IBAC Insights (newsletter)

The short answer lies in the concept of ethical fading, which comes from the world of cognitive or moral psychology. Ethical fading explains why people doing the wrong thing can continue to believe their action has nothing to do with ethics. On one level, the culprit is the human mind’s tendency to overlook moral considerations when suffering from cognitive overload, when there is too much on your mind.

How else can we begin to explain evidence given at the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that a bank leadership team knowingly changed the definition of breast cancer so as to deny people their right to a payout when they died? Or understand how the majority of Victorian police officers involved in falsifying preliminary breath tests failed to register that they had done something wrong?

That is not all cognitive psychology sheds a light on; it also tells us that human beings are hardwired to falsify. The mechanism in this case is our need to protect our self-concept of integrity. So, we do the wrong thing and rationally lie to ourselves that we actually did the right thing in order to continue to believe we are people of integrity. This allows us to remain ‘blind’ to the reality and consequences of our wrongdoing, which can be very serious. Imagine being a family denied the payout on life insurance after the ‘policy change’ mentioned above.

The forces of ethical fading and blindness are at work all the time­ – in individuals and in organisations – and they undermine the integrity of both. Could this explain the finding by the federal government financial intelligence agency, Austrac, that the 250,000 Australian companies paying bribes overseas, including an ASX 10 company, can justify it – even while admitting it is illegal – as necessary? Or how can people who engage in setting up a system of extracting commissions from the dead become defensive when their actions are exposed during a Royal Commission?

Fighting these forces of fading and blindness requires skilled and courageous ethical leadership, not least because they are powerful and prevalent.

The first step is to do a ‘sense-check’ about what organisational factors are driving certain behaviours. An incentive scheme that pays a commission for sales can make it justifiable to offer a product that is not in the best interests of the client. The cricketers, for instance, were on a ‘win-at-all-costs’ incentive plan – borrowed, ironically enough, from banking.

The second step is to trigger the full cognitional power of our minds when making ethical decisions. Many organisations now have ‘integrity shares’ at the start of regular team meetings where staff raise issues framed in terms of integrity and ethics. Raising integrity issues in this way is similar in effect to ‘safety shares’ in mining companies: they bring into sharp focus the fact that there is an ethical issue to be addressed and override the mind’s tendency to fade. They also help remind the team that they share a common purpose and are committed to act with integrity. Values are caught, not simply taught, and such moments help people ‘catch’ what the organisation stands for.

Such practices count, as do rituals. The public service has a myriad of rules that reinforce alertness to integrity and help avoid being cultivated to do the wrong thing. Simple declarations of conflicts of interest and loyalty reinforce the fact that it is the seeking of integrity – just as much the avoidance of corruption – that should define organisational culture.

Every conversation, whether ‘in the moment’ or at performance management time, needs to count. The standards we walk past are the ones that define us, and role-modelling intervention and straight feedback counts. The days of avoiding feedback and not holding people to account will soon be regarded simply as collusion with wrongdoing.

Aristotle said integrity was a habit, not some state of being and that it was what you practised that defined you and your character. No moral psychologist has found that we cannot achieve integrity. Understanding the forces that work against it gives us a start on how to overcome them.