Helping corporate leaders develop guiding ethical principles to avoid the problems of such fallen companies as Enron was a hot topic at the Society for Psychologists in Management (SPIM) Mid-winter Meeting, Feb. 28-March 1 in Tampa, Fla.
SPIM, an organization of psychologists who consult with high-level executives or are in high-level management positions, hosts the meeting annually to examine how psychology can be used in business and executive-level settings.
This year's meeting featured two events that specifically addressed businesses and ethical decision-making: a presidential address by Carl I. Greenberg, PhD, immediate SPIM past-president, and a panel on the financial, ethical and spiritual issues of CEOs consisting of psychologist-executives John Crosby, PhD, president and CEO of Micrometrics Inc., Charles J. Fogelman, PhD, principal of Paladin Coaching Services, Allen L. Parchem, PhD, chairman, president and CEO of RHR International Co., and Aurelio Prifitera, PhD, president of The Psychological Corp.
How do CEOs get into hot water? While some corporate woes are due to deliberate greed, Prifitera says, unconscious bias can also play a dominant role. For example, executives may discount facts that aren't consistent with their expectations--also known as self-serving bias. As such biased decisions escalate over time, speaking up and admitting to the string of poor decisions becomes harder, and executives may try to conceal the problems.
What can be done to prevent such dilemmas? The speakers offer these ideas:
Pass clear laws with consequences. While legal regulation is a first step, Prifitera says, more preventative measures are also needed because punishing businesses for violating the law only occurs after-the-fact.
"Also, because something is legal doesn't mean it's ethical, and because something isn't illegal doesn't mean it's ethical," says Crosby.
Help companies develop an ethical business culture. An environment in which employees can discuss ethically ambiguous situations puts the focus on supporting responsible behavior, not preventing wrongdoing. For example, psychologists can recommend that companies assign a person to play devil's advocate when discussing important decisions.
Avoid ambiguous situations when possible. Setting regular checkpoints and agreeing on the course of action before a project begins minimizes the chances that ambiguity--and the need to decipher what is ethical--will arise, says Prifitera.
Address ethics at the executive level. As business consultants and coaches, psychologists can help CEOs understand what general values and aspirations they hold, and then help them translate those values to their leadership styles, says Fogelman.
"We might all be better off if we could talk about business purpose and personal meaning more explicitly," Parchem explains. "People seek meaning in their lives and, if encouraged, many will seek it in their work."
Implement training on self-serving bias and judgment errors. Just as many organizations offer sexual harassment or diversity training, businesses can train employees to identify and discuss disconfirming evidence.
Many business ethics courses, Greenberg says, fail to include applicable psychological research, such as work on decision-making by Nobel Memorial Prize-winning psychologist Daniel Kahneman, PhD, and the late Amos Tversky, PhD. Psychologists, he says, could be designing courses that include such research.
Develop more measures and methods for businesses to select people with good character. It's difficult to train an unethical person to make ethical decisions, Fogelman says.
"You may not steal from the company, but you certainly may make decisions that will violate accounting principles and may better you and the organization at the expense of somebody else," Greenberg explains. "The tests out there right now aren't getting at what businesses are trying to establish as more ethical decision-making."