In Life and Business, Learning to Be Ethical

In Life and Business, Learning to Be Ethical

JAN. 10, 2014


Lots of New Year’s resolutions are being made — and no doubt ignored — at this time of year. But there’s one that’s probably not even on many lists and should be: Act more ethically.Most people, if pressed, would acknowledge that they could use an ethical tuneup. Maybe last year they fudged some numbers at work. Dented a car and failed to leave a note. Remained silent when a friend made a racist joke.

The problem, research shows, is that how we think we’re going to act when faced with a moral decision and how we really do act are often vastly different.

Here’s just one of many examples from an experiment at Northeastern University: Subjects were told they should flip a coin to see who should do certain tasks. One task is long and laborious; the other is short and fun.

The participant flips the coin in private (though secretly watched by video cameras), said David DeSteno, a professor of psychology at Northeastern who conducted the experiment. Only 10 percent of them did it honestly. The others didn’t flip at all, or kept flipping until the coin came up the way they wanted.

Trying to become more ethical — or teaching people how to — would seem doomed then. But that’s not true. It’s just that how we teach ethics has to catch up with what we know about how the human mind works.

One area clearly in need of attention is business ethics, especially given the transgressions in the financial world in recent years. Some of the nation’s top researchers think so too. Next week, a group of them — most based at American universities — will officially introduce a new website, The site is the first to pull together extensive research and resources on the subject of business ethics with the aim of making the vast trove available to schools, government regulators and businesses — especially their compliance officers.

“It used to be business ethics grew out of philosophy, with a focus on the right thing to do,” said Jonathan Haidt, a professor of ethical leadership at New York University’s Leonard N. Stern School of Business. “In the last 10 years there’s been an explosion of research in behavioral economics” and the underlying reasons people act the way they do.

Some of the research was informed by the scandals at Enron and WorldCom unfolding at the time, as well as the global financial crises.

Those events, in part, “inspired a small group of researchers to develop a more psychologically realistic approach to business ethics,” said Professor Haidt, who spearheaded the website.

This approach — which applies to ethics in general, not just business ethics — incorporates what we now know about how people really act when faced with a moral dilemma and what tools can be used to nudge them toward doing the right thing.

First we need to be more aware of the ways we fool ourselves. We have to learn how to avoid subconsciously turning our backs when faced with a moral dilemma. And then we must be taught how to challenge people appropriately in those situations.

“When people predict how they’re going to act in a given situation, the ‘should’ self dominates — we should be fair, we should be generous, we should assert our values,” said Ann E. Tenbrunsel, a professor of business ethics at the University of Notre Dame who is involved in the EthicalSystems website. “But when the time for action comes, the ‘want’ self dominates” — I don’t want to look like a fool, I don’t want to be punished.

“Our survival instinct is to want to be liked and to be included,” said Brooke Deterline, chief executive of Courageous Leadership, a consulting firm that offers workshops and programs on dealing with ethical situations. “We don’t willfully do bad things, but when we’re under threat our initial instinct is to downplay or ignore problematic situations.”

Most people know the feeling: Something happens that we know is wrong and we mean to speak up or make it right. But we can’t quite figure out how to do it, and the moment passes. And then we justify that it was O.K. that we acted the way we did.

So how do we change this?

Using social and cognitive behavioral psychology as well as neuroscience, Ms. Deterline said, the first step is to become aware of our natural inclinations.

“Think back: When are you vulnerable to not speaking up and not saying what needs to be said?” she said. When authority is present? When it might alienate you from friends? When it might cause subordinates to think less of you?

“We all have automatic thoughts when we feel anxious: ‘I’m going to get fired, I’m going to look like an idiot,’ ” she said. The point is not to listen to those thoughts, but to be aware of them and override them. And to do that, we need to practice.

Like pilots who use flight simulators, people need to work on situations that cause them anxiety before they occur. In her programs, Ms. Deterline has role-playing employees initiate potentially challenging conversations.

“When most of us feel uncomfortable, we shut up,” she said. “But we need to use discomfort to know that that is my signal to be courageous and a cue for action rather than inaction.”

The focus on why people do and don’t act ethically is not, of course, limited to the business world. After all, it takes good citizens to make good employees.

Philip G. Zimbardo, a professor emeritus of psychology at Stanford University, is a pioneer in the study of social power — for good and for evil — and started a program in 2007 called the Heroic Imagination Project. His interest in ethics dates far back; in 1971 he created the notorious Stanford Prison Experiment, where college student “guards” demeaned and humiliated student “prisoners.” The experiment had to be stopped early because it became so abusive.

After studying moral degradation for decades, Professor Zimbardo started wondering about the 10 to 20 percent of people in every situation who resisted. Who were these people he called heroes, and could anyone be taught to be one?

Through the Heroic Imagination Project — for which Ms. Deterline once worked — middle- and high-school and community college students learn about group dynamics, like the bystander effect, in which the more people who are on a scene, the less likely it is for anyone to help.

Using video clips and real-life situations, teachers explain how students can resist such behavior, and help them explore why they have acted — or failed to act — in specific situations.

While students are taught not to be “dumb heroes” and rush into danger, Professor Zimbardo said, “we teach them that knowledge obligates you to do something —to act heroically.”

His nonprofit program has made many of its resources available free and is in the final stages of receiving funding to train a group of teachers in Flint, Mich., starting in the spring. Graduate students at the University of Michigan will assist in the program and, it is hoped, develop longitudinal findings on its effectiveness, he said.

Kristen Renwick Monroe, a professor of political science at the University of California, Irvine, has long studied why some people act righteously and others fail to.

She has found in her research that “the rescuers say, ‘What else could I do?’ ” she said. “The bystander says, ‘I was just one person? What could I do?’ ”

“We have to think, ‘Who am I and how do my actions create who I am?’ ” Professor Monroe added. She recalled interviewing a Dutch woman who stood by and watched while Jews were thrown into a truck and taken away during World War II. But the woman later saved more than a dozen others.

Professor Monroe remembers what the woman told her: “We all have memories when we should have done something, and it gets in the way for the rest of your life.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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