Prelude: What Unethical Leadership Looks Like
Ethics in Leadership is a hot topic and it has been for some time. In this issue of The Lead, we explore ways it can go terribly wrong, and what you can do about it
This article was originally published in The Lead on 21st March 2021. All content from The Lead can now be found in the new section of the same name here on Sunday Letters. This essay is part of the series on Leadership.
It never ceases to amaze me as I go about my day the extent to which businesses large and small go in their attempt to get one over on us. It seems to be a game of cutting as close to the bone of ethical practice as possible without getting caught. The competitive marketplace script appears to read; “let’s see how big we can grow this company, take advantage of those with less information than us, and make as much money we can while giving as little value as possible to the customer. And hey, if we get caught, we’ll just apologise and pony up. In the meantime, let’s make enough money so we can cover the legal costs, ok. If people are being hurt by what we do, it’s their own fault. After all, it’s just business.” The alternative seems to be a rare exception.
From cleverly packaged meat products that hide small portions under the label to high-margin lower quality goods placed at eye level to discounted aged fruit and veg that goes rotten within a couple of days. Every time we go shopping, it takes effort not to be conned. And it’s not only foodstuffs; appliances and personal technology have built-in obsolescence. Social and other technology apps mine us for our information without our knowledge or consent. Tradespeople take outrageous shortcuts. Although meeting the criteria required by legislation, financial products are created so that the providers don’t lose. FFS, you can even buy books that show you how to build products that manipulate and take advantage of people’s propensity toward addiction.
Everywhere you look in our wondrous capitalist model of society, people and organisations take unfair and unethical advantage. Corporations exist to make a profit, and that’s fine, but to what extent will you go in your business to achieve that profit? For many corporations, large or small, a sense of humanity and ethical behaviour take second place in the decision making process. Like it or not, and call me a cynic if you will, this is the state of play a “survival of the fittest” ideology encourages. At its worst, as we will see in our example, people become fodder for cannons. Sure, people care for people, but people under the command of an entity whose primary aim is profit are prone to making decisions that favour that entity. Some are even perverse and downright nefarious. Concern for their fellow human being is not a factor.
“From cleverly packaged meat products that hide small portions under the label, to high-margin lower quality goods placed at eye level, to discounted aged fruit and veg that goes rotten within a couple of days. Every time we go shopping it takes effort not to be conned. And it’s not only foodstuffs…”
The Ford Pinto Scandal
At the retail level, the literature is littered with examples from trivial right through to inhumane, where decision-makers have disregarded their sense of humanity and social obligation for the sake of duty to the corporation and bottom line. The story of the Ford Pinto is a case in point.
In 1968, executives at the Ford motor company put the low-cost Pinto into production. To have their new vehicle ready for the 1971 market, Ford decided to reduce their design-to-production time of three years down to two. This straight away perhaps compromised established protocols for safety. However, commercial pressure for a low-cost vehicle was significant. Before production, Ford crash-tested various Pinto prototypes to assess fire risk from road traffic collisions and meet the National Highway Traffic Safety Administration standards. The prototypes and the Pinto final design all failed the standard 20-mph test resulting in ruptured gas tanks and fuel leaks. The only Pintos to pass the test had been modified somehow, for example, with rubber bladders in the gas tank or additional reinforcement.
Ford executives knew that the Pinto design was flawed and represented a serious risk to human life in rear-end collisions, even at low-speed. However, they felt additional pressure from cheap Japanese imports and therefore faced a critical decision. Should they go to production with the existing design and risk consumer safety? Should they delay production, redesign the gas tank and concede defeat to foreign competition? Remarkably, Ford not only committed to the flawed design, but they stuck to it for the next six years. The decisions to proceed with the Pinto production without safety improvements led to more than 500 cases of fire-related deaths, fifty lawsuits, and many millions in compensation to families, not to mention the trauma inflicted on the victims' families.
Why would anyone do this?
Why, when you know your actions will likely lead to human suffering and even loss of life, would you proceed along the same lines? I believe that situations such as these account for human beings' propensity to subjugate themselves to the power system they occupy. In that setting, their sense of self is entirely dependent on the system, so to forgo the system's rules amounts to forgoing their sense of self — the entrepreneurial self. Internal dialogue insists that if one breaks the rules, then their very existence is threatened. Regardless of the psychological process at work, it seems clear that to make decisions in a fake plastic setting such as the world of business, we must leave our humanity at the door.
In the Ford Pinto case, evidence suggests that executives relied on cost-benefit reasoning to analyse the expected monetary costs and benefits. Apparently, Ford's estimated cost for making these safety improvements was only $5 to $8 per vehicle; however, the executives reasoned that this cost outweighed the benefits of a new tank design. It seems the cost to life was not part of their decision-making model.
The Art of Self-deception and Disregard for Ethics in Business
Cognitive bias distorts decision making, and the “rational” approach in business circles, coupled with a host of complex psychological factors, fuel this distortion. For the Ford executives, the moral and ethical imperative didn’t even enter the equation. A phenomenon known as “ethical fading,” detailed by Ann Tenbrunsel and David Messick, has highlighted how self-deception is a central component in unethical decision making. In their 2004 paper1, the authors wrote;
“Self-deception allows one to behave self-interestedly while, at the same time, falsely believing that one’s moral principles were upheld. The end result of this internal con game is that the ethical aspects of the decision “fade” into the background, the moral implications obscured.”
Tenbrunsel and Messick suggest that self-deception is an unawareness of the internal processes that lead us to form opinions and judgments of ourselves and events in which we are involved. This self-deception involves avoiding the truth, lying to, and keeping secrets from ourselves. The practice is widespread, normal, and accepted in the lives of everyone we know. We create the lives we live through the stories we tell ourselves, and these stories allow us to do what we want and then serve to justify our actions. Over time, there exists what psychologists call an “ethical numbing”, where repeated exposure to an ethical dilemma numbs our sensitivity to our own unethical behaviour. Unless we are willing to monitor and question our own thoughts, assumptions and behaviour, we are in danger of cultivating unethical practices in our organisations.
What role did organisational culture at Ford play in these unethical decisions? Evidence suggests that the vice president at the time, Lee Iacocca, who was closely involved in the Pinto launch, did not encourage a safety culture. A mentality of “just get it done” filtered down from the top through the entire company. A 1977 magazine article2 quoting an engineer from Ford wrote that any employee who dared to slow progress would have been fired on the spot. The subject of safety wasn’t a popular conversation around Ford in those days, and with Iacocca, it was taboo. Apparently, whenever staff raised a concern that resulted in delay on the Pinto, Iacocca would chomp on his cigar, look out the window and say, “Read the product objectives and get back to work.”
Is Unethical Behaviour Ok In Your Organisation?
Breach of the ethical imperative is not isolated to the case of the Ford Pinto and Lee Iacocca. At that time, lobbying by the motor industry against safety legislation was at its height. At Ford, they saw safety as meddling in free enterprise, with the motor industry insisting that accidents were not problems caused by cars but by people and road conditions. Yes, with the sobriety of fifty years; hence, we may see how crazy that idea is now. But it wasn’t necessarily crazy then — not to the industry. Consider how we do business today; how might our decision-making assumptions be flawed or unethical? Are we considering others' welfare in the products and services we create, or is that none of our business?
Consider the technology sector, for example — it’s the wild west as far as regulation goes. The creation of addictive digital applications that take advantage of sleepy people is widespread and accepted in the corporate world. For Christ’s sake, there are even books that show you how to do it. And what’s worse, their authors seem completely unapologetic in their promotion of these unethical practices. In fact, they even go so far as to suggest that it’s ok to deceive people — Oh, but only if it’s in their best interests3. Of course, the authors assume that they know what your best interests are. And yes, that usually means their own best interests, not yours.
“Over time there is what psychologists call a sort of “ethical numbing” where repeated exposure to an ethical dilemma numbs our sensitivity to our own unethical behaviour”
I was thinking of recording a video series titled; “Make Your Own Meth At Home” and posting it to YouTube. Yeah, that sounds like a good idea. Sure, it’s hardly my problem if kids follow my video series and kill themselves. I’m just looking to make a few quid from YouTube ads. Not my problem if people are adversely affected, right? Too extreme an example? Well, it illustrates my point. You know, it takes a special kind of psychology to compartmentalise one’s thought processes to the extent where it’s ok to manipulate, deceive, and knowingly contribute towards the misery of another human being while advocating for self-preservation in the face of the ubiquitousness of technology.
For me, it’s quite simple; if I know what I’m doing is hurting, or has the potential to hurt someone, then I stop. There are plenty of ways to make money and live a comfortable life without knowingly hurting other human beings in the process. But then again, if you’re mind has become consumed by self-deception in this regard, then the justification of unethical and nefarious behaviour is sure to follow. To think this way, to rationalise unethical behaviour, one has to disconnect from their humanity.
“The short-term, dopamine-driven feedback loops we’ve created are destroying how society works. No civil discourse, no cooperation; misinformation, mistruth. And it’s not an American problem — this is not about Russians ads. This is a global problem.” — Chamath Palihapitiya
How To Cultivate Ethics In Business
I can’t throw stones without taking ownership of my own flawed thinking and unethical behaviour in business. There have been times where my actions have been less than admirable. I’ve taken profit at the expense of quality, and I’ve turned a blind eye to less than satisfactory work carried out on my behalf. Pressure to perform, turn a profit, or even just break even tends to make human beings act unethically. That’s the inherent problem with the neoliberal capitalist system. However, that said, I can say with a large degree of certainty that no one has suffered directly at my hands. The nature of my work never has been or will be about taking advantage of those in a weaker position than me. This is the case now, particularly considering my area of study and research. It seems learning to manage oneself is the key.
In a 2016 article for Harvard Business Review4, Dacher Keltner, professor of psychology at the University of California, wrote that powerful people are more likely to engage in unethical behaviour than those with less power. Keltner’s 20 years of research in human behaviour has shown that while people usually advance to authority positions through positive behaviours such as empathy, fairness and collaboration, these qualities tend to fade with time. A sense of privilege and selfishness seems to take over many business leaders. He suggests that iconic abuses of power, such as that at Enron and Lehman Brothers, are extreme examples of unethical behaviour and power abuses. All companies, large and small, are susceptible.
So what can we do about it? Keltner has some suggestions.
Make Time For Self-reflection
The first step, Keltner suggests, is developing a greater sense of self-awareness and appreciation that our thoughts and actions can have far-reaching consequences. Meta-cognitive studies in neuroscience5 have shown that thinking about our thoughts and reflecting on our feelings and emotions can give rise to greater control of our actions. For example, recognition of feelings of euphoria, joy, and confidence can engage parts of our brain that help us keep in check irrational behaviour based on those feelings. It also helps with negative feelings such as anger and aggression when things don’t work out.
Keltner suggests that we can build this self-awareness through daily meditation and mindfulness practices. Research shows that even just a few minutes each day spent in a quiet space focusing on repetitive breathing patterns, for example, can lead to greater focus, control, and calmness under pressure. We can practice this throughout our day too. For example, in between tasks, take time to close out that last task by pausing for a few minutes. Take a few deep breaths, think about the next task and how you would like it to go for you and others. Then proceed.
Practice Empathy, Gratitude, & Generosity
Working with corporate executives, Keltner emphasises the importance of human factors, empathy, gratitude, and generosity that he says have shown to sustain benevolent leadership. These attributes of leadership, when executed authentically, bring about a sense of unity in the team or organisation. They suggest that someone cares that we are a part of something important and good. Ruling with an iron fist might get things done but at what cost? Keltner suggests that expressing appreciation, showing tolerance and understanding, and simple generosity acts lead to higher employee engagement and productivity.
Keltner suggests that to cultivate empathy, gratitude and generosity, entrepreneurial leaders should;
Listen with your ears, eyes and body. Put the blinkers on, so to speak, convey genuine interest and engage.
When someone comes with a problem, try to empathise with the language of understanding. Take on board what’s being said and void knee-jerk reactions.
Recognise good work when you see it, no matter how small. Send them an email, or better still, say it face to face.
Publicly acknowledge the work someone has done.
Delegate high-level responsibilities.
Avoid taking the credit — be humble, and be inclined to give that credit to others.
Some Final Thoughts
I’m for working for oneself over being an employee. I believe there are few better means by which human beings can develop themselves professionally, technically, and personally. Working for oneself brings great fulfilment, even if it proves to be the greatest challenge you have ever undertaken. It affords us the freedom to be creative and innovative without the boundaries of organisational structure — we create our own boundaries. We direct our own energies and command our own work. Self-employment, entrepreneurship in its purest form, insists that we take responsibility for ourselves, but it also insists that we consider how our work impacts other people.
When the ends become so important as to justify the means, we know we lost our way. Money and profit should never be the reason to enter business IMO— if they are, it won’t last. Sustainable profit comes from an honourable starting point: the work itself, the service, and the product. The joy must be in the work itself and not the material ends — the applause, reward, status or power. When money becomes the aim, as we have seen in the example above, all kinds of insane justifications creep into our decision making processes. Self-deception takes over, and unethical practices are not far behind.
Why are do we go into business? What is it about the entrepreneurial notion that attracts us? Is it money, control, status, power? Is there something so absent in us that we are prepared to spoof, tell half-truths, and manipulate people towards our own ends? The term “unethical behaviour” seems sterile when we see the extents to which our lack of humanity can go. It just doesn’t seem to capture the tragic and painful reality that transpired for hundreds of people due to Ford’s cost-benefit analysis in the Pinto case. I believe it doesn’t need to be this way.
I would say, sure, go into business for yourself. Pursue your personal and business goals, but never lose sight of your humanity. The Ford Pinto case serves as testimony to the obscenities we bring about when we forget who and what we are.
“Power tends to corrupt, and absolute power corrupts absolutely” — John Dalberg Acton
Tenbrunsel, A. E., & Messick, D. M. (2004). Ethical fading: The role of self-deception in unethical behaviour. Social justice research, 17(2), 223–236.
Dowie, M. (2021). Pinto Madness. Retrieved 14 February 2021, from https://www.motherjones.com/politics/1977/09/pinto-madness/
Eyal, N. (2014). Hooked, (p. 167). London: Penguin Books.
Keltner, D. (2016). Avoiding the Behaviors That Turn Nice Employees into Mean Bosses. Retrieved from https://hbr.org/2016/10/dont-let-power-corrupt-you
Fleming, S. M., & Dolan, R. J. (2012). The neural basis of metacognitive ability. Philosophical Transactions of the Royal Society B: Biological Sciences, 367(1594), 1338–1349.