American Fraud Part IV
2012
Why Nothing Will Change Until We Think Differently
John Ensign
Part IV of V
Is the way Americans think about ethics—and even ethics codes themselves—the real problem?
Personal and professional experiences have allowed me to explore that question in detail. I’ve met and spoken to people associated with shocking financial scandals. Doing so has given me a perspective that I never would have imagined. It has made me think that everything we’re doing to protect ourselves from these scandals may actually be making us less safe than ever.
Caught In a Trap
If most crimes of fraud start small and without evil intent, how do they escalate to such surprising magnitude? In perhaps the strangest and most difficult to understand phenomena that I encountered during my research, all of the criminals I interviewed described a feeling of being “trapped” in their crime. They all reported an overwhelming feeling that they could somehow make the problem better. They reported that they would take whatever actions necessary to “get through another day.”
One of my interviewees, convicted due to his association with a $350 million international Ponzi scheme, captured the thoughts of many of the convicted criminals when he commented, “You wake up every day and you have three choices, and you don’t like any of them.” Comments by Bernie Madoff saying that he wished he had been caught earlier, and amazed that he wasn’t, have an eerie echo in light of these findings.
When we invest time, effort, or money into something, a strange phenomenon occurs called “entrapment in escalation.” The more time or energy we invest in something, the more we are motivated to justify our behaviors and compelled to invest even more to see it through. Studies show that, contrary to rational thought, when we have invested even a small effort in something, we feel committed to the outcome, and will follow that to ridiculous lengths. We will follow through, even if a loss is imminent, as though we can’t stop ourselves.
Don’t Follow Your Conscience; Follow the Leader
In my study, 70% of the convicted felons reported that their crimes required the cooperation of others, sometimes even auditors or enforcement officials. Most reported that recruiting these individuals was effortless, even when it seemed obvious that the actions would be unethical. Why does this happen? Studies show that Americans respond to dominance. We are hardwired to follow our leaders and to follow our group and its rules.
Research comparing values in different countries about priorities of following the group or personal conscience are telling. Americans frequently favor following the rules of their group over their own conscience. Americans are significantly more likely than Europeans to say they should follow the orders of their superiors, even if it is against their conscience. In 1991, the International Social Survey Programme asked respondents from nine different nations if they agreed that “right and wrong should be a matter of personal conscience.” Almost 90% of Austrians agreed with the statement, but Americans nearly tied for last with only 47% agreeing with the statement. The more recent 2006 survey asked, “In general, would you say that people should obey the law without exception, or are there exceptional occasions in which people should follow their consciences even if it means breaking the law?” At 45%, Americans were the least likely to say that people should on occasion follow their consciences.
If we’ve been conditioned to follow our leaders and not our consciences, what does that mean when it comes to codes of ethics? Does having more rules make us more inclined to be ethical, or less? Part V , the conclusion to this series, answers that question.
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Richard Cline
The article suggests that because 45% of Americans believe that a person should follow the law, rather than substitute their individual view of what is right or wrong, Americans are more ethically challenged. I don’t think the conclusion follows from the premise. If the question was limited to whether one should “follow the corporate culture” or “follow the lead of my superior at work, even if I believe that he or she is embarked on an unethical path,” then the conclusion that Americans are ethically challenged would make sense. However, when the results show that Americans are more likely to feel an obligation to obey the law (i.e., to adhere to the social contract) than their cohorts in other developed nations, that suggests to me that Americans are, on average, more ethical than the cohorts against whom they were compared. Of course, this article is not the entire study, so there may be other data to support the conclusion stated in the article.
Toby Groves
That particular statistic from the International Social Survey Programme is but one piece of anecdotal evidence that, when considered along with many others, amounts to a compelling argument. No statistic can stand on its own. You bring up a critical point though, that should cause all of us alarm…which is also indicated by the ISSP study and numerous others—that is, we frequently view that it would be a “substitution” if we were to decide what principles were important in a particular situation, instead of strictly following the law. A critical component of ethical thought must be the ability for empathy, to connect with others, and to understand and care about how your actions affect others. The studies I quote indicate that Americans are more likely to bypass this type of thinking to follow the law. This is also what I have observed in my own research. If your definition of ethical is “what is legal”, I would absolutely agree with your assertions—If however, one believes that there is more to it than that, then your comments would be further evidence of what the ISSP suggests. I believe the conclusion does follow from the premise. Part V will further clarify this line of thought. Thank you for your post; I appreciate thoughtful and intelligent challenges that further the examination of this topic. (P.S. There are also studies, including the ISSP, that address the questions you suggested should be substitutes, and similar results are found)
Tiffany Crosby
American Society is still very hierarchical. We place high value on titles and social status. We define leadership by titles versus defining it by actions. We are taught from a very young age that you defer to authority at all costs. In fact, anything less is punished severely during your teenage and young adult years. We then compound the issue with an educational system that doesn’t teach our students how to think for themselves. We give them step-by-step instructions on how to complete labs or solve a problem. We provide cheat sheets and study guides so they know exactly what they need to know to pass an exam. We teach them rules and regulations versus teaching them the principles and decision-making processes. We boil everything down to a series of do’s and don’ts as if there are no gray areas. Then, to top it off, we tell teach them that there are no moral absolutes. Everything’s relative. And then we are surprised that people are unable to discard their 25+ years of conditioning when they encounter an ethical situation.
larry stirtz
1. I think these things are incremental and we tend to judge each step standing alone so do not receive a good view of the cumulative impact.
2.I do C level coaching primarily CFO’s the most valuable thing I can teach I think is that they are the keeper of truth regarding company resources and reporting. They will almost always find themselves conflicted and if they are concerned that information they bring may cost them their job they will almost never present the truth.
3.I am also 78. I think this so called wisdom we are supposed to have acquired is nothing more than a limited future. Being limited our decisions cannot harm it much and we are able to see clearer. We are less conflicted. Looking back almost all of my bad decisions were made from fear of the future.