Dr. Bettina Palazzo

Company value statements are often not much more than orgies of humanistic prose. Fancy buzzwords, that sound too good to be true and look attractive on the company website.

And still, if values are managed in the right way, they can influence our behavior and guide our decisions.

Values can define the “name of the game” that the men and women in a company play.

An insightful experiment

A team of psychology professors demonstrated this in an experiment (Liberman et al. 2004):

They let a group of people play an economic game in which they had the choice to either cooperate with their partner and both gain money or not cooperate and having the chance to gain all of the money for themselves, while the other loses.

Source: Liberman, Varda & Samuels, Steven & Ross, Lee. (2004). The Name of the Game: Predictive Power of Reputations versus Situational Labels in Determining Prisoner’s Dilemma Game Moves. Personality & social psychology bulletin. 30. 1175-85. 10.1177/0146167204264004.  

There were two setups:

  • in set-up 1 the participants were told that the name of the game was “The Community Game”
  • in the second set-up the game was called “The Wallstreet Game”.

Now I let you guess: 

  • Do you think that more participants cooperated when the name of the game was “The Wallstreet Game”?
  • Or did more people cooperate, when the name of the game was “The Community game”?

Too easy, right? In fact, 70% of participants playing the Community Game cooperated, but only 30% of the players of the Wall Street Game. This is an impressive effect! Maybe they could gain more money in the Wall Street Game, you might ask. No, they could not. The monetary rewards were exactly the same in both set-ups.

Values are powerful

We see, already a simple language choice can direct people in different normative directions. Also companies communicate with their choice of words what kind of values should guide their coworkers behavior and decisions. Of course, in the real world of organizations words and language alone will not make the difference.

The words that are written in your value statement must reflect the reality and they must be linked to organizational design and performance standards.

You cannot declare that your company cherishes collaboration, open communication and teamwork, when in reality, your corporate culture is driven by fierce internal competition, politics and monetary incentives only. (see more on my blogpost https://bettinapalazzo.com/2019/08/19/five-steps-to-make-company-value-statements-work/)

But if the real values under the surface and the words of the values in the shiny values statement brochures are in sync, values can be like wings that that lift us to do amazing things together.

Values are challenging

If values can do so many good things for you, why is it difficult to stick to ethical values in business? There are, of course, many complex reasons for this, but I will only pick two very powerful ones:

•             the slippery slope and

•             performance pressure.

Moral decline always starts small

When I am working with managers, they always ask me “But isn’t it ethical if it is legal?”

The problem is that the path from unethical to illegal is a slippery slope.

During my time at forensic services at a major accounting firm, I learned that economic criminals were always, shocked when they got caught. They still thought of themselves a good people.

You just do not wake up one day, go to the office and decide to do something illegal. You have done a hundred legal, but unethical things before that and you do not notice when you cross the line towards illegal.

Therefore, we have to stay mindful of the first little digression, because, as Cat Stevens sang “The first cut is the deepest”.

The money pressure cooker

The second force that can push people towards unethical behavior and rule breaking is performance pressure. We can observe this for instance in the oil drilling business.

Photo by Kevin Harris on Unsplash

An oil drilling rig is a dangerous place and work safety is key. But there are two situations when most safety violations occur:

  • When the rig is not operating, because of a break-down. This means a massive loss of money. When the rig is working, it brings in a quarter of a million dollars a day. It is not hard to imagine that the pressure to get this money-making machine back on track is tremendous and it pushes people to cut corners and forget about safety protocols.
  • The second situation that turns the cautious oil rig worker into a reckless risk-taker is when a big storm is coming up and the oil rig needs to get evacuated as quickly as possible. Here time pressure is the force that pushes people to the dark side.

Very often these two powerful forces of time and performance pressure form one irresistible cocktail. We can observe the powerful effect of this cocktail over and over again. Just take a closer look at the corporate scandal of your choice and in most cases extreme time and performance pressure will be among the root causes.

What to do

What can we do against these dynamics that can push normal, good people over the ethical edge?

Today we know that ethics depends much less on the ethical character of the individual, but to a big extend on ethical competence and on  a favorable environment.

How do you become ethical competent?

Building ethical competence is not something you can do on the fly. You have to prepare before being in the heat of the moment: You will need to anticipate and prepare for ethical challenges in cold blood. In most professions there are typical ethical dilemmas that come with the job. For telecommunications it is issues like client private data, in consulting it is staying truly critical and independent toward the hand that feeds you. Trying to resolve these dilemmas when your blood is boiling from time and performance pressure rarely results into the right decisions.

How to create an ethics-friendly environment

The most important ingredient for an ethics-friendly environment is a corporate culture where it is safe and worthwhile to speak up on uncomfortable truths (see my Speak-up blog series https://bettinapalazzo.com/2019/08/15/1-speak-up-the-role-of-leadership-is-crucial/) .

This is the most powerful antidote to the slippery slope of moral decline.