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Conflicts of interest have long been frowned upon, and still are, says Dunfee.Shareholders, employees and other stakeholders increasingly expect organizations to base decisions on merit rather than relationships, he says.Mueller, whose own research has shown that organizations seen by employees as unfair in pay, promotion or other practices have higher rates of stealing, bad-mouthing and other damaging behaviors.How can an organization keep these relationships under control? Family ties, romances and friendships have long been issues for organizations all over the world, and different cultures look at them differently, says Thomas W.“Harming behaviors” aimed towards envied employees — such as gossip or rumor-spreading — become a means of indirectly hurting the organization, “because eventually harming the envied other may affect the performance of the organization and the morale and performance of the work group.” Moreover, when the researchers leveled the playing field during their experiment by removing the indicators of unfairness, they found that envy still had a negative influence.“Unfairness makes matters worse, but fairness doesn’t eliminate the negative influences of envy,” Mueller says.What would have been a negative interaction between the neglected employee and the organization or his supervisor now becomes interpersonal, involving not only the employee and the organization, but another coworker as well.Perceived unfairness and envy — the two primary ingredients in favoritism — are catalysts for a potential chain of behaviors that can negatively impact the company, the researchers note.
This spring, World Bank president Paul Wolfowitz had to resign after being accused of arranging a big raise and promotion for a woman with whom he was having a relationship.
Dunfee, professor of legal studies and business ethics at Wharton.
These issues fall within an area of “moral free space,” rather than one of universal moral principle, he adds, leaving each society to deem what is considered appropriate.
In a paper titled, “Does Perceived Unfairness Exacerbate or Mitigate Interpersonal Counterproductive Work Behaviors Related to Envy?
” Mueller and Yochi Chohen-Charash from City University of New York attempt to answer that question by presenting the results of two experiments designed to elicit envy and measure its impact on behavior.The dilemmas are acute in family-controlled businesses, when a founder choosing a successor must decide whether to favor a son or daughter or search outside for what may be better qualified managers.