Money and morals: Can behavioral ethics help “Mister Green” behave himself?

The Bible says that the love of money is the root of all kinds of evil (or, depending on the translation, some variation on that thought). On the other hand, noted historian Niall Ferguson has shown that money is the foundation of much human progress.

“Mister Green” has, of course, long been known for both his bad and good sides, with the latest view coming from a recent behaviorist study, “Seeing green: Mere exposure to money triggers a business decision frame and unethical outcomes,” by Maryam Kouchaki, Kristin Smith-Crowe, Arthur P. Brief and Carlos Sousa in Organizational Behavior and Human Decision Processes.   As described in their abstract of the piece: “In four studies, we examined the likelihood of unethical outcomes when the construct of money was activated through the use of priming techniques. The results of Study 1 demonstrated that individuals primed with money were more likely to demonstrate unethical intentions than those in the control group. In Study 2, we showed that participants primed with money were more likely to adopt a business decision frame. In Studies 3 and 4, we found that money cues triggered a business decision frame, which led to a greater likelihood of unethical intentions and behavior. Together, the results of these studies demonstrate that mere exposure to money can trigger unethical intentions and, behavior and that decision frame mediates this effect.” 

The paper is well worth reading, not only for the above-described compelling findings but also for its review of other research on the impact of money on our behavior generally and social relationships in particular.  For instance, the authors describe one study in which participants “who were primed with money were more likely to choose an individual activity (e.g., four personal cooking lessons) over a group activity (e.g., an in-home catered dinner for four)” and also note that “researchers have demonstrated that activating the construct of money leads… to taking on more work for oneself, reduced helpfulness, and placing more distance between the self and others.”  This latter point is critical to the field of ethics because “[g]enerally speaking, morality has been said to be embedded in social relationships … The more tenuous the relationship, or social bond, the less morality matters.”  

Finally, the authors state: “Given the power of subtle environmental cues—such as the idea of money, discussed in this paper—organizations should identify the structural, institutional, and systematic factors that promote unethical behavior” and – citing a 2003 paper by Ann Tenbrunsel and others – further recommend that organizations attempt to establish “an ‘ethical infrastructure,’…formal and informal systems of communication, surveillance, and sanctioning mechanisms that should be aligned with strong organizational climates pertaining to ethics, justice, and respect.”

Of course, compliance and ethics programs are “ethical infrastructures”  and in the past ten years many organizations have indeed implemented such programs.  But far fewer have done so in an effective manner, and the general point of behavioral ethicists about our natural, but underappreciated, infirmities in ethical decision making suggests that more should be done in this regard – both by organizations on their own initiative and by government agencies in incenting companies to take such measures. (For a fuller discussion of why the government needs to step up its efforts in this regard see this paper from a 2012 Rand Symposium. )  

But beyond this general relevance of behavioral ethics to C&E programs, there are specific ways in which such programs can be fortified using behavioral ethics insights.  In this article published a few months ago in the Hong Kong based corporate governance journal CSj, I offer a preliminary catalogue of such possibilities  and the  study described by Kouchaki  and her colleagues suggests that one should seek to identify such opportunities from the perspective of the particular risks posed by Mister Green.

To begin, organizations should consider as part of their periodic C&E risk assessments which,  if any, of their “parts”– e.g., business, geographical or functional units – are extensively exposed to money. This  does not mean, of course, that individuals in such units are likely to act unethically. However, the socially corrosive effects of money should be taken into account along with other C&E risk relevant facts in designing and implementing mitigation measures, and not all parts of a business organization are likely to feel those effects to a uniform degree.

To take an example from C&E history, energy utilities traditionally have benefitted ethically from a focus on service to customers – i.e., this is a business where relationships with others are strong. But in the 1990s, some of these companies acquired or developed trading businesses, in which there were counterparties to trade against rather than customers to be served, and where money had a far greater presence than it would for other utility employees, e.g.,  someone whose job was fixing electrical lines.   No surprise then that while some of these companies had generally strong C&E programs, their trading operations proved to be an ethical Achilles Heel, often at great cost to their shareholders.

But how should one address these sorts of risks? One ways is through C&E-related communications.  The idea here is not to try to banish any mention of money in the workplace; as the authors of the study note, “Money is a ubiquitous feature of modern life and business organizations, in particular.” However, for parts of a company identified by the above-described risk assessment, an organization may wish to deploy communications designed to remind employees, in an impactful way, of the many  important  relationships  that the organization has with customers, stockholders, co-workers and others.  And that – combined with other C&E measures (e.g., targeted monitoring, auditing) – could help keep the lesser angels of Mister Green’s nature in check.

Finally, as with other posts on behavioral ethics, I don’t want to oversell the impact of this field of study on C&E, which should be based on knowledge from various disciplines – including management, philosophy, economics, law and, loosely speaking,  anthropology – as well as psychology.  (Indeed, in my energy trading example,  economics – meaning compensation structures  – probably would have been a more important area of focus than  behavioral ethics in preventing wrongdoing, although I do think the latter is relevant here, too.)   However,  behavioral ethics does have for some organizations the potential to enhance various specific areas of such programs. More generally –  by setting an example of using cutting edge social science research to address real C&E risks –  perhaps it will help  elevate the field as a whole.