Penalties for not performing to a certain level can pressure people to act unethically

Question

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When people face penalties or consequences for not meeting certain performance standards, they may feel pressure to cut corners or behave unethically to avoid negative outcomes. This is known as a "moral hazard," and it can lead to a variety of unethical behaviors such as cheating, lying, or covering up mistakes. In order to avoid this kind of situation, it is important for organizations to create a culture that prioritizes ethics and encourages employees to do the right thing, even if it means falling short of certain performance expectations.

Penalties for Not Performing to a Certain Level Can Pressure