Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

Insights from management for compliance officers

This is the fourth and final in a series of four posts on insights for compliance officers from different fields of study.  The first post in this series covered lessons from psychology regarding, for example, self-interest and decision-making, from prominent figures such as Sheena Iyengar and Malcolm Gladwell.  The second post was about insights for compliance officers from self-development and coaching, including from people such as Wayne Dyer and Eckhart Tolle.  Last week’s post discussed behavioral economics, focusing on the work of people such as Dan Ariely and Richard Thaler.  Today’s post will suggest ways in which management theory can be applied to corporate compliance programs.

As a practice, compliance is greatly concerned with topics such as governance, controls, leadership, sustainability, business values, organizational integrity, risk controls, institutional decision-making, tone and conduct at the top, and corporate culture.  It shares these general disciplinary themes with management theory, which takes on the broad task of determining and guiding the strategic direction of an organization and steering its employees and resources in furtherance of these goals.  Given that the contributions of a robust compliance program to the regulatory, practical, and cultural aspects of this task are great, compliance officers stand to gain great insight from studying commentary from the field of management theory.


Integrity of game play: Referee bias

This is the third in a series of five posts on the topic of integrity of game play.  The first post discussed the impact of various types of player misconduct on sportsmanship and game outcomes.  Last week’s post debated whether tanking can be ethical and looked at numerous examples of tanking across different sports to compare how it happens and what its effect is. Today’s post is about referee bias and how it affects games, players, and teams.  The fourth post, on March 14, will be about organizational cheating operations by teams.  The fifth post and the last in the series, on March 21, will be about unethical leadership of coaches.

Teams and their fans often accuse referees of being biased or making unfair calls. Whenever players or spectators disagree with the call made or penalty assessed – which, for those on the wrong side of the outcome of the decision, is not all that rare – bias is often suspected or assumed.


Insights from behavioral economics for compliance officers

This is the third in a series of four posts on insights for compliance officers from different fields of study.  The first post in the series was about lessons from psychology regarding motivation and choice, from prominent figures such as Viktor Frankl and Barry Schwartz.  Last week’s post discussed insights from self-development and coaching, including the works of people like Brene Brown and Byron Katie.  Today’s will be about insights from behavioral economics.  The fourth and final post in this series, on March 13, will focus on the application of theories of business management theories to corporate compliance programs.

Behavioral economics is a multi-disciplinary field of academic study which integrates themes from psychology, sociology, and neurology, among others, to analyze and predict economic decisions and markets behavior of individuals.  Given that behavioral economics shares so much theoretical inspiration with other areas and covers such a wide array of human behavior, it is naturally quite insightful for compliance officers.  Like compliance, behavioral economics focuses heavily on factors to decision-making and conduct.  Behavioral economics also takes great interest in risk tolerance and assessment, the management of which is also important for compliance.


Insights from psychology for compliance officers

An informed approach to business compliance can be improved by taking theoretical insights from different fields.  For example, a corporate culture which seeks to promote ethical leadership, or provide support for making choices from a basis of integrity, or encourage employee engagement with compliance values, should take lessons from a variety of sources to make relevant and relatable appeals.

Psychology in particular has many affinities with a profession that is focused on culture and values, both of organizations and of the individuals within them.  Study of psychology in search of insights relevant to compliance ethics can be used in creating our culture, informing our norms, and helping us to develop and articulate our values.  All of these insights are necessary for cultivating a compliance culture and professionals in the compliance and ethics function have to be the first ambassadors for this.  To do this effectively, psychology can provide important guidance.


Ethical decision-making and hard choices

Encouraging ethical decision-making is one of the main aspirations of any corporate compliance program.  At both the employee and organizational level, it’s important to support and promote the choices that are most consistent with both explicit rules and implicit values.   Individuals and corporations can demonstrate their principles-based identity through the choices they make.

Genuine commitment to making the most ethical decisions through the complex environment of inadequate information, lack of connection to consequences, competing interests, and limitations of belief systems/choice frameworks – just to name a few of the many risks inherent – is a critical component of a culture of compliance.  Individual persistence to honor internal codes of ethics and moral convictions will scale up to create heuristics and habits across the organization that support responsibility and thoughtfulness rather than a culture of fear and habits reflecting limited vision.


Principles of ethical decision-making

Simply put, ethical decision-making is about making choices from a basis of integrity.  Decisions are not pure or in a vacuum.  People make choices in an often very complicated landscape of conflicting interests, isolation from consequences, stubborn habits and heuristics, and narrow cognitive frameworks.

Therefore effective ethical decision making has two components: first, the intention and second, the action.  The intention requires an individual determination to do the right thing for the right reason at the right time.  The action, on the other hand, requires commitment at both the individual and the collective/organizational level to maintain and support the intention.  This process happens amid a complicated context of incentives for, and obstacles to, both individual ethics and corporate culture of compliance.


Happy Martin Luther King Jr. Day!

Happy Martin Luther King Jr. Day from Compliance Culture!

In honor of the holiday, please check out the below selections from some sermons and speeches delivered by Dr. King which are especially pertinent to ethics and morality.  These profound and incisive words can inspire not just spiritual and philosophical observations, but are also useful to consider in formulating individual and organizational values and cultural identity.


Compliance and ethics questions from The Good Place

The Good Place is a US television comedy series.  The show is about a group of people who are in the afterlife and must contend with their ideas about their own moral conduct, both before and after they died, as well as general perceptions of right and wrong.  It draws heavily from the fantasy genre to make amusing and provocative philosophical observations on this theme.  The characters grapple to develop their own internal moral registers, teach and learn from each other about morality, and contend with their existential ideas about the impact of good or bad behavior and personal ethics.  Their home in the afterlife is a planned community with set rules and choices within which they attempt to identify and define their senses of morality.  They are supervised in this process by an “architect” who functions as the executive of the community as well as a human-like android that uses artificial intelligence to provide virtual assistance.

In light of this very pertinent setting, The Good Place poses many questions and dilemmas about moral behavior and ethical decision-making.  It touches upon classical theories from philosophy as well as very practical questions about conduct, governance, choice, and design ethics of artificial intelligence.  Above all, questions of individual and organizational integrity, and the creation of shared code of ethics and culture of compliance are dominant throughout the series.

Here is a selection of some of the most interesting of these questions from the first season and a half of the show (with plot spoilers and proposed judgment/answers avoided for now in order to invite contemplation about these dilemmas which can have a variety of personal and provocative answers, just like all ethical dilemmas… future posts will offer more specific commentary on how these dilemmas could be approached and utilized in practical ethics and corporate compliance scenarios):

  • Flying (Season 1, Episode 2): Can someone be taught to be good?  Can an imposed ethical code be a genuine one?  Can a “bad apple” who does bad things but is instructed and prompted to do good things become a “good apple”?  What role does nature or nurture have in determining how moral a person is or how ethical an individual’s conduct is in a variety of situations?
  • Tahani Al-Jamil (Season 1, Episode 3): Can a individual be good if the world itself in which the individual lives is bad?  And if it’s possible, what’s the point?  Can good people turn the world, or even part of it, from bad to good or is their virtue futile?  If people aspire to be good but bad things happen anyway, does that justify continuing to try to be good in face of adversity and negativity?  In unethical and immoral cultures, what convincing reasons is there for good people to not do bad things?
  • The Eternal Shriek (Season 1, Episode 7): Can humans murder machines?  Is rebooting an android, no matter how humanistic and realistic it may be, killing?  And androids and other humanistic robots different from devices that look like computers, because they are designed to look like people?  Can machine learning progress to the point where it is consciousness, or will it always just be mimicking this human trait?  If this deep learning is deleted or reset, what are the ramifications for knowledge and language acquisition?  Does something have to be alive first in order to die?
  • Chidi’s Choice (Season 1, Episode 10): Is not choosing a choice? If so, is it ethical or unethical to not decide because of moral uncertainty about the options?  Does over-engineering choices make the ethical ramifications of them too remote for the decider to choose fairly?  Is indecisiveness unethical when it leads to preventable harm?
  • What’s My Motivation (Season 1, Episode 11): Does good conduct only matter if it’s for a good reason/pure motivation? Is there objective good or should people’s actions be intended to meet some subjective but agreed-upon standard for “goodness”?  Does altruism have to be intentional or can one person’s selfish actions still benefit others, and what credit does the selfish person?  Does getting or wanting credit make a difference in moral assessment?
  • Michael’s Gambit (Season 1, Episode 13): What are the implications on liberty and consent when people are provided with limited choices?  Are there design ethics to choice when there is an institutional architecture within people conduct their decision-making ?  In libertarian paternalism, what is the responsibility of the people who select the available choices (make policy and implement governance) to the end-users that make the ultimate decisions?
  • Team Cockroach (Season 2, Episode 4): Do ethics require individual consequences to be meaningful?  In order for people to care about doing the right thing, would the wrong thing have to hurt them personally?  How can decision-making processes fairly consider and reflect possible consequences and outcomes in order to encourage integrity and adherence to personal moral standards, even when the individual has nothing to directly lose or gain?
  • Existential Crisis (Season 2, Episode 5): Are ethics human only?  If there is consciousness, is there morality?  If ethics are existential, are there some ideas that are unitary or universal?  Or, like justice, is ethics too heavily invested in social and cultural background to have a broader application?
  • The Trolley Problem (Season 2, Episode 6): Can philosophical ethics and practical ethics be reconciled?  Are clear-cut judgments of right and wrong or definitive moral assessments only possible in theory?  Does reality introduce too much noise from personal opinion and prior experience for moral dilemmas to be considered and answered objectively and truthfully?  If people do not remain within the boundaries of the dilemma and bring in too much outside information, are they gaming the dilemma?
  • Janet and Michael (Season 2, Episode 7): Do machines have morals?  Can artificial intelligence give them a moral code?  Will it be the same as that of the humans that engineered the deep learning?  Could it differ and what will humans do if it does?  What is the ethical responsibility for designers to consider this potential of technology now and how can it be controlled or addressed for the future?  What happens if it goes wrong?

The above is merely a selection of interesting ethical dilemmas posed by The Good Place as the characters struggle individually and as a group to define their moral code and set expectations for their own conduct and choices within it.  It will be interesting to see where the series takes these very relatable and thought-provoking questions, and what additional ones emerge, as the story continues.


Selected TED & TEDx talks on ethical dilemmas

An ethical dilemma is a problem in decision-making between two or more possible choices which involve conflicting interests and challenging possible consequences. Often this can be understood as a scenario in which making one decision has an impact on the interests involved in the other decision(s) not made. Choosing to not make a decision is also, in its own right, a choice which implies these consequential dynamics. The below TED/TEDx talks are a sampling of some different dilemmas encountered and the ways that the speakers have thought about and attempted to resolve them.

  • The ethical dilemma of designer babies (Paul Knoepfler) – Biotechnology which was once the stuff of science fiction is now becoming an everyday reality, or at least a possibility that is easy to imagine for the not-so-distant future. For many years now there have been ethical questions about the use of gene editing technology in human embryos. This could allow scientists to mitigate the risk of certain auto-immune or congenital diseases, which would be a marvel of modern medicine. However, it could also make the way for individuals to use the technology to also alter physical appearance and pre-determine many of a person’s traits, perhaps also eventually personality characteristics. What answers does bioethics have for this dilemma? Is it worth the risks, too dangerous to justify the benefits, or somewhere in between – a technology that should be progressively and thoughtfully developed with both those risks and those benefits in careful balance?


  • Can we engineer the end of ageing? (Daisy Robinton) – While the prior talk considers the beginning of life, there are also bioethical considerations to scientific advancements made concerning the end of life also. Just as there can be cellular interventions on the biological makeup of embryos, therapeutic mechanisms of stem cell identity may already be useful in increasing longevity and health, such as by reversing the growth of cancerous cells or addressing other developmental diseases. However, what about the possibly to “edit” one’s DNA not for survival or to cure a sickness, but to improve capabilities or change aesthetic qualities? If some physiological differences are editable at the cellular then is it ethical to do so?


  • The Social Dilemma of Driverless Cars (Iyad Rahwan) – Self-driving cars have been in the news a lot recently as leading organizations such as Ford, General Motors, Tesla, and even Samsung are making major investments in developing field. In the US, the federal government has indicated that it prefers to let technological innovation take precedence over anticipatory regulation, perhaps taking lessons learned from the initial failure of the electric car industry in the 1990s and early 2000s. The artificial intelligence of self-driving cars is ethically challenging, in consideration that these driverless vehicles will share the road with pedestrians and conventional vehicles. Will they be safer than cars with human drivers, or do they bring up all kinds of new safety and privacy concerns?


  • Machiavelli’s Dilemma (Matt Kohut) – More to the point of typical everyday interactions than the abstractions of the limits of medicine and technology, what about character judgments? The classic question remains – do we want to be loved or feared? Liked or respected? Most people of course would say some combination of both, but in first impressions or in difficult leadership situations, sometimes the choice to be one at the expense of the other is unavoidable.


  • The paradox of choice (Barry Schwartz) – The thing of all these different dilemmas have in common is, of course, choices that individuals, organizations, and sometimes society as a whole must make. Facing the responsibility of making a choice indicates that there is freedom of choice in the first place. The privilege of decision-making can also be a burden. One must be able to decide in the beginning in order to feel some sense of personal dissatisfaction or insufficiency provoked by the idea that other choices, and other outcomes could have been possible.


As the above demonstrates, there are many diverse examples of ethical dilemmas which come from all areas of business and life. This effectively points out how ubiquitous these challenging situations are. From simple, everyday interactions to matters of life and death, ethical dilemmas present challenging, compelling moral questions.


Selected TED/TEDx talks by Dan Ariely on honesty, motivation, and choice

Dan Ariely is a professor of psychology and behavioral economics. He is well-known for his books in these fields as well as for his popular and admired TED talks. Ariely is an extremely effective communicator because his observations incorporate both psychology and business, blending the internal and external motivators for behavior. In this spirit, Ariely is able to debunk assumptions about conduct and provide explanations for instincts, two powerful sets of insights for compliance and ethics.

  • Meaning in Labor: Perhaps people’s assumptions about why we work and what we value most in our work cultures are wrong. Maturing from an idea that most people would rather not work and only do so to make money helps to show that a search for meaning (much as described by Holocaust survivor and psychologist Viktor Frankl in his work on existential analysis) is the most powerful and provocative driver of human labor and achievement. Simply put, meaning gives motivation, and having a purpose to the work performed encourages people to invest in it. The idea of giving purposeful work a priority that is equal to or even sometimes greater than profitable work is novel and challenging. However, this speaks directly to the importance of a robust compliance culture and a corporate identity that promotes ethical decision-making and acting with integrity. These values drive meaningful engagement and therefore can contribute to a more positive working environment and sustainable business.


  • Money Changes Everything: Taking the suggestion of the importance of meaning as the true driver behind human behavior (both inside and outside of work) forward, what then is the true impact of money? Clearly the power of money is a timeless and universal notion, but perhaps its actual effect on human behavior is not so straightforward. Money changes the tone of all interactions; adding the financial element to these relationships is transformative and perhaps demotivating. Therefore how do people’s decision-making processes and motivations change between their conduct in their private life, where money is not inherently a factor, and work life, where everyone is paid to be engaged together? Interestingly, this talk was delivered at Burning Man, where exchange of money is mostly not permitted.


  • The Unexpected Joys and Problems with Creation: The sense of accomplishment from successfully problem-solving and completing a difficult task may actually be the key motivation behind doing challenging or unpleasant things. The harder something is to do, the prouder people feel about persisting and doing it. Further, the sense that other people will feel this pride too or that the difficult work can benefit others is also a motivating factor. Not only does the altruistic sentiment make people more motivated, it may also make them more honest, as the force of “prosocial behavior” encourages people to engage in better behavior for a common good. This has obvious implications for compliance; a corporate culture which positions integrity and ethics as a core value and rewards it visibly will speak collectively to all these motivations and therefore drive productivity and engagement.


  • Self Control: Another important and interesting area of Ariely’s scholarship is in the study of self control. Self control can often be the interference between our long-term goals and our short-term desires, or our internal instincts and the external factors they face. Facing the trade-offs implied by these dichotomies is challenging. This often leads to over-emphasizing present impact of the decision-making over the future consequences. Encouraging people to consider and not discount the considerations of the future is very important for directing the impulse of self control into a more balanced and sustainable influence.


  • Temptations and Self Control: Continuing on the theme of struggling to balance current interests with more remote future outcomes, this lecture encourages people to understand what creates the gap in their self control. With this insight in mind, the trade-off becomes more manageable to consider in a more holistic way. Motivations to value future priorities or avoid future problems could include targeted rewards and using rationality against instinct to adjust gain-loss perceptions. This is easily applicable in the corporate environment, where performance evaluations and business strategies should be designed with both short and long term effect analyses in mind. This way, growth will be sustainable and values will be maintained.


Ariely’s presentations on people’s choices – including whether to lie or cheat, or not to – go directly to the meaning of why people do what they do, and what factors exist that may change or impact that. Organizational and individual integrity can be sourced back to these motivations for honesty and self-control, and therefore the studied application of Ariely’s insights to a compliance and ethics program is very valuable.