Fluent Essays

https://www.youtube.com/watch?v=wJ0q2X5Eyow After reading PDF and watching this video 1. Give an example of unethical business practices that has been covered in the news within the past 3 years (or feel free to comment on current events). What blind spots contributed to or motivated the unethical decision-making? 2. How does the theory of moral disengagement apply to the scenario i.e. how might people have acted the way they did without feeling like they did anything wrong? 3. Can you think of a time when you did not live up to your own ethical standards? What caused you to go against your ideals? https://www.youtube.com/watch?v=wJ0q2X5Eyow Chapter 1 The Gap between Intended and Actual Ethical Behavior For some reason I cant explain, I know St. Peter wont call my name. - Viva La Vida, Coldplay How ethical do you think you are compared to other readers of this book? On a scale of 0 to 100, rate yourself relative to the other readers. If you believe you are the most ethical person in this group, give yourself a score of 100. If you think youre the least ethical person in this group, give your­ self a score of 0. If you are average, give yourself a score of SO. Now, if you are part of an organization, also rate your organization: On a scale of 0 to 100, how ethical is it compared to other organizations? How did you and your organization do? If youre like most of the people weve asked, each of your scores is h igher than SO. If we averaged the scores of those reading this book, we guess that it would probably be aro und 7S. Yet that cant actually be the case; as we told you, the average score would have to be SO. Some of you m ust be overestimating your ethi­ cality relative to others. 1 Its likely that most of us overestimate our ethi­ cality at one point or another. In effect, we are un aware of the gap between how ethical we think we are and how ethical we truly are. This book aims to alert you to your ethical blind spots so that you are aware of that gap-the gap between \vho you want to be and the person you actually are. In addition, by clearing away your organizational and societal bl ind spots, you will be able to close the gap between the organi­ zation you actually belong to and your ideal organization. This, in turn, Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 2 Chapter 1 will h elp us all to narrow the gap betv;een the society we want to live in and the one in which we find ourselves. Drawing on the burgeoning field of behavioral ethics, which examines how and why people beh ave the way they do in the face of ethical dilemmas, we will make you aware of your ethical blind spots and suggest ways to remove them. Behavioral Ethics: A New Way of Understanding Unethical Behavior Consider these two opinio ns regarding responsibility for the financial crisis that began in 2008: This recession was not ca used by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street. -Preside nt Barack Obama The mistakes were systemic-the product of the nature of the b anking business in an environment shaped by low interest rates and deregulation rather than the antics of crooks and fools. -Ri chard Posn er Same financial crisis, two different explanations from two famous citi· zens . The fi rst blames the bad boys who operated in our fina ncial sys· tern, the second the system in wh ich those bad boys operated. Whos right? Both are-but, even if combined, both opinions are inco mplete. Did some greedy, ill-intentioned individuals contribute to the cris is? Absolutely! As Pres ident Obama notes, self-interested actors engaged in clearly illegal behavio r that helped bring about the crisis, and these crim i· nals should be sent to jail. Was the fi n ancial system destined to produce such behavior ? Again, absolutely! Many of our institutions, laws, and regulations are in serious n eed of reform. Do these two explanations, even when combined, fully explain the fina ncial crisis? Absolutely not! Missing from these analyses are the thousands of people who were Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 3 culpably ignorant, engaged in what they thought were seemingly harmless behaviors without con sciously recognizing they were doing anyth ing wrong: the mortgage lenders who only vaguely understood that buyers couldnt afford the homes they wanted, the analysts who created mortgage· backed securities without understand ing the ripple effect of such a prod· uct, the traders who sold the securities without grasping their complexity, the bankers who lent too m uch, and the regulators biased by the lobbyi ng efforts and campaign donations of investment banks. The crisis also in· volves the multitude of people who were aware of the uneth ical behavior of others, yet did little or noth ing in response, assum ing perhaps that some· one smarter than them understood how it all worked, as BusinessWeek speculated.2 Nu mero us scandals that have occurred in the new millennium have damaged our confidence in our businesses and our leaders. Under pre s· sure to become more ethical, organizations and fi nancial instit utions have u ndertaken efforts aimed at improving and enforcing ethical behav­ ior within their walls. They have spent millions of dollars on corporate codes of conduct, value-based m iss ion statements, ethical ombudsmen, and ethical training, to name just a few types of ethics and compl iance management strategies. Other efforts are more regulatory in nature, in· elud ing the Sarbanes·Oxley Act passed by the U.S. Congress; changes to the rules that determine how the New York Stock Exchange governs its m ember fi rms; and changes in how individual corporations arti culate and comm un icate their ethical standards to their employees, monitor employees behavior, and punish deviance. While we support efforts to enco urage more ethical decisions within organ izations, the results of these efforts have been decidedly mixed. One influential study of d iversity programs even found that creating diversity programs- an organizational attempt to do the right thing-has a nega· tive impact on the subsequent diversity of organizations. 3 Moreover, such interven tions are noth ing new. Many s imilar changes have been made in the past to address ethical indiscretions. Despite these expensive inter· ventions, new eth ical scandals continue to emerge. Similarly, ethics programs have grovm at a rapid rate at bus ine ss Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 4 Chapter 1 schools across the globe, and ratings of business schools now often ex­ plicitly assess the prevalence of eth ics training in the curriculum. Yet the effects of s uch ethics tra in ing are arguably short-lived, and MBA hono r codes, us ually part of the educational process, have in some cases been proven to produce no discernible improvement in ethical behavior. In fact, accordi ng to a 2008 survey conducted by the Aspen Institute, MBA studen ts feel less prepared to deal with val ue conflicts th e longer they are in school.4 Co uld the financial crisis have been solved by giving all individuals involved more ethics tra ining? If the training resembled that wh ich has h isto rically and is currently be ing used, the answer to that question is no. Eth ics interventions have failed and will continue to fail because they are predicated on a false assu m ption : that ind ivid uals recognize an ethical dilem ma when it is presented to them. Ethics traini ng presumes that emph as izing the moral components of decisions will insp ire executives to choose the moral path. But the common assumption this tra in ing is b ased on-that executives make expl icit trade-offs between behaving eth i­ cally and earning profits for the ir organizations- is incomplete. This paradigm fa ils to acknowledge our innate psychological responses when faced with an ethical dilemma. Fi ndings from th e emerging field of behavioral ethics-a field that seeks to u nderstand how people actually behave when confronted with eth ical dilemmas-offe r insights that can round out our understand ing of why we often behave contrary to our best ethical intentions. Our ethical behavior is often inconsistent, at ti mes even hypocritical. Co nsider that people have the innate ability to maintain a belief wh ile acting contrary to it.5 Mo ral h ypocrisy occu rs when individuals evaluations of their own moral transgressions differ substantially from thei r evaluations of the same transgressions committed by others. In one research study, partici­ pants we re divided into two groups. In one condition , participants were requ ired to distribute a resource (such as ti me or energy) to themselves and another person and could make the distribu tion fairly or unfa irly. The allocators were the n asked to evaluate the ethicality of thei r actions. Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 5 In the other condition, participants viewed another person acting in an unfa ir manner and subsequently evaluated the ethical ity of th is act. Indi­ viduals who made an unfair distr ibution perceived this transgression to be less objectionable than did those who saw another person comm it the same transgression.6 This widespread double standard-one rule for our­ selves, a d iffe rent one for others- is consistent with the gap that often exists between who we are and who \Ve think that we should be. Tradition al approaches to ethics, and the trad itional training methods that have accompanied such approaches, lack an understand ing of the unintentional yet predictable cogn itive patterns that result in unethical behavior. By contrast, our research on bounded ethicality focuses on the psychological processes that lead even good people to engage in ethically questionable behavior that contradicts their own preferred ethics. Bounded eth icality comes into play when individuals make decisions that harm others and when that harm is inconsistent with these decision makers conscious beliefs and preferences. If ethics training is to actually change and im prove ethical decision making, it needs to incorporate behavioral eth ics, and specifically the subtle ways in which our ethics are bounded. Such an approach entails an understanding of the different ways our m inds can approach ethical dilemmas and the different modes of deci­ sion making that res ult. We have no strong op inion as to whether or not you, personally, are an ethical person. Rather, we aim to alert you to the blind spots that pre· vent all of us from seeing the gap bet,veen our own actual behavior and our desired behavior. In this book, we will provide substantial evidence that our ethical judgmen ts are based on factors outside of our awareness. We will explore the impl icit psychological processes that contribute to the gap between goals and behavior, as well as the role that organizations and political environments play in widening this div ide . We will also offer tools to help weight important ethical decisions with greater reflection and less b ias- at the individual level, the organizational level, and the societal level. We will then offer interventions that can more effectively imp rove the morality of decision making at each of these three levels. Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 6 What about You? The Implications of Ethical Gaps for Individuals Chapter 1 Most local and natio nal jo urn alists questio ned in a recent survey ex­ pressed the strong belief th at mos t reporters are mo re eth ical tha n the politicians they cover. In stark contrast, m ost government and bus iness le ade rs surveyed, including members of Congress, believed that reporters were no more ethical than the targets of the ir news stories.7 Whos right? Wh ile it would be almost im possible to reach an objective conclusion, the vast l iterature that doc um en ts the way we view ourselves suggests that that both groups have inflated perce ptions of their own ethical ity. Heres another question: Did former president George W. Bush act ethically or unethically when he decided to invade Iraq? How would you have answered th is question du ring the early days of the war, when it looked as if the Un ited States was winning? To what extent m ight politi­ cal preferences bias answers to these questions? Most people believe they are fa irly immu ne from bias when assess ing the behavio r of elected offi­ cials. Moreover, even wh en they try to recall th eir view at the time they m ade a decision, m ost people are affected by their knowledge of how well the decision turned out. Our preferences and biases affect how we assess ethical dilemmas, but we fail t0 realize that this is the case. At this po int, we m ay have convinced you that others have infla ted perceptions of their O\vn ethicality and a limited awarenes s of how thei r m inds work . In all likelihood, though, you remain skeptical that th is in­ formation a pplies to you. In fact, you probably are certai n that you are as ethical as you have always believed yourself to be. To test this ass umption, imagine that you h ave volunteered to parti cipate in an experiment that requ ires you to try to solve a n umber of puzzles. You are told that you will be paid acco rding to your performance, a set amount fo r each success­ fully solved puzzle. The experimenter mentions in passing that the re­ search program is well funded. The experimenter also explains that, once Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 7 you h ave finished the task, you will check your answers aga inst an answer sheet, count the number of questions you answered correctly, put your answer sheet through a shredder, report the number of questions you solved correctly to the experimenter, and receive the money that you re­ ported you earned . Would you truthfully report the number of puzzles you solved to the experimenter, or would you report a h igher number?8 Note that there is no way for the experimenter to know if you cheated. While we do not know if you personally would cheat on this task, we do know that lots of seemingly n ice people do cheat-just a little. In comparison to a group of ind ividuals who are not allowed to shred thei r ansv,rers, those who are al­ lowed to shred report that they solved sign ifica ntly more problems than d id those who didnt shred. Those who cheat likely count a problem they would h ave answered correctly, if only they hadnt m ade a careless mis­ take. Or they count a problem they would have aced if they only had h ad another ten seconds. And when piles of cash are present on a table in the room, part icipants are even more likely to cheat on the math task th an when less money is visually available.9 In this case, participants presum­ ably justify their cheating on the grounds that the experimenters have money to burn. Ample evidence suggests that people who, in the abstract, believe they are honest and would never cheat, do in fact cheat when given such an easy, unverifia ble opportunity to do so. These people arent likely to factor this type of cheating into thei r assessments of their ethical character; instead, they leave the experiment with their pos itive self-image intact. The notion that we experience gaps between who we believe ourselves to be and who we actually are is related to the problem of bounded aware­ ness. Bounded awareness refers to the common tendency to exclude im­ portant and relevant information from our decisions by placing arbitrary and dys functional bound s around our defi n itio n of a problem. 10 Bounded awareness results in the systematic failure to see information that is rel­ evant to our personal lives and professional obligations. Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 8 Chapter 1 A .... CV:- r-wix L: IC!: ,,c-. ..... - ..... - - -. - - -- -~ - -.. =-~ ~J ~ - - -,... L . ~ - lilw . , -, -.. --. ~ J ~· • . - Fi gure 1. Photograph copyright© 1965 by Ro nald C. James Take a look at fig ure 1. What did you see? Now take a look at the Dal­ matian sniffi ng on the ground. Most people do not see the Dalmatian on the firs t look. Once they know she is there, however, they easily see he r­ and, in fact, they can no longer look at the picture without noticing she is there. The context of the black-and-white background keeps us from no· ticing the Dalmatian, just as our profit-focused work environments can keep us from seeing the ethical impl ications of our actions. As the Dalmatian pict ure demonstrates, we are boundedly aware: our perceptions and decis ion making are constrained in ways we don t realize. In addition to fall ing prey to bounded awareness, recent research fi nds we are also subject to bounded ethicality, or systematic constraints on our moral ity that favor our own self-interest at the expense of the inter· est of others. As an example, a colleague of Anns once mentioned that she had decided not to vaccinate her children given a perce ived potential connection betwee n vaccines and autism. After noting that this was a de ­ cision her colleague had a right to make, Ann suggested that she might be overweigh ing the risks of the vacc ine in comparison to the risk of the disease. Ann also raised the possibil ity that h er colleague was not fully Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 9 cons ider ing the imp act of her decision on others, part icularly im m une­ comp romised children who could d ie if they cont racted diseases as com­ monplace as ch icken pox from unvaccinated children. Several days later, An ns colleague ment ioned that she was reth inking her decision not to vaccinate her ch ildren, as she had never conside red the other ch ildren who might be affected by her decision. The psychological study of the mistakes of the m ind h elps to expla in why a parent might overweigh the risks of a vaccine relative to the risk of a d isease for the sake of her or h is own child. Going a step further, bounded ethicality helps to explain how a paren t might .act in ways that violate her own ethical standards-by p utting other peoples ch ildren in danger­ without being aware that she is doing so. We will explore how psychologi· cal tendencies produce this type of accidental uneth ical behavior. Philosopher Peter Singers book The Life You Can Save: Acting Now to End World Poverty provides ample documentation of how our limited awareness restr icts our charitable giving and even our will ingness to think about many ethical problems.11 He opens h is book with the follow­ ing problem: On your way to work, you pass a small pond. On hot days, ch ildren sometimes play in the pond, which is only about knee-deep . The weathers cool today, tho ugh, and the hour is early, so you are sur­ prised to see a ch ild splashing abo ut in the pond. As you get closer, you see that it is a very young child, just a toddle r, who is fla il ing abo ut, unable to stay upright or walk out of the pond. You lo ok for the parents or babysitter, but there is no one else around. The ch ild is unable to keep his head above the \Vater for more than a few seconds at a time. If you don t wade in a nd pull h im out, h e seems l ikely to drown . Wading in is easy and safe, but you will ruin the new shoes you bought only a few days ago, and get your suit wet and muddy. By the ti me you hand the child over to someone respons ible for h im, and change your clothes, youll be late for \Vork. What should you do? Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 10 Chapter 1 Singer notes that most people see this as an easy problem to solve. Clearly, one should jump in and save the child, as fa iling to do so would be a mas­ sive ethical fa ilure. Singer then goes on to describe a challenge descr ibed by a man in Ghana: Take the death of this small boy this m orning, for example. The boy died of measles. We all know he could have been cured at the hosp i­ tal. But the parents had no money and so the boy died a slow and painful death, not of measles but out of poverty. Think about some­ thing like that happen ing 27,000 ti mes every day. Some children die beca use they dont have enough to eat. More d ie, like that small boy in Ghana, from measles, m ala ria, diarrhea, and pneumonia, condi­ tions that either dont exist in developed nations, or, if they do, are al­ m ost never fa tal. The children are vulnerable to these diseases be­ cause they have no safe dri nking water, or no sanitation, and because when they do fall ill, the ir parents cant afford any m edical treatment. UNICEF, Oxfam, and m any other organ ization s are working to re­ duce poverty and provide clean water and bas ic he alth care, and these efforts are reducing the toll. If the relief organizations had more money, they could do more, and more lives would be saved. While one could quibble about whether the two stories are perfectly paral­ lel, most people feel uncomfortable when reading this second story (we know that we were). In fact, the stories are qu ite similar, except for one difference. In the fi rst, you would likely be aware of any gap that arises between what you should do and what you actually do : you sho uld save the boy, and if you do not, it will be obvious to you that you fa iled to meet your own ethical standards. In the second example, your ethical blinders are firmly in place. Most people likely would be ashamed if they knew they had failed to save a life for a relatively s mall amount of money, yet m ost of us do exactly that. We will explore the psychological tendencies that produce those blind spots and suggest ways to remove them. As another example, take the case of Berna rd Madoff. Over the course of three decades, Madoffs Ponzi scheme racked up enormous losses: Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 11 more than 15,000 cla ims ap proach ing $300 million in damages, and $64.8 b illion in paper profit wa s wiped out. Madoff sold m ost of h is investments through feede r fu nds-tha t is, other funds that e ither m arketed the ir ac­ cess to Ma doff to potential investors or cla imed they h ad access to some exotic investment strategy. In reality, the feeder funds were doing noth ing more than tur ning much of the money they collected over to Madoff. These intermediaries we re extremely well paid, often earning a small per­ centage of the funds invested plus 20 percent of any investmen t profits earned. Thus, a s Madoff cla imed an amazing record of success, the feeder funds were getting r ich . It is now clear that Madoff was a crook, and h is purposeful, dece itful behavior lies outs ide of th is books focus on un intentional ethical beh av­ ior. Yet we are fa scin ated by the har mful behavior of so m any oth er people in this story, people who had no inten ti on of h urting Madoff s eventual victims. Many analysts have now concluded that outper forming all kinds of m arkets, as Ma doff d id, is statistically imposs ible. Did the managers of the feeder fu nds know that Madoff was r un ning a Ponzi scheme, or d id they simply fail to notice that Madoff s pe rform ance reached a level of return and stability that was im possible? Ample evidence suggests that m an y feeder fu nds had h ints that somethi ng was wrong, but lacked the mot ivation to see the evidence tha t was readily available. For exa m ple, Rene-Th ierry Magon d e la Villehuchet, a descendent of European nob il ity and the CEO of Access Internat ional Ad vi sors and Marketers, ha d in­ vested h is own mo ney, h is fa m ilys money, and money from h is wealthy Eu ropean clien ts with Madoff. He was repeatedly warned abo ut Madoff and received ample evidence that Madoffs returns were not possible, but he tu rned a blind eye to the overwhelming evid ence. Two weeks after Madoff surrendered to authorities, de la Villehuchet killed him self in h is New York office. Heres a final example of the type of psychological blind spots tha t af­ fect us. In perhaps the m ost famo us exper iment in psychology, Stanley Milgram demonstrated the amazing degree to which people will engage in uneth ical behavior in order to fulfill their obligations to authority. Each Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 12 Chapter 1 participant in Milgrams study played the role of teacher, while a study confederate (someone trained by the experimenter) played the role of learner. The learner was portrayed as a fo rty-seven-year-old accountant. The teacher and learner were physically separated, such that the teacher cou ld not see the learner. The teacher was told that it was h is job to ad· m inister shocks of increasing m agn itude, rang ing from 15 volts to 450 volts, as the le arner made mistakes in a task requiring the matching of word pa irs . The learner did m ake mi stakes on the task, requiring the confederate to administer shocks. Up to 150 volts, occasional grunts were heard from the other side of the wall where the learner was located. (The learner was not actu ally receiving shocks; he was an actor.) At 150 volts, the learner shouted that he wanted to stop the experiment and let out some cries of pain. If the teacher resisted contin uing, the experimenter insisted that the experiment m ust go on. From 150 to 300 volts, the teacher heard the learner as h e pleaded to be released and compla ined about h is h eart con· dition. At 300 volts, the learner banged on the wall and demanded to be released. After 300 volts, the learner was completely silent. Milgram surveyed psych iatrists, graduate students, behavioral sci­ ence faculty members, college sop homores, and m iddle-class adults about their expectations of how study participants playing the role of the teacher would r espond dur ing the st udy. Across groups, survey respon· dents predicted that nearly all teachers would stop administering shocks well short of 450 volts . The psych iatrists predicted that nearly all teachers would refuse to m ove beyond the 150-volt level and that only one in a thousand particip ants would go all the way to 450 volts. In fact, in the ac­ tual study, 65 percent of those playi ng the role of teacher went all the way to 450 volts .12 These powerful results show that our ethical beh avior is distinctly differe n t from our expectations of our own behavior. While m any teachers were visibly upset and angry dur ing the study, they none­ theless submitted to the experimenters … Chapter 1 The Gap between Intended and Actual Ethical Behavior For some reason I cant explain, I know St. Peter wont call my name. - Viva La Vida, Coldplay How ethical do you think you are compared to other readers of this book? On a scale of 0 to 100, rate yourself relative to the other readers. If you believe you are the most ethical person in this group, give yourself a score of 100. If you think youre the least ethical person in this group, give your­ self a score of 0. If you are average, give yourself a score of SO. Now, if you are part of an organization, also rate your organization: On a scale of 0 to 100, how ethical is it compared to other organizations? How did you and your organization do? If youre like most of the people weve asked, each of your scores is h igher than SO. If we averaged the scores of those reading this book, we guess that it would probably be aro und 7S. Yet that cant actually be the case; as we told you, the average score would have to be SO. Some of you m ust be overestimating your ethi­ cality relative to others. 1 Its likely that most of us overestimate our ethi­ cality at one point or another. In effect, we are un aware of the gap between how ethical we think we are and how ethical we truly are. This book aims to alert you to your ethical blind spots so that you are aware of that gap-the gap between \vho you want to be and the person you actually are. In addition, by clearing away your organizational and societal bl ind spots, you will be able to close the gap between the organi­ zation you actually belong to and your ideal organization. This, in turn, Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 2 Chapter 1 will h elp us all to narrow the gap betv;een the society we want to live in and the one in which we find ourselves. Drawing on the burgeoning field of behavioral ethics, which examines how and why people beh ave the way they do in the face of ethical dilemmas, we will make you aware of your ethical blind spots and suggest ways to remove them. Behavioral Ethics: A New Way of Understanding Unethical Behavior Consider these two opinio ns regarding responsibility for the financial crisis that began in 2008: This recession was not ca used by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street. -Preside nt Barack Obama The mistakes were systemic-the product of the nature of the b anking business in an environment shaped by low interest rates and deregulation rather than the antics of crooks and fools. -Ri chard Posn er Same financial crisis, two different explanations from two famous citi· zens . The fi rst blames the bad boys who operated in our fina ncial sys· tern, the second the system in wh ich those bad boys operated. Whos right? Both are-but, even if combined, both opinions are inco mplete. Did some greedy, ill-intentioned individuals contribute to the cris is? Absolutely! As Pres ident Obama notes, self-interested actors engaged in clearly illegal behavio r that helped bring about the crisis, and these crim i· nals should be sent to jail. Was the fi n ancial system destined to produce such behavior ? Again, absolutely! Many of our institutions, laws, and regulations are in serious n eed of reform. Do these two explanations, even when combined, fully explain the fina ncial crisis? Absolutely not! Missing from these analyses are the thousands of people who were Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 3 culpably ignorant, engaged in what they thought were seemingly harmless behaviors without con sciously recognizing they were doing anyth ing wrong: the mortgage lenders who only vaguely understood that buyers couldnt afford the homes they wanted, the analysts who created mortgage· backed securities without understand ing the ripple effect of such a prod· uct, the traders who sold the securities without grasping their complexity, the bankers who lent too m uch, and the regulators biased by the lobbyi ng efforts and campaign donations of investment banks. The crisis also in· volves the multitude of people who were aware of the uneth ical behavior of others, yet did little or noth ing in response, assum ing perhaps that some· one smarter than them understood how it all worked, as BusinessWeek speculated.2 Nu mero us scandals that have occurred in the new millennium have damaged our confidence in our businesses and our leaders. Under pre s· sure to become more ethical, organizations and fi nancial instit utions have u ndertaken efforts aimed at improving and enforcing ethical behav­ ior within their walls. They have spent millions of dollars on corporate codes of conduct, value-based m iss ion statements, ethical ombudsmen, and ethical training, to name just a few types of ethics and compl iance management strategies. Other efforts are more regulatory in nature, in· elud ing the Sarbanes·Oxley Act passed by the U.S. Congress; changes to the rules that determine how the New York Stock Exchange governs its m ember fi rms; and changes in how individual corporations arti culate and comm un icate their ethical standards to their employees, monitor employees behavior, and punish deviance. While we support efforts to enco urage more ethical decisions within organ izations, the results of these efforts have been decidedly mixed. One influential study of d iversity programs even found that creating diversity programs- an organizational attempt to do the right thing-has a nega· tive impact on the subsequent diversity of organizations. 3 Moreover, such interven tions are noth ing new. Many s imilar changes have been made in the past to address ethical indiscretions. Despite these expensive inter· ventions, new eth ical scandals continue to emerge. Similarly, ethics programs have grovm at a rapid rate at bus ine ss Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 4 Chapter 1 schools across the globe, and ratings of business schools now often ex­ plicitly assess the prevalence of eth ics training in the curriculum. Yet the effects of s uch ethics tra in ing are arguably short-lived, and MBA hono r codes, us ually part of the educational process, have in some cases been proven to produce no discernible improvement in ethical behavior. In fact, accordi ng to a 2008 survey conducted by the Aspen Institute, MBA studen ts feel less prepared to deal with val ue conflicts th e longer they are in school.4 Co uld the financial crisis have been solved by giving all individuals involved more ethics tra ining? If the training resembled that wh ich has h isto rically and is currently be ing used, the answer to that question is no. Eth ics interventions have failed and will continue to fail because they are predicated on a false assu m ption : that ind ivid uals recognize an ethical dilem ma when it is presented to them. Ethics traini ng presumes that emph as izing the moral components of decisions will insp ire executives to choose the moral path. But the common assumption this tra in ing is b ased on-that executives make expl icit trade-offs between behaving eth i­ cally and earning profits for the ir organizations- is incomplete. This paradigm fa ils to acknowledge our innate psychological responses when faced with an ethical dilemma. Fi ndings from th e emerging field of behavioral ethics-a field that seeks to u nderstand how people actually behave when confronted with eth ical dilemmas-offe r insights that can round out our understand ing of why we often behave contrary to our best ethical intentions. Our ethical behavior is often inconsistent, at ti mes even hypocritical. Co nsider that people have the innate ability to maintain a belief wh ile acting contrary to it.5 Mo ral h ypocrisy occu rs when individuals evaluations of their own moral transgressions differ substantially from thei r evaluations of the same transgressions committed by others. In one research study, partici­ pants we re divided into two groups. In one condition , participants were requ ired to distribute a resource (such as ti me or energy) to themselves and another person and could make the distribu tion fairly or unfa irly. The allocators were the n asked to evaluate the ethicality of thei r actions. Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 5 In the other condition, participants viewed another person acting in an unfa ir manner and subsequently evaluated the ethical ity of th is act. Indi­ viduals who made an unfair distr ibution perceived this transgression to be less objectionable than did those who saw another person comm it the same transgression.6 This widespread double standard-one rule for our­ selves, a d iffe rent one for others- is consistent with the gap that often exists between who we are and who \Ve think that we should be. Tradition al approaches to ethics, and the trad itional training methods that have accompanied such approaches, lack an understand ing of the unintentional yet predictable cogn itive patterns that result in unethical behavior. By contrast, our research on bounded ethicality focuses on the psychological processes that lead even good people to engage in ethically questionable behavior that contradicts their own preferred ethics. Bounded eth icality comes into play when individuals make decisions that harm others and when that harm is inconsistent with these decision makers conscious beliefs and preferences. If ethics training is to actually change and im prove ethical decision making, it needs to incorporate behavioral eth ics, and specifically the subtle ways in which our ethics are bounded. Such an approach entails an understanding of the different ways our m inds can approach ethical dilemmas and the different modes of deci­ sion making that res ult. We have no strong op inion as to whether or not you, personally, are an ethical person. Rather, we aim to alert you to the blind spots that pre· vent all of us from seeing the gap bet,veen our own actual behavior and our desired behavior. In this book, we will provide substantial evidence that our ethical judgmen ts are based on factors outside of our awareness. We will explore the impl icit psychological processes that contribute to the gap between goals and behavior, as well as the role that organizations and political environments play in widening this div ide . We will also offer tools to help weight important ethical decisions with greater reflection and less b ias- at the individual level, the organizational level, and the societal level. We will then offer interventions that can more effectively imp rove the morality of decision making at each of these three levels. Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 6 What about You? The Implications of Ethical Gaps for Individuals Chapter 1 Most local and natio nal jo urn alists questio ned in a recent survey ex­ pressed the strong belief th at mos t reporters are mo re eth ical tha n the politicians they cover. In stark contrast, m ost government and bus iness le ade rs surveyed, including members of Congress, believed that reporters were no more ethical than the targets of the ir news stories.7 Whos right? Wh ile it would be almost im possible to reach an objective conclusion, the vast l iterature that doc um en ts the way we view ourselves suggests that that both groups have inflated perce ptions of their own ethical ity. Heres another question: Did former president George W. Bush act ethically or unethically when he decided to invade Iraq? How would you have answered th is question du ring the early days of the war, when it looked as if the Un ited States was winning? To what extent m ight politi­ cal preferences bias answers to these questions? Most people believe they are fa irly immu ne from bias when assess ing the behavio r of elected offi­ cials. Moreover, even wh en they try to recall th eir view at the time they m ade a decision, m ost people are affected by their knowledge of how well the decision turned out. Our preferences and biases affect how we assess ethical dilemmas, but we fail t0 realize that this is the case. At this po int, we m ay have convinced you that others have infla ted perceptions of their O\vn ethicality and a limited awarenes s of how thei r m inds work . In all likelihood, though, you remain skeptical that th is in­ formation a pplies to you. In fact, you probably are certai n that you are as ethical as you have always believed yourself to be. To test this ass umption, imagine that you h ave volunteered to parti cipate in an experiment that requ ires you to try to solve a n umber of puzzles. You are told that you will be paid acco rding to your performance, a set amount fo r each success­ fully solved puzzle. The experimenter mentions in passing that the re­ search program is well funded. The experimenter also explains that, once Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 7 you h ave finished the task, you will check your answers aga inst an answer sheet, count the number of questions you answered correctly, put your answer sheet through a shredder, report the number of questions you solved correctly to the experimenter, and receive the money that you re­ ported you earned . Would you truthfully report the number of puzzles you solved to the experimenter, or would you report a h igher number?8 Note that there is no way for the experimenter to know if you cheated. While we do not know if you personally would cheat on this task, we do know that lots of seemingly n ice people do cheat-just a little. In comparison to a group of ind ividuals who are not allowed to shred thei r ansv,rers, those who are al­ lowed to shred report that they solved sign ifica ntly more problems than d id those who didnt shred. Those who cheat likely count a problem they would h ave answered correctly, if only they hadnt m ade a careless mis­ take. Or they count a problem they would have aced if they only had h ad another ten seconds. And when piles of cash are present on a table in the room, part icipants are even more likely to cheat on the math task th an when less money is visually available.9 In this case, participants presum­ ably justify their cheating on the grounds that the experimenters have money to burn. Ample evidence suggests that people who, in the abstract, believe they are honest and would never cheat, do in fact cheat when given such an easy, unverifia ble opportunity to do so. These people arent likely to factor this type of cheating into thei r assessments of their ethical character; instead, they leave the experiment with their pos itive self-image intact. The notion that we experience gaps between who we believe ourselves to be and who we actually are is related to the problem of bounded aware­ ness. Bounded awareness refers to the common tendency to exclude im­ portant and relevant information from our decisions by placing arbitrary and dys functional bound s around our defi n itio n of a problem. 10 Bounded awareness results in the systematic failure to see information that is rel­ evant to our personal lives and professional obligations. Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 8 Chapter 1 A .... CV:- r-wix L: IC!: ,,c-. ..... - ..... - - -. - - -- -~ - -.. =-~ ~J ~ - - -,... L . ~ - lilw . , -, -.. --. ~ J ~· • . - Fi gure 1. Photograph copyright© 1965 by Ro nald C. James Take a look at fig ure 1. What did you see? Now take a look at the Dal­ matian sniffi ng on the ground. Most people do not see the Dalmatian on the firs t look. Once they know she is there, however, they easily see he r­ and, in fact, they can no longer look at the picture without noticing she is there. The context of the black-and-white background keeps us from no· ticing the Dalmatian, just as our profit-focused work environments can keep us from seeing the ethical impl ications of our actions. As the Dalmatian pict ure demonstrates, we are boundedly aware: our perceptions and decis ion making are constrained in ways we don t realize. In addition to fall ing prey to bounded awareness, recent research fi nds we are also subject to bounded ethicality, or systematic constraints on our moral ity that favor our own self-interest at the expense of the inter· est of others. As an example, a colleague of Anns once mentioned that she had decided not to vaccinate her children given a perce ived potential connection betwee n vaccines and autism. After noting that this was a de ­ cision her colleague had a right to make, Ann suggested that she might be overweigh ing the risks of the vacc ine in comparison to the risk of the disease. Ann also raised the possibil ity that h er colleague was not fully Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 9 cons ider ing the imp act of her decision on others, part icularly im m une­ comp romised children who could d ie if they cont racted diseases as com­ monplace as ch icken pox from unvaccinated children. Several days later, An ns colleague ment ioned that she was reth inking her decision not to vaccinate her ch ildren, as she had never conside red the other ch ildren who might be affected by her decision. The psychological study of the mistakes of the m ind h elps to expla in why a parent might overweigh the risks of a vaccine relative to the risk of a d isease for the sake of her or h is own child. Going a step further, bounded ethicality helps to explain how a paren t might .act in ways that violate her own ethical standards-by p utting other peoples ch ildren in danger­ without being aware that she is doing so. We will explore how psychologi· cal tendencies produce this type of accidental uneth ical behavior. Philosopher Peter Singers book The Life You Can Save: Acting Now to End World Poverty provides ample documentation of how our limited awareness restr icts our charitable giving and even our will ingness to think about many ethical problems.11 He opens h is book with the follow­ ing problem: On your way to work, you pass a small pond. On hot days, ch ildren sometimes play in the pond, which is only about knee-deep . The weathers cool today, tho ugh, and the hour is early, so you are sur­ prised to see a ch ild splashing abo ut in the pond. As you get closer, you see that it is a very young child, just a toddle r, who is fla il ing abo ut, unable to stay upright or walk out of the pond. You lo ok for the parents or babysitter, but there is no one else around. The ch ild is unable to keep his head above the \Vater for more than a few seconds at a time. If you don t wade in a nd pull h im out, h e seems l ikely to drown . Wading in is easy and safe, but you will ruin the new shoes you bought only a few days ago, and get your suit wet and muddy. By the ti me you hand the child over to someone respons ible for h im, and change your clothes, youll be late for \Vork. What should you do? Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 10 Chapter 1 Singer notes that most people see this as an easy problem to solve. Clearly, one should jump in and save the child, as fa iling to do so would be a mas­ sive ethical fa ilure. Singer then goes on to describe a challenge descr ibed by a man in Ghana: Take the death of this small boy this m orning, for example. The boy died of measles. We all know he could have been cured at the hosp i­ tal. But the parents had no money and so the boy died a slow and painful death, not of measles but out of poverty. Think about some­ thing like that happen ing 27,000 ti mes every day. Some children die beca use they dont have enough to eat. More d ie, like that small boy in Ghana, from measles, m ala ria, diarrhea, and pneumonia, condi­ tions that either dont exist in developed nations, or, if they do, are al­ m ost never fa tal. The children are vulnerable to these diseases be­ cause they have no safe dri nking water, or no sanitation, and because when they do fall ill, the ir parents cant afford any m edical treatment. UNICEF, Oxfam, and m any other organ ization s are working to re­ duce poverty and provide clean water and bas ic he alth care, and these efforts are reducing the toll. If the relief organizations had more money, they could do more, and more lives would be saved. While one could quibble about whether the two stories are perfectly paral­ lel, most people feel uncomfortable when reading this second story (we know that we were). In fact, the stories are qu ite similar, except for one difference. In the fi rst, you would likely be aware of any gap that arises between what you should do and what you actually do : you sho uld save the boy, and if you do not, it will be obvious to you that you fa iled to meet your own ethical standards. In the second example, your ethical blinders are firmly in place. Most people likely would be ashamed if they knew they had failed to save a life for a relatively s mall amount of money, yet m ost of us do exactly that. We will explore the psychological tendencies that produce those blind spots and suggest ways to remove them. As another example, take the case of Berna rd Madoff. Over the course of three decades, Madoffs Ponzi scheme racked up enormous losses: Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. Intended and Actual Ethical Behavior 11 more than 15,000 cla ims ap proach ing $300 million in damages, and $64.8 b illion in paper profit wa s wiped out. Madoff sold m ost of h is investments through feede r fu nds-tha t is, other funds that e ither m arketed the ir ac­ cess to Ma doff to potential investors or cla imed they h ad access to some exotic investment strategy. In reality, the feeder funds were doing noth ing more than tur ning much of the money they collected over to Madoff. These intermediaries we re extremely well paid, often earning a small per­ centage of the funds invested plus 20 percent of any investmen t profits earned. Thus, a s Madoff cla imed an amazing record of success, the feeder funds were getting r ich . It is now clear that Madoff was a crook, and h is purposeful, dece itful behavior lies outs ide of th is books focus on un intentional ethical beh av­ ior. Yet we are fa scin ated by the har mful behavior of so m any oth er people in this story, people who had no inten ti on of h urting Madoff s eventual victims. Many analysts have now concluded that outper forming all kinds of m arkets, as Ma doff d id, is statistically imposs ible. Did the managers of the feeder fu nds know that Madoff was r un ning a Ponzi scheme, or d id they simply fail to notice that Madoff s pe rform ance reached a level of return and stability that was im possible? Ample evidence suggests that m an y feeder fu nds had h ints that somethi ng was wrong, but lacked the mot ivation to see the evidence tha t was readily available. For exa m ple, Rene-Th ierry Magon d e la Villehuchet, a descendent of European nob il ity and the CEO of Access Internat ional Ad vi sors and Marketers, ha d in­ vested h is own mo ney, h is fa m ilys money, and money from h is wealthy Eu ropean clien ts with Madoff. He was repeatedly warned abo ut Madoff and received ample evidence that Madoffs returns were not possible, but he tu rned a blind eye to the overwhelming evid ence. Two weeks after Madoff surrendered to authorities, de la Villehuchet killed him self in h is New York office. Heres a final example of the type of psychological blind spots tha t af­ fect us. In perhaps the m ost famo us exper iment in psychology, Stanley Milgram demonstrated the amazing degree to which people will engage in uneth ical behavior in order to fulfill their obligations to authority. Each Bazerman, Max H., and Tenbrunsel, Ann E.. Blind Spots : Why We Fail to Do Whats Right and What to Do about It. Princeton, US: Princeton University Press, 2011. ProQuest ebrary. Web. 27 September 2016. Copyright © 2011. Princeton University Press. All rights reserved. 12 Chapter 1 participant in Milgrams study played the role of teacher, while a study confederate (someone trained by the experimenter) played the role of learner. The learner was portrayed as a fo rty-seven-year-old accountant. The teacher and learner were physically separated, such that the teacher cou ld not see the learner. The teacher was told that it was h is job to ad· m inister shocks of increasing m agn itude, rang ing from 15 volts to 450 volts, as the le arner made mistakes in a task requiring the matching of word pa irs . The learner did m ake mi stakes on the task, requiring the confederate to administer shocks. Up to 150 volts, occasional grunts were heard from the other side of the wall where the learner was located. (The learner was not actu ally receiving shocks; he was an actor.) At 150 volts, the learner shouted that he wanted to stop the experiment and let out some cries of pain. If the teacher resisted contin uing, the experimenter insisted that the experiment m ust go on. From 150 to 300 volts, the teacher heard the learner as h e pleaded to be released and compla ined about h is h eart con· dition. At 300 volts, the learner banged on the wall and demanded to be released. After 300 volts, the learner was completely silent. Milgram surveyed psych iatrists, graduate students, behavioral sci­ ence faculty members, college sop homores, and m iddle-class adults about their expectations of how study participants playing the role of the teacher would r espond dur ing the st udy. Across groups, survey respon· dents predicted that nearly all teachers would stop administering shocks well short of 450 volts . The psych iatrists predicted that nearly all teachers would refuse to m ove beyond the 150-volt level and that only one in a thousand particip ants would go all the way to 450 volts. In fact, in the ac­ tual study, 65 percent of those playi ng the role of teacher went all the way to 450 volts .12 These powerful results show that our ethical beh avior is distinctly differe n t from our expectations of our own behavior. While m any teachers were visibly upset and angry dur ing the study, they none­ theless submitted to the experimenters …