Earlier this year, I suggested that accountability would be the big ethical challenge facing the insurance market in 2019. And my focus then was on accountability in relation to key audiences like clients, regulators, investors and the public at large. Yet there is another dimension to the accountability that we as insurance people should demonstrate. We need to be accountable to ourselves. It is just as important.
In this week's post, I'm going to explore 'ethical dissonance’ and why addressing it is central to the sector's attempts at recapturing the trust of the insurance buying public. It has close links with the debate about trust because it focuses on the many small, often mundane decisions we make every day at work. Remove the ethical dissonance that can affect such decisions and the reputation of the whole market could be transformed.
Academics in the emerging field of behavioural ethics have been researching the widely held desire we have to maintain a positive moral image of ourselves. We see ourselves as good people and want to be seen by others in that way. And of course, we make lots of good decisions every day. We must also recognise that we make some bad ones from time to time as well.
Ethical dissonance focuses on that conflict, between the moral self image we hold of ourselves and the temptation to benefit from those poor decisions. We'll be looking at it in three ways. Firstly, how we can sometimes both recognise that dissonance and try to cover it up. Secondly, how we can structure our response to it. And thirdly, three ways to help people in your firm tackle it.
Clearly, when we make a poor decision, a conflict can then arise around how to fit that unethical behaviour with the self image we have of ourselves as a moral person. We resort to all sorts of psychological tricks to maintain that moral self image.
So for example, we may recall some more ethical decisions we've made in the recent past and apply a set of moral weighing scales. We convince ourselves that those good works allow us to act unethically from time to time. This is referred to as 'moral licensing’.
Or we might resort to ‘ethical distancing’. This involves justifying our unethical behaviour by pointing to the unethical (perhaps even more unethical) behaviour of others. This can evolve into a demonising of others in order to reduce a discomfort with our own ethical dissonance.
Then there is ‘self serving altruism’, in which we see our actions as causing no apparent harm to a specific person, but at the same time benefiting both ourselves and others. This can cause some people to view an unethical decision as a legitimate course of action on the basis that it serves a greater good.
Do such psychological tricks turn up in insurance decisions? Of course they do, and this blog has looked at examples of them on several occasions over the years. So let’s be honest and acknowledge that we all experience ethical dissonance at some time in our work. Equally important, we can often pick up signs that others are experiencing it too.
In my course on ethical decision making, I look at examples of what are called rationalisations. These are excuses used by someone trying to make their bad decision look better than it really was. In other words, they’re struggling with ethical dissonance. Here are five such rationalisations:
In the workshops I run with firms, I often ask attendees if they’ve ever heard that last one. Most of them have. This points to ethical dissonance being fairly common across the market.
If it’s more common than we think, then we should start structuring our thinking around it so as to better find ways of addressing it. Researchers tend to distinguish between what they call pre-violation rationalisations and post-violation rationalisations. They also distinguish between unintentional unethical acts and intentional unethical acts. This gives us a simple two by two grid into which we can organise the different types of responses and support.
And this is important, for we can do something about ethical dissonance. It’s not something that we just have to live with. The research literature points to this happening on three levels.
Firstly, we can employ a variety of tactics to raise the prominence of how to act ethically, and which at the same time reduce the scope for justifying unethical behaviour. The watchword here is communication and the focus is on reducing ambiguities.
Secondly, we can act to increase the visibility of decisions. This is about encouraging an openness around what we do and why, and being accountable for the decisions we take. So the watchword here is culture and the focus is on leading by example.
And thirdly, we can be more honest with ourselves. This is about reflecting on what we are doing and thinking beyond our immediate situation, be that what other people might think of what we’re about to do, or what it would look like in hindsight. The watchword here is awareness and the focus is on reflective thinking.
We need to engage with ethical dissonance – after all, most misconduct in corporate settings is not down to bad people doing bad things, but good people making bad decisions. Most importantly, it should not just be viewed as something that is inevitable in a competitive market.
And we need to engage with it on two levels – the personal and the corporate. We can change how we approach the decisions we make at work. And firms can support us in doing so, by having work environments that encourage more ethical decisions and that define more clearly what is a good decision and what is a bad decision.
A survey last year by law firm DWF found that 28% of UK insurance executives thought that by 2022, the greatest risk they expect to face will be personal regulatory sanction because of their firm's compliance failings. Addressing ethical dissonance, both their own and of those around them, would significantly reduce that risk.
Duncan is the founder of the Ethics and Insurance blog and the author of its many posts. He's a Chartered Insurance Practitioner, having worked 18 years in the UK market. As an adviser to many firms on ethics issues, as well as a regular conference speaker, he is one of the leading voices on ethics and insurance.