Kobe Steel, Middle Managers, and Unethical Behavior

The Wall Street Journal reports today about the results of an interim investigation into the product quality scandal at Japan's Kobe Steel. According to the newspaper, "Kobe Steel Ltd. released a report Friday that blamed lax management and overworked employees for a product-quality scandal, saying the company has to restore trust to survive." The report reminded me of research by Linda Treviño of Penn State University.  She and her colleagues have conducted research on unethical behavior that emerges from middle manager's attempts to cope with unrealistic targets set by top executives at firms.  She has found that middle managers sometimes react to highly ambitious and difficult-to-achieve goals by finding ways to deceive top executives as to the actual performance of the organization.  She describes the results from a study of a large telecommunications company: 

"What we found in this particular case — but I think it happens a lot — is that there were obstacles in the way of achieving these goals set by top management," said Treviño. "For a variety of reasons, the goals were unrealistic and unachievable. The workers didn't have enough training. They didn't feel competent. They didn't know the products well enough. There weren't enough customers and there wasn't even enough time to get all the work done."

Facing these obstacles, middle management enacted a series of moves designed to deceive top management into believing that teams were actually meeting their goals, according to Treviño, who worked with Niki A. den Nieuwenboer, assistant professor of organizational behavior and business ethics, University of Kansas; and Joa᷃o Viera da Cunha, associate professor, IESEG School of Management.

The researchers also discovered that middle managers took concerted actions to coerce individuals to comply with the deceit campaign.  They pressured people to go along with the efforts to fool top executives into believing that the organization was reaching its targets.  The most interesting finding, though, pertains to what the researchers did NOT find in their study.  They did not see managers trying to argue for a revision of unrealistic goals.  They were afraid to challenge top management.  Treviño explains: 

"Interestingly, what we didn't see is managers speaking up, we didn't see them pushing back against the unrealistic goals," said Treviño. "We know a lot about what we refer to as 'voice' in an organization and people are fearful and they tend to keep quiet for the most part."