What is behavioral ethics? Why is it important for all companies?
Behavioral ethics series #1: creating successful companies attuned to the values and challenges of the 21st century
Acclaimed writer Oscar Wilde captured very well the spirit of the emerging field of “behavioral ethics” by saying that “the only difference between saints and sinners is that every saint has a past while every sinner has a future.”
This new and multidisciplinary field — primarily based on social psychology, evolutionary psychology, sociology, behavioral economics, and neuroscience — aims to address two major questions:
1. How do people actually behave when they are exposed to ethical dilemmas? and,
2. Why do ordinary people (or simply “good people”) do bad things, often without being fully aware that they are acting against their own values?
These questions represent a new perspective for the field of ethics.
The traditional approach, prescriptive and based on philosophy, aims to discuss and inform how people should behave.
Behavioral ethics, in contrast, tries to understand what situational factors might foster ethical behaviors as well as those that might lead well-intentioned people to act in unethical and even in illegal ways. It seeks, therefore, to understand how people do actually behave.
The traditional approach to ethics is grounded on theories that assume people are rational and fully reflect on their actions. The two major theses, widely debated in ethics courses, are the deontological view of Immanuel Kant and the utilitarianism of Jeremy Bentham and John Stuart Mill.
The normative discussion about ethics is certainly very important. After all, how can we judge people’s conduct without a guidance that establishes ex-ante what is ethical or unethical?
However, if knowing what is right to do was enough to effectively improve human behavior, then individuals with high expertise on its concepts such as ethics professors would probably behave more ethically than the rest of the population.
Curiously, though, scientific evidence shows that not even ethicists tend to behave systematically better than others.
This was demonstrated by a series of papers led by philosophy professor Eric Schwitzgebel. In one of his works, he went to libraries from universities all over the United States and concluded that ethics books were 50% to about twice as likely to be missing than books from other areas of philosophy comparable in terms of age and popularity.
In another study, he concluded that ethics professors did not behave better than professors from other fields in any of eight activities having a moral dimension, e.g., blood and organ donation, election attendance, vegetarianism, payment of academic societies membership fees, replying to student emails, and even the frequency of staying in touch with one’s mother.
The central message from these papers is clear: studying ethics from a strictly intellectual point of view will not necessarily make people behave more ethically.
In fact, the opposite can occur, i.e., studying ethics from a rational and normative perspective can make individuals more prone to use rhetoric to justify their preferred courses of action, thus increasing the chance of unethical behaviors.
This view is endorsed by Mary Gentile, professor of ethics at the University of Virginia. In her book “Giving Voice to Values”, she argues that the traditional training on ethics, centered on the discussion of complex dilemmas using ethical normative models has led to a sort of “ethics fatigue” among executives, who tend to view these intellectual debates as tedious exercises.
Psychologist Jonathan Haidt, a professor of ethics at New York University and founder of Ethical Systems, a multidisciplinary initiative that brings together leading researchers on behavioral ethics, make a similar criticism. For him, traditional ethics trainings fail to effectively change people’s conduct because they are based on mid-twentieth-century theories that assume people are fully rational, when in fact they are not. In contrast, he argues that our moral judgments primarily result from an intuitive and automatic process usually (but not always) followed by reasoning.
The modern view on ethics, therefore, is that people behave virtuously when they are moved not only by reason, but essentially by intuition, emotion, and empathy. Countless research in the fields of neuroscience and social psychology has corroborated this claim.
For the business world, behavioral ethics plays a key role by providing a new way for understanding the conduct of people in organizations.
Instead of classifying individuals as “good” or “bad” and expect that “good people” will always act ethically, behavioral ethics understands that most transgressions derive from the psychological complexities of human beings and from the powerful social contexts of which they are part.
As pointed out by Harvard Business School professor Eugene Soltes, author of a book titled “Why They Do It” based on interviews with dozens of convicted manager involved in high-profile corporate scandals, “[to judge executives’ unethical actions], we have to imagine ourselves surrounded by their norms and immersed in their culture — not just in the present but in the past as well… we have to see ourselves as being shaped by the experiences they faced throughout their careers, not by those we face in our own.”
To improve ethical conduct, therefore, we must go beyond the view that human beings always act in a rational and calculated way. It is necessary to analyze the impact of their psychological processes, contextual pressures, and temporal dynamics.
By understanding these sources of unethical behavior, we will be able to create workplaces in which a sound ethical conduct is easy-to-do, automatic, and customary.
So far, research on behavioral ethics has reached two major conclusions based on numerous experiments with thousands of individuals:
The first is that we have a strong tendency to fall short of our ethical standards. This implies that we often do not realize the gap between how ethical we would like to be and how ethical our actions really are.
The second conclusion is that most of the wrong things are done by ordinary people: that is, by individuals with no malicious intent nor any relevant personality disorders. This suggests that most of us could end up committing unethical behaviors depending on the context, pressures, and temporal dynamics we are subject to.
Both findings are difficult for us to digest. After all, most people have been educated to think that bad things are done by “bad people” while “good people” do virtuous things. Most of us have not, however, been educated to believe that people of “good character” can do bad things.
For the business world, these findings mean that most corporate scandals are the consequence of a collective process of ethical fading taking place in the workplace in which people become less and less sensitive to the implications of their decisions until they reach a point of complete ethical blindness.
Behavioral ethics assumes that the situational factors and the belief system to which people are subject are the main determinants of their behavior, instead of their character or disposition.
The greatest risk for sound management does not come from a few bad apples, but from people with good values who start to rationalize their behaviors as a result of cognitive biases, day-to-day pressures, and a perverse temporal dynamic.
In the next articles, I am going to dig deeper into these critical conclusions as well as offer a set of practical solutions to help companies developing a strong ethical culture promoted by virtuous leaders in the pursue of an authentic purpose beyond profits.
Prof. Dr. Alexandre Di Miceli is a professional speaker, business thinker and founding partner of Direzione, a top management consultancy.
He is the author of “The Virtuous Barrel: How to Transform Corporate Scandals into Good Businesses” as well as of the best-selling books on corporate governance and business ethics in Brazil, including “Corporate Governance in Brazil and in the World”, “Behavioral Business Ethics: Solutions for Management in the 21st Century”, and “Corporate Governance: The Essentials for Leaders”.
He thanks Prof. Dr. Angela Donaggio for her valuable comments and suggestions.