Enron. Wells Fargo. Volkswagen. It's hard for good, ethical people to imagine how these meltdowns could possibly happen. We assume it's only the Ken Lays and Bernie Madoffs of the world who will cheat people. But what about the ordinary engineers, managers, and employees who designed cars to cheat automotive pollution controls or set up bank accounts without customers' permission? We tell ourselves that we would never do those things. And, in truth, most of us won't cook the books, steal from customers, or take that bribe.
But, according to a  study  by one of us (Christopher) of C-suite executives from India, Colombia, Saudi Arabia, the U.S., and the U.K., many of us face an endless stream of ethical dilemmas at work. In-depth interviews with these leaders provide some insight and solutions that can help us when we do face these quandaries.
We were surprised that 30 leaders in the study recalled a total of 87 "major" ethical dilemmas from their career histories. Over 50 had occurred in the course of the last five years. Another surprise was how few of the incidents were caused by bribery, corruption, or anti-competition issues (only 16% of all ethical dilemmas mentioned). More often the dilemmas were the result of competing interests, misaligned incentives, clashing cultures.
Based on this study and our collective experience of working with thousands of business leaders, there are a number of obstacles and contradictions we see most often impact the ability to act ethically:
Business transformation programs and change management initiatives. Companies can warp their own ethical climate by pushing too much change from the top, too quickly and too frequently. Leaders in the study reported having to implement staff reduction targets, dispose of big businesses in major markets, and lead mergers and acquisitions. Some of these activities included inherent conflicts of interest; others simply caused leaders to have to act counter to their values (loyalty, for example). Many leaders felt poorly prepared for the dilemmas they faced and felt compelled to take decisions they later regretted.
Incentives and pressure to inflate achievement of targets.  People do what they are rewarded to do, and most leaders are rewarded for hitting targets. Take Wells Fargo as an example: Managers  were rewarded for the number of accounts they opened and managed . As a result, apparently, many felt driven to open accounts that customers didn't request or approve. The lure of incentives are a problem in boardrooms too: Bonus payments and executive share schemes are often based on short-term business metrics, which can be counter to long-term success.
Cross-cultural differences.  Most leaders in the study reflected on how rapidly their businesses had globalized over the last 10 years and how ethical issues can be profoundly difficult when operating across different cultures. They talked about how challenging it was to decide whose cultural "rules" were paramount when making business decisions. They gave examples like closing a sales office in Japan, breaking a verbal promise made during after-work drinks in China, or ignoring "sleeping" business partners in a Saudi Arabian deal, all of which have cultural and ethical components.
While these obstacles stand in the way of making ethical decisions, they aren't insurmountable. Here's what we learned from the leaders in the study about what worked for them in improving the ethical climate in their organizations:
Know where you stand  The senior leaders in the study told us that, in contrast to what corporate compliance officers would like us to believe, their organizations' codes of conduct and ethics training wasn't particularly helpful when it came to managing ethical dilemmas. Rules and regulations often don't cover the majority of ethical issues, especially those around people and resource trade-offs. Even the law, they said, is limited as it's usually geared to big transgressions.
Instead, you need to understand what matters to you. Companies become ethical one person at a time, one decision at a time. If you don't know where you stand, or if you can't accurately read your organization's underlying culture, you'll find yourself blowing in the wind (at best).  Emotional intelligence  can help you here. Self-awareness enables you to build and strengthen that inner compass. Organizational awareness enables you to identify the forces in your