Ethics made easy

We justly praise those who show true ethical heroism.  But to protect business organizations  and society generally from legal and ethical breaches we need to aim our efforts more broadly.

In “How to Design an Ethical Organization” in the May-June 2019 issue of the Harvard Business Review, Nicholas Epley, John Templeton Keller Professor of Behavioral Science at the University of Chicago Booth School of Business, and Amit Kumar, an assistant professor of marketing and psychology at the University of Texas at Austin, argue: few executives set out to achieve advantage by breaking the rules, and most companies have programs in place to prevent malfeasance at all levels. Yet recurring scandals show that we could do better. Interventions to encourage ethical behavior are often based on misperceptions of how transgressions occur, and thus are not as effective as they could be. Compliance programs increasingly take a legalistic approach to ethics that focuses on individual accountability. They’re designed to educate employees and then punish wrongdoing among the “bad apples” who misbehave. Yet a large body of behavioral science research suggests that even well-meaning and well-informed people are more ethically malleable than one might guess…Creating an ethical culture thus requires thinking about ethics not simply as a belief problem but also as a design problem. We have identified four critical features that need to be addressed when designing an ethical culture: explicit values, thoughts during judgment, incentives, and cultural norms.

The first of these is “explicit values.” Among the key points here are that:

– Strategies and practices should be anchored to clearly stated principles that can be widely shared within the organization. A well-crafted mission statement can help achieve this, as long as it is used correctly. Leaders can refer to it to guide the creation of any new strategy or initiative and note its connection to the company’s principles when addressing employees, thus reinforcing the broader ethical system.

– A mission statement should be simple, short, actionable, and emotionally resonant. Most corporate mission statements today are too long to remember, too obvious to need stating, too clearly tailored for regulators, or too distant from day-to-day practices to meaningfully guide employees.

The second design consideration is “thoughts during judgment.” Among the key points here are that:

– Most people have less difficulty knowing what’s right or wrong than they do keeping ethical considerations top of mind when making decisions. Ethical lapses can therefore be reduced in a culture where ethics are at the center of attention. … Behavior tends to be guided by what comes to mind immediately before engaging in an action, and those thoughts can be meaningfully affected by context.

– Several experiments make this point… In a large field experiment of approximately 18,000 U.S. government contractors, simply adding a box for filers to check certifying their honesty while reporting yielded $28.6 million more in sales tax revenue than did a condition that omitted the box.

The third consideration is incentives. Here the authors note: Along with earning an income, employees care about doing meaningful work, making a positive impact, and being respected or appreciated for their efforts… An ethical culture not only does good; it also feels good.

The final design consideration is cultural norms. Here the authors recount the results of several experiments showing the often underappreciated power of such norms in creating ethical risk.

The authors conclude the article with several helpful suggestions for putting ethical design into practice – including in the contexts of hiring, personnel evaluation, compensation.

Note that there is a lot more that could be said about how behavioral ethics can inform and fortify compliance programs. (See this index of prior posts on this subject.) But the ideas and information is this article are very helpful, and the overall point – that [o]rganizations should aim to design a system that makes being good as easy as possible – seems exactly right to me.