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Being a Parent as a Source of Ethics Risk

In 1973, in speaking to colleagues on the Cook County Democratic Committee, Mayor Richard Daley of Chicago defended his having directed a million dollars of insurance business to an agency on behalf of his son John with the immortal words: “If I can’t help my sons, then [my critics] can kiss my ass. I make no apologies to anyone.”

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The Hidden Insights Evolution Has for Healthy Businesses

Charles Darwin ended The Origin of Species, his argument for evolution by natural selection, on a note of celebrated eloquence. “There is grandeur to this view of life,” he wrote, “with its several powers, having been originally breathed into a few forms or into one; and that, whilst this planet has gone cycling on according to the fixed law of gravity, from so simple a beginning endless forms most beautiful and most wonderful have been, and are being, evolved.”

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How to Make Lying at Your Company Normal

Earlier this month at the Beacon Theater, in New York City, Daniel Kahneman, famed author of Thinking, Fast and Slow, had a conversation with neuroscientist Sam Harris. It ranged over many of the topics the Nobel Prize-winning behavioral scientist has explored in his work. This included the “remembering” and “experiencing” self, where intuitions reliably fail, and—while discussing obstacles to desirable behavior—the need for ethical systems design. “You want to create systems whereby even mediocre, which is to say normal people, can behave better and better effortlessly,” Harris said. “You don’t want systems where you have to be a saint to do something good or proper.”

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Socialism and Conflicts of Interest

There was a time in my life when I might have embraced the cause of socialism, but that was many years ago, and today I proudly march under the banner of centrism. And the current flirtation with socialism in the U.S. has me worried—at least a little bit.

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Wall Street and the Behavioral Science of Making Culture Ethical

Before he became “The Wolf of Wall Street,” Jordan Belfort, when he arrived in New York in the 1980s, was more like a starry-eyed sheep. That’s how Leonardo DiCaprio plays him in The Wolf of Wall Street, the film adapted from Belfort’s 2007 memoir of his years as a stockbroker. In an early scene from the film, Belfort brims with a rookie’s optimism about starting at investment banking firm L.F. Rothschild, under stockbroker Mark Hanna, played by Matthew McConaughey. He can’t wait to help make Hanna’s impressive clients more money, but he learns that isn’t quite Hanna’s modus operandi. “F[—] the clients,” Hanna tells Belfort. “Your only responsibility is to put meat on the table.”

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The Paradox of Employee Surveillance

This piece was originally published in Behavioral Scientist magazine.

For many people, the global financial crisis eroded trust in corporations and government. There was a double-digit decline in trust of large banks in particular, dropping from 69% before the crisis to 49% in 2013 in Edelman Trust data. These perceptions have ushered in a new paradigm of oversight between regulators and firms, both for banks and big business generally. And this increased oversight of companies has also created new dynamics between organizations and their employees, as executives try to control for any possibility of misconduct.

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Listen to Adam Grant Talk Leadership Science with Preet Bharara

It is safe to say that I am a podcast junkie. Whenever I find myself “ears-free”—while taking a shower, walking the dog, riding the subway—I listen to an episode. Usually it is intellectual fare—scientists or other sorts of scholars discussing their new books with, for instance, comedian Joe Rogan (on whose show our founder, Jon Haidt, just appeared). Recently I’ve wandered into more current- and legal-affairs territory, and discovered “Stay Tuned” with Preet, hosted by Preet Bharara, a former US attorney for the Southern District of New York who President Trump fired.

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New Evidence in Favor of Active Internal Whistleblowing

Over two decades ago, two of the largest corporate bankruptcies in U.S. history sprung up one after another—first Enron, then WorldCom—after the companies became mired in accounting and financial fraud.  In 2002, in response to these ethics breaches, President Bush passed the Sarbanes-Oxley Act, which established many of the internal controls now common in U.S. public corporations. The Act also mandated, among other things, that public companies provide employees a hotline with which they could report any company wrongdoing anonymously—an early warning signal for the company’s Board and management to address bad behavior before risking the ruin of the company’s reputation by, for example, an external whistleblower incident.  

 

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How to Avoid Becoming the Next Wells Fargo

Last year, in September, CNN Business ran the headline, “The two-year Wells Fargo horror story just won’t end.”

 

By now, many have heard how it all began: In 2016 it was revealed that the bank fired over 5,300 employees for opening millions of potentially unauthorized or fraudulent customer accounts between 2011 and 2016. These “sales integrity issues,” as the bank put it, likely date back to at least 2002. Then in 2017, news came that Wells Fargo had charged unwarranted mortgage fees between 2013 and 2017 and foisted unneeded auto insurance on many of its customers, causing thousands to default on their car loans and have their vehicles repossessed. Last year, the public learned that Wells Fargo had also foreclosed on hundreds of homes due to a technological glitch. The bank recently agreed to shell out $575 million to settle claims with U.S. states. Matt Eagan, a CNN Business reporter, has been chronicling the bank’s failures since they began. “Wells Fargo initially minimized the millions of fake bank and credit card accounts as wrongdoing by bad actors,” he wrote last month. “It only later admitted the existence of [a] widespread cultural problem.” 

 

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End of Year Letter, 2018, from Jon Haidt and Azish Filabi

Stop the World—I Want to Get Off. The title of that 1960s musical captures a timeless sentiment, but it seems more common in recent years, and is perhaps especially on the minds of leaders of organizations and their ethics-and-compliance staff.  

In this era of rising political polarization and social-media fueled speculation, small things can quickly blow up and become very big headaches. Having an ethical, high-trust culture does not guarantee that you’ll avoid problems, but it can greatly reduce your risk. That’s one way to look at Ethical Systems Design: as a way to increase resiliency in the face of uncertainty and rapid change.

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