Ethics in the Construction Industry

I recently gave a talk to a roomful of architects, engineers and construction company executives titled “Introduction to Ethics in the Construction Industry,” and the experience was actually enjoyable. I went over the allotted time and no one left. That’s a win in my book.

The question I raised was this: “In spite of the millions of dollars and thousands of hours spent annually on ethics training and enforcement, why is unethical conduct still a problem?” I suggested that the reasons are psychological, not ethical.

We reviewed several cases from Texas state courts for prosecution of bribery and official misconduct. The rules can be obscure in some instances, but everybody knows that you shouldn’t bribe a public official for favorable treatment, all the way from inspectors to the officials who award contracts. We also talked about corporate programs to protect the company from kickback arrangements, favoritism, and conflicts of interest, and it started to get interesting.

Turns out many in the group had taken a philosophy course or two in their college days, and they had no trouble understanding that ethical behavior is defined by the consensus of what is permissible in a given community, and that behavior that is inhibited by fear of criminal law isn’t really ethical—it’s just prudent. But beyond the obvious limits, there really is a tension between doing what’s necessary to get and keep work, to make a profit, and restraining yourself, disclosing mistakes, and maybe losing money. Everyone has heard stories about how highly ethical companies prosper, and that in the end, cheaters “never” win. But it’s not clear that those stories are guides to what’s appropriate in day-to-day decision making, and they sure aren’t always true. There’s not always a happy ending. But corporate strategy is not the issue when we consider individual conduct at the levels below the pinnacle.

The bottom line is motivating individuals to rise above their own personal agendas and fears. Putting aside for the time being the question about what is “right” in a given circumstance, how do we make employees feel secure enough to always act ethically?

A good start would be to help individuals use independent judgment about orders from people in authority. Studies show that over 60 percent of people will follow an instruction that is ethically questionable, just because the instruction comes from a person in a position of authority. Add that to studies that show that in companies which are internally highly competitive, individuals are much more likely to conceal errors. At the other end of the spectrum is the “foxhole mentality.” Who would turn in a friend or colleague for poor performance, if someone else, like those idiots at the other company, are at least partly responsible for the delays and cost-overruns? You look out for the guy in the next foxhole, and they do the same. It starts being clear why unethical conduct is a perennial problem in the construction industry.

I saw many heads nodding in agreement when I asked if they had personally witnessed unethical behavior. It happens in the best companies. That’s why when I’m hired to defend a company on a construction law claim, my client and I have to be as objective as possible. When we reconstruct what went wrong, the first thing we must establish is what really happened. If the lawyer representing the other side doesn’t do the same thing, there can be some surprises in store when the dispute is aired out in front of a judge or arbitrator. Lawyers like to brag they are fearless. Are they fearless when it comes to making an objective evaluation of fault, and a recommendation to a client? You should hope so…