Is There Too Much Worry About Conflicts of Interest?

In materials from a talk last year called Beyond Agency Theory: The Hidden and Heretofore Inaccessible Power of Integrity , Michael Jensen of Harvard Business School and Werner Erhard (affiliation not listed) argue: “There is far too much concern today about the conflicts of interest between people…and not enough attention paid to the damage caused by an individual’s conflict of interest with himself or herself.”   Their focus is on the importance of integrity, meaning “the quality or state of being complete; unbroken condition; wholeness; entirety [and] the quality or state of being unimpaired; perfect condition; soundness” –  not the definition of integrity concerning “sound moral principle; uprightness, honesty, and sincerity.”  The former type of integrity has a profound impact on various aspects of performance but is often disregarded because “[f]or most people and organizations integrity exists as a virtue rather than as a necessary condition for performance.  As a virtue, integrity is easily sacrificed when it appears a person or organization must do so to ‘succeed.’”

One key aspect of integrity is the importance of honoring one’s word, by which they mean: “1. Keeping your word  or: 2. Whenever you will not be keeping your word, just as soon as you become aware that you will not be keeping your word (including not keeping your word on time) saying to everyone impacted: a. that you will not be keeping your word, and b. that you will keep that word in the future, and by when, or that you won’t be keeping that word at all, and c. what you will do to deal with the impact on others of the failure to keep your word…”

On this latter point they argue:  “When giving their word, most people do not consider fully what it will take to keep that word.  That is, people do not do a cost/benefit analysis on giving their word.  In effect, when giving their word, most people are merely sincere (well-meaning) or placating someone, and don’t even think about what it will take to keep their word. This failure to do a cost/benefit analysis on giving one’s word is irresponsible.”

This notion of doing a cost/benefit analysis when giving one’s word  seems very important, and  I think it should be woven into ethics training of all kinds (among other reasons, because the underlying idea of ethics as requiring more than good intentions needs far more support than it currently gets).  Still, one can embrace this point without agreeing that we pay too much attention to conflicts of interest. 

Indeed, many COIs can be seen as failures to honor one’s word – whether it is an explicit promise of loyalty or the inherent promise of such  that comes from entering into and staying in a relationship of trust.    For this reason, paying more attention to COIs might, in my view, support the authors’ cause of promoting integrity generally and encouraging individuals to keep their word in particular.

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