Principia Advisory

Implementing ethical behavioural change (without it backfiring)

21st July 2022

A major bank wants to improve its ethical reputation, so it invests in workshops on responsible lending for staff and publishes ethical guidelines for employees to follow when selling customers credit.

Yet the company’s incentives structure remains unchanged, meaning staff bonuses and promotions are based on hitting sales targets.

And its internal communications continue to define and celebrate success in terms of profits made and sales volume achieved, regardless of where those sales come from.

As an employee, would you be more likely to prioritise putting into action the ethical behaviour you were taught in a training session or behaviour that could see you earn a bonus or promotion?

When behavioural science goes wrong

The example highlights the danger of trying to implement behavioural change on one level, without looking at the bigger picture.

Behavioural science can be used to help improve ethical behaviour in companies but, to be successful, interventions must act on three levels simultaneously: they must target individuals, but they must also target the way relations between individuals work, and the messages the organization sends through the systems and process it implements.

What many organizations get wrong is focusing on only one of these at a time and designing interventions in isolation, for example investing in workshops one year and updating performance assessment systems the next.

Done badly, these interventions can actually make people less likely to behave ethically. For example, employees can quickly become demoralised and cynical [1]Zhang, Ting, Francesca Gino, and Max H. Bazerman. 2014. “Morality Rebooted: Exploring Simple Fixes to Our Moral Bugs.” Research in Organizational Behavior 34 (January): 63–79. … Continue reading when they feel their company is instructing them to behave in one way, while rewarding them for behaving in another.

Nudging individuals vs changing corporate culture

Often it is individuals that are emphasised in behavioural interventions, largely through ‘nudges’ that gently steer people towards a desired behaviour.

For example, if you want your workforce to be healthier, you can place fruit bowls in easily accessible places around the office, while putting unhealthy snacks in a high cupboard in the kitchen. Staff still have a choice about what they eat but they are ‘nudged’ to make the healthier choice.

However, no amount of fruit bowls can fully counteract the influence of a company culture where employees are regularly expected to network with managers at evening events where heavy drinking is commonplace.

Make ethical behavioural changes work

Instead of focusing solely on changing the behaviour of individual staff, companies must simultaneously tackle the cultural factors and policies and systems which shape this behaviour.

Individual, relational and organizational behaviours are interconnected, so it is impossible to positively influence behaviour on one level without making equivalent changes on the others.

Our bank, for example, could build on the lessons of its workshops by implementing an incentives system which specifically rewards use of appropriate affordability checks, with managers singling out for praise those who have acted ethically in selling credit.

And our company with its unhealthy workforce could replace its Friday night networking drinks with a dedicated weekly informal coffee morning, with healthy snacks.

In both cases, nudges for individual staff are still in place, but now they are situated in an environment where group activities and formal processes and systems are reinforcing the same behaviours, so creating a virtuous circle.

 

Unsure where to start with implementing an ethics-based approach in your organization?

Principia uses the latest academic research and proven practical insights on organizational ethics and culture in order to support businesses and complex organizations to tackle some of their most pressing challenges.

Contact Marco Meyer (marco@principia-advisory.com)

About the author: Marco Meyer is a Director at Principia where he specialises in organizational ethics, organizational psychology, and quantitative analytics, with a focus on the financial sector. Marco holds a PhD in Philosophy from the University of Cambridge and a PhD in Economics from the University of Groningen.

References

References
1 Zhang, Ting, Francesca Gino, and Max H. Bazerman. 2014. “Morality Rebooted: Exploring Simple Fixes to Our Moral Bugs.” Research in Organizational Behavior 34 (January): 63–79. https://doi.org/10.1016/j.riob.2014.10.002.