Friday, June 17, 2011

How To Make People Choose Right Over Wrong

Until his recent conviction on 14 criminal charges, Raj Rajaratnam (who translates his name as "King of Kings"), the founder of the Galleon Group, epitomized professional and financial success. Yet his conviction on insider trading charges proved that at least some of his success had depended on illegal, unethical acts. His case may be an extreme example, but such behavior is not rare. Leaders face ethical challenges all the time, in particular conflicts between money and morality. And those challenges can take a tremendous toll. Rajaratnam faces sentencing in July, and his hedge fund is already defunct.

Choices between right and wrong have been around since Adam and Eve, and even when ethical standards are straightforward it's not always easy to choose a hard right way over an easy wrong one. The best leaders know the potential consequences of their unethical choices, and they create policies that discourage overstepping moral bounds. However, recent efforts to dampen unethical behavior in organizations, with codes of ethics, compliance departments, ethics training and the like, have often been stunningly ineffective, to put it bluntly. Moral scandals keep emerging, and trust in business keeps falling. Remember, Enron had an industry-leading code of ethics.

What can leaders who want to encourage ethical behavior actually do? Our research, which will appear in the Academy of Management Journal, suggests that simple, psychological interventions can have a potent effect, perhaps as potent as costly compliance initiatives. We have found that contemplation and conversation--just thinking and talking--can help people choose right over wrong. Thus our research suggests that simple changes to how people decide can yield substantial improvements in ethicality.

In our study we asked people to choose between money and morality, using the economist Uri Gneezy's "deception game": We had them each send one of two messages to another person. Message A was a direct lie that would likely earn them $10; Message B was the truth, but it would likely earn them $5.

Before they made this choice, we asked one group of participants to "spend three minutes thinking 'very carefully'" about their decision. We asked another group to exchange an e-mail with a stranger who faced the same decision with a different counterpart, and who indicated that he or she would probably tell the truth, because it was the right thing to do. People knew that they would never meet their conversation partners and would receive only one e-mail from them. Thus, the conversations were kept as minimal as possible.

Our results indicate that 84% of the participants who experienced a contemplation period or had a truly minimal moral conversation sent the truthful message. In contrast, 53% of the participants who made their decision without contemplation, or exchanged e-mails with a stranger who indicated that he or she would probably go for the money, lied.

In addition, whatever their choice, people consistently explained their actions as natural and obvious. Truth-tellers said it was a matter of morality; liars portrayed it in terms of self-interest.

These findings have important implications for leaders and organizations. First, they suggest that how people choose can have a dramatic impact on what they choose. In other words, organizations might spend at least as much time designing how people make decisions as they spend training them on what they should decide. Codes of ethics, compliance departments and ethics training undoubtedly provide important guidance about what choices people should make, but a well-designed decision process can dramatically increase the chances that they will actually make them. Encouraging people to think and talk about their tough decisions can have remarkably positive consequences.

Second, our results suggest that both ethical and unethical behavior can become accepted. Today's justifications become the reasons for tomorrow's choices. Thus, a seemingly minor unethical act can encourage increasingly unethical behavior, as conversations ("everybody does this") easily rationalize subsequent action. In particular, leaders' explanations for their decisions may become justifications for their employees' future choices.

Finally, our study also suggests that people do not necessarily have strong, stable moral compasses. That fact spells trouble for organizations that are not aggressive about ethics; they may need only a few bad apples to start the formation of unethical norms. This is good news, however, for organizations that devote serious attention to encouraging ethical behavior. It suggests that they can have a big effect on their employees' behavior. Thus, our research suggests, leaders should definitely devote time and resources to actively encouraging ethical behavior.

What, specifically, can leaders do? Organizations can easily adapt our contemplation and conversation ideas to their own contexts. Leaders know what types of decisions raise moral red flags in their organizations: if people make these decisions electronically, their computers might be programmed to require contemplation time before their choices can be finalized (and even to fill this contemplation time with reminders of the organization's ethical values). Alternatively, decision protocols might require multiple approvals, an obvious way to foster conversation among employees.

Fortunately, leaders already use many of these tools, though usually for non-moral purposes. The challenge, in many cases, is placing ethics high enough on their priority list to adapt existing tools toward encouraging what's right.

Brian C. Gunia, Long Wang, Li Huang, Jiunwen Wang and J. Keith Murnighan all teach at Northwestern University's Kellogg School of Management.

Thanks to Brian C. Gunia, Long Wang, Li Huang, Jiunwen Wang and J. Keith Murnighan / Forbes


No comments: