"The current crisis is the time to reflect on the things we do
in business," said Prof.dr. David De Cremer, renowned behavioural
ethicist at RSM, as he introduced the work of the ECBE. "We need to
understand and predict business ethics," he said. The ECBE is run
by Erasmus Research Institute of Management (ERIM) and was launched
at a one-day symposium featuring five speakers from global business
and academia.
The symposium's speakers made chilling listening for the
audience. Speaking first, Bill Bottom, Professor of Organisational
Behaviour from Olin School of Business, Washington University in St
Louis, USA, described recent events as the 'stunning collapse of
firms and the destruction of stakeholder wealth through a level of
basic incompetence and ethical misconduct by business graduates.'
It was, he said, the result of a 'loose-tight' personnel policy and
using financial rewards as motivation with bonuses and
outcome-based pay.
But studies have shown that people in business are more like
reciprocal altruists, for whom the choice of future
trading partners is influenced by those who have been helpful to
them in the past. Variable pay is an inefficient motivator, said
Professor Bottom, and he supported the restoration of human
relations in business education and practice.
Ann Tenbrunsel, Professor of Management at the Mendoza College
of Business, University of Notre Dame University in Indiana, USA
proposed that none of us behave as well as we think we do. This
'ethical mirage' influences the business decision-making process,
masking its true impact. Without the sanction of the 'business'
label, decisions are often seen as interpersonal, ethical ones and
outcomes differ.
Effective ethical decision-making, Professor Tenbrunsel said,
required an abstract view 'at forest level, not tree level', and
recognition that recollection of the ethics involved in the
decision-making process are likely to be distorted.
Peter Kim, Associate Professor of Management and Organisation at
the Marshall School of Business, University of Southern California,
added another layer to the problem and said the framing of an
incident can make a difference to how it is perceived. "We view
matters of incompetence as fixable by apology, repentance and
redemption. But if the action is seen as a transgression of
integrity, the action leaves a permanent, personal stain on the
character," he said.
But apologies are not always successful. Individuals can be more
lenient, but the effect of belonging to a collective group can
magnify a negative response and lead to a mob mentality. In
addition, cultural norms may also alter responses, with apologies
are viewed differently in Eastern and Western cultures.
Drs. Annegien Blokpoel is Managing Director of PerspeXo, a
consultancy working on developing value-enhancing strategies for
SMEs. She identified the thread running through the previous
speakers' presentations when she said: "the common thread here is
human interaction".
We tend to be more moral in human-to-human interactions than in
faceless business-to-business interactions, she said. Larger
companies and merged banks had become impersonal organisations, and
the banking system in particular was 'hijacked by econometrics',
with measurements of past performance held as the key to future
success. But in large organisations, no single person had an
oversight of the whole operation and consideration of the human
element was lost. Divisions were operating without cohesion and the
result was the financial crisis.
Drs. Blokpoel advocated a 'back to basics' tactic for banks.
Trust could be re-established by building a reputation as efficient
currency exchanges, as depositories for funds over a long term, and
for producing a return on investments through good and bad times.
The banking industry needed professional bankers with a good
balance between their rational and emotional sides, she said, and
who worked under the assumption that they were responsible for
their own opinions and actions.
Dr. Sylvie Bleker, Director of the Centre of Excellence on
Compliance and Integrity for Deloitte reminded the audience that
history often repeats itself. When Nick Leeson brought down Barings
Bank with losses of £827 million in 1995, it was said it could
never happen again. But Jerôme Kerviel lost €4.9 billion for the
Société Générale in 2008. Behaviour of employees is affected by
opportunity, pressure and rationalisation, she explained, and
suggested that the crisis came about because of a loss of human
senses in large organisations. "We can't see the assets, we can't
feel them, we don't hear the cries of those affected, we don't
smell the poverty and don't taste the despair," said Dr Bleker.
'Virtual money' had turned bankers into the equivalent of computer
game players, with the ability to press the re-set button. "But
this is not virtual money," she told the audience. "What bankers do
has an effect on everyone."
In summing up, Prof.dr. David De Cremer said he hoped that the
findings of the Erasmus Centre of Behavioural Ethics would prove to
be a useful resource for business, and that he and his researchers
would be happy to hear from businesses with questions or problems
related to business ethics.
The Erasmus Research Institute of Management
(ERIM)is the research school in the field of management of
the Erasmus University Rotterdam. The founding participants of ERIM
are Rotterdam School of Management, Erasmus University and the
Erasmus School of Economics (ESE). ERIM organises the Erasmus
Doctoral programme in Business and Management for the training of
young, promising scientists. Over 300 researchers are attached to
ERIM.
for conference abstracts, please click here.
Read the articles
The Devils in Each of Us by Peter H. Kim, click here.
Credit Crunch Etics by Dr. Sylvie C. Bleker van Eyk, click here.
The Ethical Mirage by Ann E. Tenbrunsul, click here.
Restoring Human Relations in Business Education and Practice by
William P. Bottom, click here.