Selecting the right people and fostering the right culture: Nature and Nurture
Hodges L. Golson, Ph.D.
This article was the basis for a presentation for the Southern Institute For Business and Professional Ethics, which is now a part of the Georgia State Center for Business Ethics.
Business executives are often cast as the bad guys by Hollywood and the media gives the not-too-subtle message that most business people are unethical by sensationalizing the wrongdoing of a few. No wonder that when many business leaders think about ethics, moral issues and ethical cultures, they feel a vague sense of inadequacy, dread or even guilt. But is this really because most business people are engaged in unsavory practices? That’s certainly not my experience. In spite of the steady drumbeat of negative press and Hollywood stereotyping, the overwhelming majority of business people I’ve worked with over a long consulting career were trying to do things right and trying to do the right things. I was called upon recently to help a graduate student with her dissertation (on business ethics) to share my stories about unethical leaders I had known. I wasn’t much help. She was surprised to hear that I could count them on one hand. I told her that I’d seen top executives make some really stupid decisions, but could come up with very few instances of premeditated unethical behavior. But the problem with stupid decisions is that they sometimes involve moral issues and can lead to ethical problems.
Although they may be self-evident, let me begin by focusing on a few definitions.
What do we mean by culture? Culture refers to the shared values, behaviors and norms of a group. It includes the patterns of activities and symbols that give it significance and meaning. Basically, culture in a business setting is “how we do things around here.â€
What are ethics? Although you can get into a great deal of philosophical nuance here, for purposes of this discussion ethics is concerned with issues of right and wrong, or morality. If we are to be ethical, we must understand virtue. A long line of philosophers, starting with Aristotle, make the compelling case that to be ethical, moral and virtuous is to protect and strive for what is good. It implies the knowledge of virtue, the proper choice and character. Peter Drucker noted that there is no difference between business ethics and personal ethics, that there is “only one ethics, one set of rules, one morality code, that of individual behavior in which the same rules apply to everyone alike.†Further, he observed that the Hippocratic oath (not knowingly doing harm) is “the basic rule of professional ethics, the basic rule of an ethics of public responsibility.†Codes of ethics are at the heart of all religions as well secular wisdom.
What is an ethical culture? For purposes of this paper, an ethical culture in a business organization is a set of attitudes and values that help us to make decisions that are good for people and that avoid doing harm to people. I take it as a given that an ethical culture in an organization is a good thing. I do so because I’ve done enough reading, consulting and observing to understand that people and organizations who behave well over time will be more successful than those who behave poorly.
So, how do we go about fostering an ethical culture? The answer is simple. We get good people, surround them with good people, give them clear goals and parameters for action (which includes a clear code of ethics), provide them with good leadership, train them properly and turn them loose. Simple concepts…difficult execution.
The controversy over nature versus nurture in explaining behavior has been around since people began forming opinions. Over time, the pendulum has swung to extremes and the argument still generates a great deal of emotion. The extreme argument from nature is that all behavior is determined by the inherent characteristics of the individual. The opposite position, the argument for nurture, is that behavior is a product of the past and present environment of the person. I’ll deal with both sides of that issue, first by looking at personal characteristics which are likely to be associated with good behavior, then by covering some of the research on how the environmental context affects behavior. Both sides can offer insights into building and fostering an ethical culture.
Selecting the right people
The characteristics of good people
The first pillar of Corporate Social Responsibility is building a healthy, successful company that will provide growth opportunities for people. You just can’t do that with a company full of psychopaths, Machiavellians, narcissists and aggressive personalities. I’ll talk more about them shortly. Although it’s not usually the case, the sad fact is that there are some people who will choose to do harmful things. But before I get to the characteristics of bad actors, let’s talk about good people.
What are the characteristics of people who will be good for your business and help foster an ethical culture of success? Obviously people can be “good†without possessing all of these competencies, but we’re talking business context here.
Competencies are clusters of KSAPs (knowledge, skills, abilities and personal characteristics) that enable a person to be successful in a particular job. There are two basic types of competencies. The foundation competencies are built into the system for the most part. These are the innate abilities and enduring behavioral patterns we get through the luck of the draw from the gene pool and our early learning and background experiences. This is the raw material we have to work with. These are the nature components of individual makeup which influence behavior, including ethical decision making and actions. The surface competencies are the result of later training and experience in schools, early jobs and other learning experiences. These are the nurture components of behavior. People can develop a wide range of surface competencies depending on the types of foundation competencies they possess.
Performance is dependent upon natural abilities and characteristics (the foundation competencies), knowledge and skill (the surface competencies), the ability of the organization to facilitate success and the ability of the leader to keep his or her people motivated and focused on the goal. The successful leader selects people with the necessary foundation competencies, helps them develop the necessary surface competencies and facilitates their success by keeping them focused on the right objectives.
At the most basic level, high performance in an organization depends on four foundation competencies — the I-Competencies:
The Intellectual Competency. This is more than just how well a person can perform on a standardized test although it does include the aptitudes that predict success in an academic environment. It also encompasses common sense, mental agility, quickness and creativity, among others. It is a combination of how well the person uses his/her abilities and the unique mix of abilities. People who make smart decisions and who use their talents effectively are more successful over time than those who make bad decisions and/or squander their intellectual resources. The data are quite clear and unambiguous. There are always exceptions to the rule (there are very bright people who never amount to anything and there are people of very average ability who work hard and achieve at very high levels) but overall correlations between the components of this competency and performance over time are clear and consistent in a very broad range of jobs and organizations. As applied to ethical cultures, smart people can figure ways around rules and ethics if they’re not motivated to do the right things. But they can also be the first to recognize moral issues when they’re trained to look for them and they are more likely to grasp the high level reasoning associated with ethical decisions.
The Interpersonal Competency. People who have good social skills and who get along with other people are much more successful as a group than those who don’t have as many talents in this area. The interpersonal competency includes general social and influence skills, social insight, communication skills, intuition, likeability and persuasiveness among others. The intellectual competency enables a person to solve a problem. The interpersonal competency enables him or her to convince other people that the solution is the right one. If the person uses these skills primarily for personal gain, they can help him/her manipulate others. We all know the stereotype of the glib charismatic who will pat you on the back with one hand while picking your pocket with the other…and still make you feel good when you realize it. This is how people get elected to public office. Unfortunately, that’s all it takes in most cases. But the interpersonal competency can be a force for good in the organization in that it can help a person influence his or her peers to do the right thing. One of the laws of influence is Likeability, a component of this dimension.
The Integrity Competency. This is somewhat broader than the basic honesty-dishonesty dimension although it is an important part of this competency. This also includes general conscientiousness, discipline and follow-through. The person with high integrity will meet his or her commitments in the time frames agreed upon and to the standards at or above those which are expected. If not, he or she will let everyone know in plenty of time so that they won’t be surprised. Part of this competency includes the ability to focus and to use one’s talents and aptitudes with appropriate discipline. This is the factor that holds things together and facilitates trust and consistency of performance. The integrity competency leads a person to make the right decision, to avoid harming people and to operate with a sense of duty and responsibility. It’s the crucial component to ethical behavior.
The Intensity Competency. This includes energy, stamina, drive and the person’s ability to get fully engaged. People with high intensity are active, not passive. They are driven by a need to get things done and to see results. With the proper control and focus, people with high intensity will achieve at higher levels than those with only average levels of stamina and energy. This is the gasoline that drives the engine. People with energy and stamina have the reserves to push for what they believe in. If their efforts are channeled in the right direction, they can be of tremendous value in fostering an ethical culture. In such circumstances, they feel that their efforts can make a difference and are not as likely to go with the flow and take the path of least resistance. As will be discussed later, people who don’t feel that their efforts matter are more likely to see themselves as victims and consequently more likely to fall into some of the behavioral and thought patterns associated with poor ethical decisions.
In his book Good to Great, Jim Collins describes the characteristics of great leaders as being modest and even self-deprecating yet also as having an unwavering ambition for the company. They never lose faith in ultimate success but they also face facts in a brutally direct manner. One of his adages is that companies need to get the right people on the bus to get the company turned around and moving in the right direction. My friend and transformation consultant, Bob Miles, has another slant on it. He says to get the bus moving in the right direction and the wrong people will get off! Actually, they’re both right. Which begs the question, what do the wrong people look like?
Individual factors
In a literature review of ethical decision-making, researchers Michael O’Fallon and Kenneth Butterfield report that there are three individual factors (as opposed to organizational factors) which have received the most attention in published research. These are Machiavellianism, Locus of Control and Cognitive Moral Development. There are measures to diagnose some of the pathologies which are likely to be associated with wrongdoing, but they’re not very useful with a high-functioning population. The bible of pathology definition is the Diagnostic and Statistical Manual of Mental Disorders (DSM). We’re unlikely to see obvious signs of the pathologies described in this work in a normal population, especially a high functioning group such as managers and executives. While we may see hints of certain pathologies, if they were blatant enough to be diagnosed, the person would have been selected out of the process long before arriving as a candidate. And the measures to diagnose these pathologies are typically quite obvious to a normal job applicant. However, although they may be sub-clinical, the expression of milder forms of these pathologies can be related to ethical decisions. A less well-researched but promising avenue for helping us to select the right people is that of investigating a candidate’s assumptions about the world, which can tell us a lot about how he will respond to it (to include reactions to ethical issues). Fortunately, if we know what to look for, and look carefully, we can see hints of future problems during the assessment process.
Machiavellianism
Nicolo Machiavelli, a Florentine poet, musician, playwright and keen observer of political power, is best remembered for The Prince, a biting but accurate treatise on the practical application of power in politics. Although most of us would agree that some of his advice is harsh (e.g., If you must fight, don’t wound your enemies… kill them, their families and friends so they can’t come back to do you harm later), his messages still carry a certain resonance of uncomfortable accuracy.
Machiavellianism, as a negative term, became a focus of research in social psychology in the seventies. Machiavellianism is the proclivity to manipulate and exploit using power, intimidation, charm or other such methods to win personal or organizational advantage. Psychologists Richard Christie and Florence Geis developed a scale to measure a person’s level of Machiavellianism. High Machs are seen as calculating, detached, manipulative, deceptive and self-centered. They will employ all means available to them to get their way. Unfortunately, some of the High Mach characteristics are also correlated with rising to power in organizations and (as Machiavelli observed), maintaining power. Low Machs are more empathic, sympathetic, open and agreeable. However, at the extreme they can also be too passive and too nice for their own good.
In terms of executive selection, the available scales to measure Machiavellianism are reasonably transparent. That is, a bright psychopath can easily figure out the right answer. It doesn’t take much to understand that the socially acceptable answer to such items as “most people are basically good and kind†or “there’s no excuse for lying†is some form of agreement. Therefore, these measures aren’t that useful in the real world of executive assessment. We have to rely on more indirect means. For instance, High Mach scores are related to low scores on the Big Five personality factors of Agreeableness and Conscientiousness.
Machiavellianism is one of the factors the Dark Triad of pathology (the other two being psychopathy and narcissism). These are separate but overlapping constructs, all of which have negative consequences for ethical behavior. As an upper level graduate student explained when I was just learning about such stuff, the main thing you need to know about these folks is that they don’t care about you!
So, to build an ethical culture, we want to screen out as many of these people as possible.
Locus of Control
Locus of control is a concept first defined and researched by psychologist Julian Rotter. It refers to the belief that we control our lives by our own actions (internals) or that we’re mostly at the whim of outside forces (externals). To avoid confusion, please note that his has nothing to do with the extraversion/introversion personality trait.
Internals tend to be more satisfied with their jobs, have a more favorable attitude towards their managers and feel better about salary increases and career advancement. They see themselves as more in control of their own destiny and as responsible for their own actions. Internally controlled people are less likely to succumb to the pressures that lead to bad ethical outcomes. The internally controlled person, when motivated by positive factors, could be thought of as having a strong moral compass.
Externally controlled people are likely to believe more in luck and happenstance rather than in their own ability to make things happen. They tend to feel that their own efforts will not significantly affect outcomes. They are more likely to see themselves as victims and, hence, more likely to justify the “getting even†thinking that sometimes leads to bad decisions.
Can we measure Locus of Control? Is there a test for it? Yes but, as with the Mach scale, it’s relatively easy to manipulate. Rotter’s original IE scale, if applied to a work environment, would have candidates indicate whether they agree or disagree with such statements as: “A job is what you make of itâ€; “If people are unhappy with a boss’s decision, they should do something about itâ€; “Promotions come to those who do a good job.†It doesn’t take a genius to figure out that the right thing to do here if you want the job is to agree with these types of statements. So, if you’re using such an IE scale as a selection tool, you’re in part selecting for higher intelligence. Although Locus of Control may be a useful concept, the methods to estimate it in a selection situation must be more subtle than the tests that have been used for research on this factor, and even then they probably wouldn’t be too useful because most people at the executive level would score in the internal control direction. That is, the score distribution is positively skewed, not a normal bell curve.
Cognitive Moral Development (CMD)
A helpful framework to view moral decision making is offered by psychologist James Rest. His model describes four basic components of moral decision making: identifying the moral nature of an issue; making a moral judgment about it; establishing a moral intent; and engaging in moral action. This model makes use of the developmental stage framework for moral reasoning developed earlier by psychologist Lawrence Kohlberg (which was seen as the basis for ethical behavior). Kohlberg outlined six stages, from Stage One (recognition only of oneself, e.g. the perspective of the infant) to Stage Six (recognition and adherence to universal ethical principles). The research on this factor indicates that people who are higher on the scale of CMD tend to make better ethical decisions.
The traditional way to measure CMD is to present a dilemma for analysis (a scenario in which there are competing values, e.g., the rightness or wrongness of stealing something from someone who rightly owns it to help someone whose life depends on getting it). This is cumbersome in a selection situation and of questionable value because it tends to fall into the category of the surface competency described earlier. That is, people can learn to think differently about complex issues when given the proper training and perspective. Therefore, CMD is better addressed in ethical training than as a selection factor unless the signs of problems are blatantly obvious in the selection process. CMD is related to general intelligence (brighter people can understand some of the subtleties of ethical issues more readily than those who aren’t as gifted). Therefore, if you’re selecting for intelligence, you’re also indirectly helping to increase the overall cognitive moral development of the organization, as long as the proper instruction is available. Remember, select for the foundation competency (the Intellectual Competency in this case) and train for the surface competency (CMD).
Assumptions about the World – Underlying Mechanisms for Machiavellianism and other Pathology
When people see the world as a hostile place and assume that others will hurt them if they can, their responses to most life situations will be very different from those of normal people. Normal people define reasonable behavior by the cultural norms and standards they have internalized from parental, school and societal influences. Normal people have a hard time understanding why some people behave poorly (e.g. becoming violent with others or showing more subtle aggressive and pathological behaviors, some of which are readily observable in organizations).
However, people who see life through the distorted lens of aggression think their pathological actions are reasonable responses to a hostile world. Where normal people see others in a positive light, pathologically aggressive people see them either as weak players to be used or despised, or as strong competitors who pose a threat. They see life as a struggle between dominance and victimization, and they believe that aggression is better than cooperation because cooperation indicates weakness. When given a choice, they will prefer force, competition and displays of power to avoid having others take advantage of them.
Aggressive people are always vigilant for hostile intent and see it where none exists. They will misinterpret positive overtures from coworkers as hostile attempts to find and exploit their weaknesses or steal their work. This sets up a vicious cycle – their behavior turns others away from them and causes defensive reactions, thus reinforcing their world view. Aggressives have a keen sense of injustice and are motivated by a desire to get even for perceived wrongs. They seek retribution. When given well-meant and innocent critique, they respond both with anger at the “injustice†and with feelings of inadequacy, a powerful combination that drives negative, hostile behavior. At its worst, this can trigger workplace violence. However, the effects of this aggressive response bias can be seen in theft, sabotage, cheating, malicious gossip, etc. The aggressive personality is always trying to get even and always able to justify his or her behavior. He or she is not likely to be swayed by moral arguments.
The pathologically aggressive person operates with very different assumptions and his/her reasoning is designed to justify and rationalize behavior that harms others. These people are unconcerned with traditional ideas of ethical and moral behavior. They can do great damage to a company, especially if they are socially polished, bright and well-educated. In positions of executive leadership, they can take the company down. However, if we can understand their assumptions, which are beneath their level of awareness, we can avoid bringing these potentially destructive people into our organizations. Is there a good way to do this? In fact, there is promising research indicating that this is possible. Psychologists Larry James and Mike McIntyre have developed an instrument that appears to be a test of inductive reasoning but which is in fact a measure of aggressive versus normal assumptions. The research on this Conditional Reasoning Test – Aggression (CRT-A) indicates that it predicts pathological behavior in organizations and also appears to be subtle enough that even bright psychopaths have a hard time faking it. This measure is not correlated with general intelligence, so pairing it with cognitive tests should be a powerful method to screen for potential pathology (since they are both implicated in ethical decisions and actions).
This mechanism is at the heart of many ethical problems. The aggressive world view may be changed over time if the person truly understands how it harms him and is truly motivated to change, but this is not an easy task. And it’s beyond the mission scope of most organizations. If you’re running a business, you need to keep pathologically aggressive people out of the hiring pipeline.
Traditional Personality Factors
Personality inventories are in wide use and as a result are often mis-used. They should only be used along with many other data points. And they should be validated carefully in your environment. At lower levels, be sure you can justify their use by showing how they are related to success on the job. At higher levels, you may be able to gain useful insights for culture fit questions but they’re not perfect and should be used with care and caution. A widely agreed-upon model of personality is the “Big Five†or Five Factor Theory. The five major factors of personality measured by many present-day instruments are described briefly below.
Extraversion. This is a well-researched personality factor. At the most basic level, it is understood as an orientation towards the external world (people, things, events, etc.) or toward the internal world of thoughts, feelings and ideas. Again, this is not the same thing as the Locus of Control concept of internal versus external control discussed earlier. A large component of extraversion is the need for social contact versus a preference for solitary pursuits. People with high scores on this measure typically describe themselves as sociable, gregarious, extraverted, group-oriented, and expressive. They do not use terms such as quiet, low key, shy or introverted in their self-descriptions. Low scores are often indicative of a mild, reserved and relatively unexpressive social style while people with exceptionally high scores may be overly gregarious and may not know when to back off. This is a major component of the Interpersonal Competency.
Emotional Reactivity. This factor reflects the tendency to be tense, anxious, emotional or high strung. Business people typically score more strongly in the direction of psychological stability and emotional adjustment than do people in the general population. A high score on the emotional reactivity measure doesn’t necessarily indicate pathology but it could indicate stress-proneness or volatility under pressure. It may also be a sign that the person is undergoing a particularly upsetting or anxiety-provoking experience. Unusually low scores may be indicative of a flat, unresponsive or passive nature. High anxiety may be associated with bad decisions, some of which could be ethical in nature, but psychopaths are known to have low scores on measures of anxiety. This is a component of the Intensity competency, but extremely high or low scores here can have an impact on all of the other competencies.
Behavioral Control. This dimension is related to discipline, focus, tenacity, organization and conscientiousness. High scorers tend to control their expressions of feeling and emotion and are attuned to rules and structure. They often feel a keen sense of duty and responsibility. They describe themselves as, e.g. disciplined, conscientious, tenacious, stubborn, inflexible and controlled. People with extremely high scores may be rigid and inflexible. Low scorers see themselves as spontaneous, adaptable, undisciplined, careless and not detail-oriented. Very low scores can indicate a lack of discipline and organization. Low conscientiousness is correlated with Machiavellianism and consequently associated with ethical problems, but it does not always indicate pathology. This is part of the Integrity Competency.
Agreeableness. People scoring high on this factor are likely try to get along with others and to maintain harmonious relationships. They are typically approachable and cooperative, tending to describe themselves as cooperative, likable, approachable, soft-hearted, easygoing, etc. and not to use terms such as, e.g. blunt, intense, driven, abrupt or direct when describing themselves. Very high scores may be associated with passivity and a tendency to value harmonious relationships over task accomplishment. Unusually low scores don’t necessarily mean that the person is disagreeable, but they do suggest an intense, demanding and insensitive style. Low agreeableness is associated with bad ethical decisions, but many top leaders have relatively low scores here, so it is not a consistent predictor of problems in and of itself. Agreeableness is a component of the Interpersonal Competency. Low scores on agreeableness have also been implicated in Machiavellianism, narcissism and psychopathy.
Complexity. This factor is related to intellectual curiosity, openness to information, independence of thought and the ability to keep long term objectives in mind. Along with intelligence, it is a major part of the Intellectual Competency. High scorers describe themselves as strategic, free-thinking, reflective, imaginative, unconventional, intellectual, etc. They don’t generally use such terms as tactical, complacent or apathetic in describing themselves. Low scorers tend to be hands-on, to have focused interests and to have little inclination towards intellectual or academic issues. Very low scores may indicate a lack of imagination and/or of academic aptitude while very high scores are sometimes seen in people who are overly theoretical, conceptual or academic. Low Complexity is associated with lower general cognitive aptitude, which is in turn associated with lower levels of Cognitive Moral Development.
Selection for the right stuff
There is no substitute for a valid, fair and rigorous selection system to help an organization be successful over time. Such systems consist of an active pipeline of diverse and appropriate recruits, a structured screening process and rational decision making applied consistently. Any selection system must be validated according to legal and professional guidelines and administered in a fair and consistent manner.
Testing Programs
Testing is often a part of the selection system, especially for entry level jobs. The different types of tests include integrity testing, personality inventories, cognitive tests (e.g. reasoning, math skills, vocabulary), role plays (e.g. inbox assessments), skills testing (e.g. programming language proficiency), physical abilities tests, etc. Testing is most defensible when used to measure factors which have been determined by rigorous statistical procedures to have an impact on successful job performance. A cornerstone of defensible testing programs is the job analysis, a structured process which defines the success factors for the position under consideration. However, the job analysis is typically most useful for lower level positions where the competencies are more clear and simple. It’s more difficult to define a limited and tightly defined set of competencies for managerial and executive level positions. In these cases, we rely more on the foundation competencies (the I-Competencies) and the full psychological assessment.
For purposes of this discussion, the tests most likely to provide insights about ethical decision making in the future are integrity tests, personality inventories, cognitive tests and tests to provide information about the candidates’ world views (which can help predict aggressive, anti-social behavior).
Integrity Tests
Integrity tests would seem to be a natural if you want to select for an ethical culture. However, integrity tests are rather intrusive and objectionable. They’re useful in narrowing the focus on people who are less likely to steal, but they’re typically pitched at a low level. If your company must deal with large inventories, multiple cash transactions or other situations in which a person is likely to be tempted, they’re helpful. They’re not appropriate for managerial and executive level people in most circumstances. Of course they give the message that you want to hire only honest people, but they also say that you believe most people are dishonest. Most integrity tests have a somewhat punitive feel to them. This probably isn’t what you want to communicate right out of the gate if you’re interested in building an atmosphere of trust and an ethical culture.
Personality Inventories
Personality inventories can help to narrow the margin for error as far as culture fit and fit with a particular job is concerned. but they must be handled with care and sensitivity. You can go to the web and find a great number of personality tests which purport to measure all sorts of attributes but which would be worthless (or get you in trouble) if you used them for selection. These sorts of instruments are sometimes useful for self-insight but clearly inappropriate for selection.
The best personality inventories are professionally developed and validated, and the publisher should be ready and willing to share technical validity data with users or prospective users. One potentially promising use of personality inventories to help select people who behave ethically would be to develop an ethical “Star Performer†profile. Here, the incumbents are measured on some dimension of ethical behavior (which should be some sort of objective measure, although supervisory ratings would suffice) and also complete the personality inventory. Then we observe the correlations between the ethical behavior score and the personality variables to develop a prediction scale which could be considered in the selection process for candidates. This would not necessarily tell you how ethical the person will be, but it will give you a measure of how similar that person is to others in the organization who are considered ethical. Again, this process should be validated and used with sensitivity and caution.
Clinical psychologists have developed a variety of measures to assess a wide range of pathologies, including some of the factors implicated in bad ethical decisions. The Minnesota Multiphasic Personality Inventory (MMPI) is the oldest and most well-researched of these. However, it is not recommended for typical business use for two reasons. First, it’s intrusive and contains a number of items which are inappropriate for a business setting (and in fact there have been several successful lawsuits filed in response to its indiscriminate and ill-considered use). Second, and equally or more important, this instrument is generally considered to be a medical test and is therefore subject to the guidelines and restrictions of the Americans With Disabilities Act (ADA).
Cognitive Tests
Cognitive tests hold promise for the selection of people who will make good decisions. Since Cognitive Moral Development is correlated with intelligence (cognitive aptitude), it stands to reason that brighter people will be better able to solve challenging problems while taking into consideration some of the complexities associated with high level moral reasoning. However, cognitive tests should be carefully validated and shown to be related to bona fide occupation qualifications (BFOQs, in the jargon).
Conditional Reasoning Measures
As noted earlier, the Conditional Reasoning Test – Aggression (CRT-A) holds promise for helping us understand a candidate’s world view. If we know early enough in the process that a person holds excessively aggressive and hostile assumptions about the world and about other people, we can predict with reasonable accuracy that he will behave in ways that are harmful to others and rule him out as a candidate.
Because conditional reasoning is not correlated with intelligence, and because both conditional reasoning and intelligence are predictive of ethical decisions and actions, the combination of cognitive tests and conditional reasoning measures has the potential to be a powerful screen for people who have the potential do harm. Of course no system is perfect, but this combination should certainly help narrow the margin for error.
Psychological Assessment
Testing alone isn’t enough to answer many of the subtle but important questions about behavior in the executive suite, especially behavior involving ethical issues and decisions. The psychological assessment is one of the cornerstones of our work. It is used for candidate selection and for developmental feedback. This isn’t voodoo. It’s based on research and statistical analysis, but also adds the human intuitive dimension to the assessment process. In our practice, we gather post-assessment performance and ROI data to make sure the techniques and methodologies we employ are valid and predictive. The assessment feedback can help people understand themselves and also help leaders assess and develop candidates and incumbents. When used properly, it can help minimize employment mistakes and can help people on the job reach their potential. It is often used as a baseline for coaching and developmental plans. The assessment involves an interview covering education, work history, background, current job responsibilities, self‑perceptions, goals, etc. Standardized tests and personality inventories are also used to provide personality data that is compared to relevant norm groups. A full assessment will target many of the factors we know are related to ethical behavior on the job.
Selection Interviewing
To help managers make the best hiring decisions, there should be a rigorous, structured and defensible process of selection interviewing. The psychological assessment includes both trait and behavioral interview components. The trait interview is based on the premise that, if one can accurately assess the underlying structure of personality, one can predict behavior more accurately. It focuses on broad personality dimensions and requires considerable education and training, and a deep understanding of personality and motivation. It is useful not only for selection but for assessing growth potential. However, it is more subject to bias and may not consistently identify specific skills. On the other hand the behavioral interview is based on the premise that the best predictor of anything is what it has been in the past. In this context, the best predictor of behavior is past behavior in similar circumstances. When appropriately structured, it helps insure consistency, fairness and validity. Behavioral interview techniques are easier to learn and they help to minimize any potential effects of bias or prejudice. Although a successful behavioral interview depends on a careful job analysis to identify the specific competencies for the job and it may not tell enough about the whole person to generalize into other settings, this is the technique we recommend for clients. When planned and conducted appropriately, the behavioral interview can tap into factors related to ethical behavior.
Background and Reference Checks
Testing programs and psychological assessment can provide a wealth of useful data, but there are some people who can fool any test and any psychologist or interviewer. For a complete and robust system of screening, you need more than just a series of interviews and tests or other assessments.
Although reference checks typically provide little useful information because of fears about liability and because candidates will rarely provide the names of anyone who may give a questionable reference, they are still occasionally helpful. Sometimes reference sources may provide you with the names of others with whom the person has worked. Also, if a person knows you’ll be checking references, he or she is more likely to be truthful. At some point in the interview, if you ask something like “When we check your references, what do you think they’ll say are your major positives and major needs for improvement?†is likely to elicit more thoughtful answers than “What are your strengths and weaknesses?†The implied threat of the reference check typically gets attention.
As noted in the above discussion about selection interviewing, the best predictor of future behavior is past behavior in similar circumstances. A good way to get information about past behavior is the background check. Of course you should get consent from the candidate to conduct such investigations. Always verify education and employment. If the person is going to operate in a significant capacity and/or in a position of trust in your organization, you need to know about felony convictions, bankruptcies (both personal and corporate), lawsuits, licensure revocations, etc. Be very careful with candidates who seem to be too good to be true. We’re too prone to skim over this important step when we feel especially good about a candidate and fear we may lose him or her if we delay. This is usually a big mistake.
Organizational Factors
Getting the Environment Right – The Nurture Perspective
Characteristics of the organization
Company size and industry type aren’t consistently related to ethical culture. However, top executive teams of long tenure in public companies tend to make better moral decisions when they have a large board which is more involved. In general, we can expect the quality of the work experience to be a predictor of ethical behavior. To the extent that people in the ranks feel a sense of equity, professionalism and pride in their work, they will be inclined to behave ethically. But when they feel their efforts are not rewarded, that their work doesn’t make a difference, that others in the company don’t care and that nobody is monitoring their behavior, they’re more likely to behave poorly. However, we need to be careful not to over-regulate. The more onerous the rules, the more likely people are to look for loopholes. This is a tough balancing act.
In view of the fact that involved boards foster better ethical decisions, smaller and/or private companies may benefit from having an involved advisory board. In our profession, most ethics cases brought to the regulating boards involve individual practitioners who work in relative isolation and who don’t seek advice from other professionals when there are ethical issues on the table. Executives need contact with competent colleagues to make sure they’re behaving according to normative ethical standards and not getting on the slippery slope. People whose decisions are open to scrutiny from others are more likely to make good decisions. As H.L. Mencken observed, “Conscience is the inner voice that warns us someone may be looking.†An atmosphere of collaboration in the organization helps to increase the chances that ethical decisions will outnumber bad decisions.
Co-workers
As organizations grow, the top executives may have little direct contact with people in the ranks. A top executive’s good intentions and ethical messages can be lost among competing messages of the peer group.
One of our fundamental needs for survival is to figure out what information means so that we can tell whether it will help or hurt us, and one of the best ways to do that is to look to people around us to help us interpret that data. Psychologist Leon Festinger coined the term Social Comparison in his research about the factors involved in attitude change and rationalization. This is one of the fundamental principles of influence. People we trust and identify with (or people we want to be like) are a great resource to help us make sure we are perceiving and interpreting new data accurately. We have strong needs to identify with groups we find attractive or that we feel are powerful and we tend to take on their ideas and behaviors without conscious effort or questioning. This is also the basis for delusional beliefs and mob behavior. This has huge implications for the building and maintaining of an ethical culture.
The reference group exerts great pressure on members to conform to its norms and standards, and the force is even stronger in the absence of authority. Parents become keenly aware of this as they realize that the impact of their teenagers’ peer group is greater than that of their own. In a work environment, the peer group is the biggest source of information about how to behave, so the peer group should be of the highest quality.
Implicit Messages
If we want to create ethical cultures, we need to keep in mind what author Malcolm Gladwell refers to as The Power of Context. He uses the Broken Windows theory of criminologists George Kelling and Catherine Coles as an illustration of this concept. According to this theory, if a building is left with broken windows, vandals tend to break more windows, then break into the building itself, perhaps becoming squatters, lighting fires and doing other damage. Or if trash is allowed to accumulate on a sidewalk, more people begin to dump trash there and eventually it becomes unsafe to park or walk on the street. The clear message given by these environments is that nobody cares and nobody is looking. We would hope that people of good character would intervene, but that doesn’t happen. In fact, the research shows that the context of the situation is a powerful influence on behavior, regardless of personality characteristics.
Almost ninety years ago, educational researchers Hartshorne and May conducted a series of classic experiments about character which demonstrated that almost everyone will cheat in the right set of circumstances. And they found that moral exhortation (preaching) had no real effect. Later on in the century, Psychologists Phillip Zimbardo and Stanley Milrgam showed that the frightening behavior of seemingly normal people in situations which pull for bad behavior (e.g. under the Nazi regime) is reproducible in the laboratory. Good people can be made to do bad things more easily than we want to believe. This is demoralizing for ethics researchers, but it can’t be ignored. Although getting the right people is a fundamental key to building the right kind of organization, we need to remember what psychologists call the Fundamental Attribution Error, which refers to our tendency to over-estimate the importance of fundamental traits and characteristics and underestimate the importance of the context and situation. A bad system can corrupt or run off even the best people.
Conversely, the Broken Windows effect can be reversed. If the environment is cleaned up (graffiti erased, broken windows fixed, trash collected) and if minor transgressions such as turnstile jumping in subway stations are prosecuted, the message changes. The application of that theory is at least partially credited with the dramatic crime reduction in New York City in the nineties. By changing the environmental context in this manner, the message now becomes “we care, we’re watching and we’ll take action.†And people behave accordingly. Context is as important as character. This has clear implications for organizations in the building and maintaining of an ethical culture. Not only do you need the right people, but you need to be sure they’re getting the right messages and that the incentives for positive and negative behavior are clear, effective and enforceable.
Leaders
You can’t easily police a culture into becoming ethical, but you can provide the right examples and incentives for ethical behavior. This is not something that can be delegated. It starts with the CEO and top executive team. They must be squeaky clean. Collins’ Good-to-Great leaders were above reproach. Although the peer group has great influence on behavior, certain messages from the top are heard loud and clear. The team must always be aware of the Executive Amplifier (I can’t remember where I first heard the term, but it resonates here), whereby all messages from the top are amplified throughout the organization. A top executive is always on stage and consequently needs to remain keenly aware of the symbolic messages he or she may be sending. They are the role models for the entire organization. Unfortunately, just as in the media, bad news gets attention. And reports of bad behavior tend to get around more quickly and with greater impact than those of good behavior.
A top executive needs accurate data and knowledge to make good decisions, but leaders tend to get isolated. People who would build ethical cultures need to seek out dissenting opinions and tolerate bad news. The best leaders will face facts unflinchingly and respond accordingly. When you’re at the top, there are many ways for information to get garbled or spun by political agendas. The culture of the yes man is one of cover-up and selective information sharing which can easily lead to ethical problems for the company. If one aspires to be an ethical leader, one must operate under the “facts are friendly†philosophy and be capable of tolerating ambiguity to get to the right answer.
The first law of influence is credibility. Credibility has two components: trust and expertise. If you feel that a person is knowledgeable about the issue and is a good resource, and if you feel he/she will follow through with commitments and keep your interests in mind, that person will have credibility in your eyes. You will be likely to listen to the person and follow his/her advice and direction.
The nature of the issue
Recognition of a moral issue is of prime importance. Being able to ask deeper questions and frame decisions in terms of their likely moral impact has great value. The concept of moral intensity is useful for analyzing the nature of the question. Issues of high moral intensity have great magnitude of consequences and they are clearly recognized by most people as being moral issues. For instance, a decision which will result in the deaths of innocent people has great magnitude of consequence and it is also recognized by most people as being of the utmost moral importance. Therefore, such a decision is one of exceptionally high moral intensity. But some issues which may eventually have great impact but which are not of obvious moral intensity may slip under the radar. A potentially valuable avenue for building ethical cultures is to teach people to recognize moral issues sooner in the process. By asking more focused and probing questions about potential decisions which may not seem to be of high moral intensity at the time, we may be able to avoid trouble later.
Recommendations
There’s no magic bullet for building and fostering an ethical culture. It takes conscious thought, effort, time and watchfulness. It takes a variety of sustained actions which work in concert and reinforce one another. The list below is not exhaustive, but it includes many of the best practices of successful organizations and can be defended by research.
Selection – narrow the margin for error
Tighten up your selection procedures. Teach your hiring managers how to conduct a good behavioral interview. They should take selection interviewing seriously and see it as a crucial part of their jobs. Although HR should be a crucial component in the process, the field manager shouldn’t be allowed to abdicate his/her responsibility for selection to HR. Tighten up your selection procedures. Teach your hiring managers how to conduct a good behavioral interview. They should take selection interviewing seriously and see it as a crucial part of their jobs. Although HR should be a crucial component in the process, the field manager shouldn’t be allowed to abdicate his/her responsibility for selection to HR.
Be extra careful when you feel the heat to hire someone quickly. The adage “Hire in haste, repent at leisure†is painfully true. Peter Drucker observed that the crooks rise to the top in boom times. When a company is growing and experiencing great success, the controls aren’t usually in place to keep the bad actors from being hired or promoted into positions from which they can do real damage. It’s better not to hire someone even if it may limit your ability to take advantage of fleeting opportunities than to hire the wrong person.
Conduct thorough reference checks and background investigations. This is especially important when you’re enamored with the candidate and feel that such a step would be a waste of time. Psychopaths are skilled at gaining the confidence of others and bright ones usually do it very well.
Be careful about promotions. Drucker also noted that the most crucial promotions are those into the group from which tomorrow’s leaders will be selected. You need to know what message is being sent when you promote someone. And you need to be sure your pipeline for future executives has only the best people in line.
Tailor your selection processes to screen for the characteristics associated with good ethical decisions (and to reject those candidates who show signs of having the characteristics associated with bad ones). Research and observation teach us that dream teams rarely perform according to expectations and that having too many people with the same backgrounds, characteristics and experiences limit a team’s ability to perform well in changing environments. You will increase your chances for success by considering the following suggestions within an overall philosophy of selecting for diversity of experience, background and personal characteristics. This is true whether you use testing, psychological assessment, both or neither. These suggestions clearly should fall under the heading “all other things being equal.”
Select for intelligence. People with higher level reasoning skills are more likely to understand some of the complexities of moral reasoning and be more aware of ethical issues. And we have a great deal of real world data which shows that brighter people perform better across the board. This is part of the Intellectual Competency.
Select for conscientiousness. People who are conscientious, who follow through, who meet their commitments are more likely to behave in an ethical manner when confronted with moral dilemmas.
Select for moderate agreeableness – avoid the extremes. Although overly agreeable people can be passive, too many people low in this quality make for an overly competitive culture which sometimes fosters short cuts and bad ethical decisions.
Pay attention to red flags in the interview, verification and fact-checking process. Behavior in past situations is quite predictive of future behavior under similar circumstances, and the interview is a sample of behavior. If the person is evasive, tries to control the interview or shows hostility when he is trying to convince you to hire him, what do you think he’ll be like on the job? If a candidate leaves a job off her resume, how do you think she’ll respond in other situations where she wants to look good?
Select for a normal, or pro-social world view. Avoid the aggressives and High Machs. Consider using a measure of conditional reasoning to assess aggressive, anti-social tendencies in conjunction with cognitive tests.
Get the context right
Fix the broken windows. If there are ethical lapses, take care of them. Don’t tolerate bad actors simply because they make their numbers.
Get the message out. Make your assumptions explicit. If you don’t have a code of ethics, publish one (but be short and clear rather than legalistic and ponderous). It should be written by the CEO with the lawyers checking for legality and precedent, not written by the lawyers and presented to the CEO.
Make sure everyone reads and understands the code of ethics. It’s not enough to have a code. You need to be sure all of your people understand it and how it applies. If you don’t already do this, incorporate it into your orientation and training program. Make a separate course out of it and test all employees for the concepts. If they don’t get a certain percentage right, have them repeat the course. Consider a combination of small group discussions and online content delivery for this important task.
Get the incentives right. Of course you should reward good behavior, but it’s also important to move quickly with transgressions. Discipline should follow the Hot Stove analogy: It’s glowing, so everybody knows it’s hot and knows they’ll get burned if they touch it; the feedback is immediate when they do touch it; and it burns everybody who touches it equally.
Use the laws of influence to persuade the troops of the wisdom of following the ethical policy. For example, short ethics workshops conducted by the most credible and likable people in the company make use of the first principles of influence. Also, the law of social comparison suggests that the peer group will be an important force in getting new people to conform to the culture. And the law of consistency indicates that once people have made a commitment (especially a public and/or written commitment), they’ll be considerably more likely to follow through with it to maintain their sense of consistency and to avoid the cognitive dissonance of feeling inconsistent.
Establish a whistleblower system if you don’t already have one in place.
Designate someone of great credibility as a corporate ethics officer. Remember, the principal components of credibility are trust and expertise. The ethics officer should be given clear and real power to address ethical matters.
Sensitize your top executives, not only to your ethical principles, but also to the unanticipated consequences of appearances. They need to manage the optics of their actions to avoid even a whiff of questionable behavior. They need to understand that they’re always in a fishbowl and that they need to be clear and bright role models for the right kinds of behaviors. Remember, when we know others may be looking, we’re more likely to make better decisions.
Don’t preach — it doesn’t work. Training needs to be practical and have some visible benefit. And more tends to be less. In addition to the targeted training on your code of ethics (see above), consider some form of training in cognitive moral development (CMD) but focus it on company-specific examples. Show them how they’re likely to get into trouble and how to avoid it. Helping them to identify potential moral issues earlier in the process has great value. Training should focus on who we are and what we stand for. It should emphasize recognizing moral issues and evaluating them within the context of the organizational code of ethics.
Provide your executives with developmental coaching which includes a full psychological assessment as a baseline. Feedback from the assessment can help the person anticipate potential trouble areas and can provide the structure for a growth plan. Of course the coach should be comfortable and competent in the arenas of virtue and ethics. Coaching is not a one size fits all deal. It needs to be tailored to the person and the situation. Aristotle noted that acquiring virtue is like playing a musical instrument. It requires practice and a teacher.
Incorporate the how into your measure of the what in your performance appraisal process if you do not already do so. If a person consistently gets strong results but does so with questionable ethics, the company will suffer in the long run.
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