientation and will have to take remedial lessons on the company’s code of ethics at least once per year.

Employee’s Rewards and Punishment

As everyone knows, humans are not perfect and even with the best safeguards and training, there are times where ethical lapses may happen, either intentionally or unintentionally. Employees should be trained in ethics policy and whenever an employee feels he/she is in doubt, they could always ask a coworker or superior or the ethics management personnel.

From what we saw in the studies and experiments aforementioned, people tend to behave depending on whether they may have some benefit or whether to avoid an unwanted situation. In this regard, it is more pleasant for companies to reinforce the benefits of behaving ethically (e.g. not paying bribes or requesting them to subcontractors or suppliers, no frauds, etc). Punishment is not something that should demonized as it works often to produce positive outcomes when people try to avoid them. Therefore, disciplinary actions for wrong doing could range from salary penalties, warning letters up to termination and criminal prosecution.

Setting Realistic Goals

From the results of Milgram’s obedience studies we can realize that often people is driven to behave contrary to their own beliefs or desires due to a higher authority or external desires. These externalities are often company´s goals. While setting goals is good for reaching one’s potential, setting unrealistic goals that cannot be achieved within the boundaries of fair play can lead to undesired situations, driving employees to do so for the good of the company.

Be a True Leader

Setting the example and being a true leader is what is required most of the time. People tend to follow role models be it a person, countries or corporations. While it is true that the U.S. is constrained by strict moral and ethical standards, as a global leader is compelled to set the ethical example. So are leading companies operating in foreign countries. Leading companies are often emulated or imitated by small players around the world, and when lead companies set the rules of the game everybody follows them (either by peer pressure or sense of authority). Therefore, companies and top managers shall set the rules and be the target of exhaustive training on ethical standards, since most of the time, they are the ones breaking the rules after all.

Authors: Ricardo Bielma / Jason Richards

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