In 2016, renowned economist Alexander Wagner gave a TED talk under this title.

He wanted to explore what drives people in their companies to be honest, despite the various temptations to do otherwise.

According to the statistics provided by the president of the American Finance Association, fraud is now a feature, not a bug, of the financial services industry.

One out of seven companies commit fraud every year. That’s obviously a frightening statistic. However, what Alexander was more interested in, is how many companies chose NOT to commit fraud.

These companies have most likely the ability and the means to try to commit fraud, and yet they choose to avoid the temptation and go about their work legally. Why is that?

What motivates people to be moral in the first place?

There are two schools that try to explain why people could want to be moral at all or how to measure morality in the first place.

Consequential Morality

This is the first school, and it is quite simple to understand.

The premise for this idea is that there is a reward for every good dead that you do, and a punishment for every bad dead.

This therefore automatically pushes you to be more inclined to do the moral or right thing, for not one but two reasons; to avoid punishment and to reap the rewards.

It’s simple, yet effective. It’s what most of our legal systems are built on, as well as the economical one. Adam Smith, founding father of modern economics, believed that if everyone acted in their own self-interest, then that would be good for everyone.

His idea of self-interest wasn’t entirely reductive as what one might imagine from the meaning to simply disregarding all notions of law and order to achieve what they want.

It’s a deeper look into how it could mean well for someone to invest in what might be good for them in their future. So, for instance, instead of thinking about being lazy, they will work hard because they want to earn that extra bonus at the end of the year to go travelling.

It’s how all corporates operate. You give incentives to those who work hard, and you try and deter those who might not want to work as much by warning them with sanctions.

Categorical Morality

This is the second school, and it’s a little more complicated.

Immanuel Kant, a explained this school as someone doing the right thing, for the sake of it being what they believe is the right thing. That’s it. They don’t think of the consequence of their action as long as they believe it to be the right thing.

This is obviously much more complicated, therein lies many discussions about the necessity of how to determine what is by nature the moral thing to do. But if we can put that aside for now, having established certain values to be shared amongst most of us, it is quite intriguing.

It means that you wouldn’t lie, because you believe lying is wrong, not because the consequence of lying happens to have a negative outcome for you.

It means that without anyone looking, without the possibility of being caught, you still refuse to do the wrong and potentially advantageous action, because to you, it is simply wrong.

If we look closely at our own lives, we’ll find that we follow both schools occasionally. We don’t want to work sometimes, but we do because we don’t want to get in trouble. We lie to someone because we don’t want to hurt their feelings. Those are two actions motivated by different ideas entirely but serve a similar purpose, to do the right thing.

So which should we rely on more in business?

Companies are more known to deal in the first school, it is simple and effective for the most part. However, they should consider changing that school.

Instead of hiring workers and then trying to motivate them to be honest by incentivizing them with rewards, they should hire workers who inherently want to be good.

These people do in fact exist, yet companies often overlook them because they might be outshone by the others who could be sneakier and more cunning.

Ultimately, even if a dishonest worker was more appealing to hire than an honest for any number of reasons, they shouldn’t be deceived. An honest worker would make up for whatever advantages the dishonest one brings, simply by their honesty, handwork and ethics.

They would save their company tons of money. Every small business owner for example puts into account money they could lose due to theft from their own workers, they put up with it because the workers are skilled.

If they took the time to teach the honest worker, they would save themselves so much trouble, money and time.

“Morality is not properly the doctrine of how we may make ourselves happy, but how we may make ourselves worthy of happiness.” -Immanuel Kant-