It’s not uncommon for adults to reflect back on their teenage years and wonder, “What was I thinking?” There may be particular decisions you made that make you question what type of person you were and why you did what you did.

The answer for some will be peer group pressure, which is particularly intense in our formative years. But what excuse do we have as adults for poor decisions? The answer is: many!

The reality is we never escape the influence of other people on our decisions. Our environment also works away at our character, shaping our decisions and signaling what is right and wrong.

As we move into workplaces and develop our professional lives we become part of work cultures and professional and team sub-cultures. At the end of the day however, we are responsible and will be held accountable for our decisions and therefore it is imperative we understand the forces that impact them.

The influence of our environment

A body of research has confirmed individuals look for cues in their work environment to guide them on how to behave, particularly when facing ambiguous or uncertain situations.

Ashforth and Anand, in The Normalization of Corruption in Organizations, identify socialisation as a factor in explaining how otherwise morally upright individuals can routinely engage in corruption without experiencing conflict, and how corruption can persist despite the turnover of its initial practitioners. Importantly they conclude that the individual as the ‘evildoer’ misses the point that systems and individuals are mutually reinforcing.

In 2010, John Hartman became the youngest person jailed for insider trading in Australia. The Chief Judge Peter McClellan concluded when sentencing Hartman, that the financial services industry had “corrupted his values”, clearly signalling that individuals must remain aware of the influence of their environment on their decisions.

The influence of other people

There is also much research confirming the influence of other people on our decisions. The bystander effect, or bystander apathy, is a phenomenon identified through social psychology referring to cases in which individuals do not offer any means of help to a victim when other people are present. The probability of help is actually inversely related to the number of bystanders. In other words, the greater the number of bystanders, the less likely it is that any one of them will help.

Robert Cialdini, Regents’ Professor Emeritus of Psychology and Marketing at Arizona State University, has concluded through his research that when people are figuring out what to do in a new situation, they take their cue from what seems to be other people’s normal behaviour – what is termed “the social norm”.

Self-deception and moral fading

Increasingly, researchers are pointing to the process of self-deception to understand unethical behaviour and poor decisions. Self-deception allows an individual to behave in their self-interest while, at the same time, falsely believing their moral principles are being upheld. The result being that the ethical aspects of a decision can ‘fade’ into the background with the moral implications of a decision or behaviour obscured.

John Knapp, founder of The Southern Institute for Business and Professional Ethics, argues that unethical corporate behaviour emerges when well-meaning individuals blind themselves to the moral dimensions of their activity and he warns that this can inadvertently wreak havoc upon the public good.

Knapp identifies four categories of corporate self-deception as follows:

  1. Tribalism: The belief that the company is always right
  2. Legalism: The inability to imagine moral obligations beyond the law
  3. Moral relativism: The excusing of unethical practices by viewing business as ‘a game’ and oneself as having ‘a role’
  4. Scientism: The elevation of science, including management science, to a position of unquestioned authority.

Good decision-making practices

Good decision-making generally explores the question of ‘what ought one to do?’, as posed by Socrates, the classical Greek philosopher.

A commonly accepted model for responsible, ethical decisions involves the following:

  • Understanding the facts
  • Identifying the ethical issues involved
  • Identifying all of the stakeholders
  • Understanding how those stakeholders will be affected
  • Employing moral imagination to understand the alternatives
  • Considering how others will judge your decision/s
  • Making a decision and monitoring and learning from the results.

Undoubtedly the speed of business will not always allow for the comprehensive process required of a good decision-making model, and there will be many decisions that must rely on experience and good judgment.

The “front page test”, or more commonly in financial services, the “Fin Review Test”, is a common technique used to question whether a decision is “good” enough.

Dr Simon Longstaff, managing director of The Ethics Centre, explains:

“This question of, ‘would I be happy for this decision to be headlining the news tomorrow?’ is what’s known as the Sunlight Test. Imagine how it might feel if your decision – and the reasons you made it – were public knowledge. What if the people you most admire knew what you’d done and why?” He notes, “It’s the ‘don’t be ashamed’ test, not the ‘don’t get caught’ test”.

Awareness and practice

After reviewing the research and commentary on the potential influences on our decision-making one may conclude that humans are so ‘flawed’ that it’s surprising we can make good decisions at all. However, through developing awareness of these influences and by adopting good decision-making practices individuals can position themselves so they don’t look back on their professional career the way many do their teenage years.

 

 

Clare Payne is a co-founder and director of The Banking and Finance Oath. In addition she is the chief operating officer of Tobacco Free Portfolios and a fellow for ethics in banking and finance with The Ethics Centre. Previously Payne managed Macquarie Bank’s integrity office. She was the recipient of the inaugural Ethics, Responsibility and Trust in Finance Prize by the Observatoire de la Finance, Geneva and is a World Economic Forum Young Global Leader. She will present to the Conexus Financial Fiduciary Investors Symposium in Healesville, Victoria November 14-16, 2016.

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