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Tribes, vibes and hives: improving diversity through science

This is an article by Laura Smart cross-posted from Insight, the opinion and analysis page of the UK's Financial Conduct Authority (FCA). Original post.

 

Behavioural science can tell us a lot about how humans are hardwired, and where efforts to improve diversity will be best spent.

In 1951, Solomon Asch carried out an experiment which was to become one of the most widely known and pivotal findings in psychology.

Wanting to investigate how people were influenced by others when making decisions, he recruited students to judge the relative lengths of lines on a piece of paper. The catch was that each student was put into a group which, unknown to them, was made up of actors who had been instructed to give the same, obviously incorrect, answer some of the time.

The videos show the conflict faced by the participants when they come to give their verdict after listening to others ahead of them denying what is in front of their eyes. All in all, 70% of participants gave the same answer as the others at least some of the time - despite knowing that it was wrong.

There lies a perfect illustration of the dangers of conformity and groupthink - dangers that employers are increasingly trying to tackle, in part, through increasing diversity.

In financial services, considerable effort and resources have been put into diversity and inclusion programmes, including mandating training, introducing targets and changing recruitment processes.  But senior managers often find it hard to know which efforts are most effective and where resources would be best spent.

Fortunately, behavioural science can tell us a lot about this.  And some of the findings might come as a surprise.

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A Behavioral Science Approach to Bank Culture, with Azish Filabi

At a recent Thomson Reuters forum in New York on culture and behavioral science in the banking industry, Ethical Systems' Executive Director Azish Filabi joined a panel with fellow experts to discuss how research and data helps shape ethics and culture.

We invite you to read a piece on Reuters on the event featuring the following takeaways we share in this blog. Video from the event is also embedded. 

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Featured Expert Francesca Gino: On Rebel Talent, Culture and Ethics

Featured Expert Francesca Gino on her new book Rebel Talent

 

Your new book, Rebel Talent: Why It Pays to Break the Rules at Work and in Life was just published! Congratulations. First off, what defines a rebel? Traditionally the word connotes someone going against the grain without a care towards consequences but here it is used as a positive with beneficial consequences.

We have a very particular idea of what the rebels of the business world look like. It is an idea that hews to the myth of Steve Jobs: Creative, yes, but control freaks who create chaos and are difficult to have as a boss or an employee. In my research, though, I have found that there are many people who break rules in ways that are positive and productive. We can learn from them: their lives are especially rich and rewarding. But the big surprise is how much organizations stand to gain. We live in a world that is ever changing, and rebels are masters of innovation and reinvention. Encouraging the right kind of rule breaking is what today’s workplaces need to do to adapt. 

I discovered the power of a particular kind of rule breaking at the business-process-outsourcing division of the Indian IT company Wipro. The call center perfectly exemplifies the rules-based approach to modern service work. After all, a job well done is a job that follows a script. In an experiment, my colleagues and I had some of Wipro’s new employees take 30 minutes during their initial training to think about what was unique about them, what their strengths were, and how they could bring out their authentic selves in their jobs. Once on the job, these employees found ways to tailor their jobs so they could be their true selves, bringing more of themselves into the way they answered calls, for example. They performed better, and were more likely to stay at Wipro. Businesses have all sorts of rules that tell people how to do their job, from standard procedures that need to be followed, detailed chains of command, with rules on what to wear or how to talk to customers. The way these rules specify how people should get their work done prevents them from bringing to the company their biggest assess: themselves.

Going off script does not mean not doing the job. Think of the famous Southwest safety announcements, like this one by Marty Cobb, a Texas-based flight attendant: “My ex-husband, my new boyfriend, and their divorce attorney are going to show you the safety features of the Boeing 737 800 series.” She earned giggles from the passengers, but she also got their attention. When Ed Catmull, President and cofounder of Pixar Animation Studios, talks to new employees during their initial orientation, he tells them about bad choices and mistakes the company has made in the past as a way to stress that the organization is not perfect, and that their ideas and voice will be valued.

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New Behavioral Science One Sheet: Motivated Reasoning

Our newest topic is "Motivated Reasoning" explaining how the process by which we make decisions is less like a judge who carefully evaluates all the facts and arrives at a well-reasoned judgment and more like a lawyer who advocates for a particular outcome.

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Creating and Maintaining a Healthy Corporate Culture: RANE podcast with Azish Filabi

In this podcast, (Risk Assessment Network + Exchange) RANE’s Serina Vash sits down with Azish Filabi, Executive Director, Ethical Systems, to discuss what drives a healthy corporate culture and best practices for creating and maintaining that culture. Through research and collaboration with the best academics in the field, Azish dedicates her time to helping businesses assess and promote ethical behavior and culture in their organizations.

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Middle Meddling: Management and ethics

Goal setting is often a subject of discussion about behavioral ethics and internal programs.  We’ve seen in recent cases such as at Wells Fargo and Volkswagen how cheating and lying become the norm when performance goals are not reasonably achievable.  Recent evidence in a paper by Niki den Nieuwenboer, João da Cunha, and ES collaborator Linda Treviño shows the internal dynamics and processes that lead directly to cheating behaviors.  

 

The researchers, one of which was embedded inside the company, observed managers and sales staff over 15 months at a large (10,000 employees) telecommunications company.  The company had established goals for its desk sales teams designed to motivate productivity, including a target for sales as well as sales-related work, such as making cold calls to customers, and gathering information about potential customers, among other planning activities.

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Azish Filabi Presents on Measuring Corporate Culture at the 2018 OECD Conference

Last week, the Organisation for Economic Co-operation and Development (OECD) had its annual Anti-Corruption and Integrity Forum at their headquarters in Paris.  Entitled Planet Integrity: Building a Fairer Society, over 2,000 attendees discussed how integrity plays a role in improving economic inequality, enhances the benefits of public policies and government programs, and more broadly equalizes the gains of globalization.

Ethical Systems won one of the OECD Research Edge competition awards. The paper, co-written by Caterina Bulgarella and myself, provided the summary of our culture assessment framework, which demystifies an often complex organizational issue: how to define and measure ethical culture. 

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COMMENTARY: Safeguarding financial ­firm cultures: five focus factors for directors

Board members have the difficult job of overseeing the success of a firm without getting involved in day-to-day management or operations.  Increasingly, they are expected to understand compliance and other risks of misbehavior, particularly as those risks have been shown to impact financial performance.

In a commentary I co-wrote with Mike Silva, Partner and Chair of the Financial Services Regulatory practice at DLA Piper, we emphasize the role of corporate culture in promoting good behavior as well as financial stability.

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The Echo Effect of the Bear Stearns Collapse: The Loss of Trust

In the wake of the 10 year anniversary of the collapse of Bear Stearns, we’ve been considering the long-term impact of the financial crisis and its reverberations on Main Street today. For many, there’s been a seemingly permanent shift in how they view Wall Street, including its purpose and the people who have been charged with managing their hard earned money. While the economy may have recovered since the Great Recession, there are numerous former investors whose levels of trust in financial companies have not.

In a recent piece in The Wall Street Journal, writer Jason Zweig spotlights how the collapse of Bear Stearns wreaked havoc on the sense of fairness among everyday investors and “what psychologists call ‘belief in a just world,’ the notion that, on average, we get what we deserve.”

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Bank Culture Reform & Behavioral Science Event April 9

Ethical Systems is partnering with Thomson Reuters Legal Managed Services, Regulatory Intelligence, and Starling to put on a panel event on Bank Culture Reform & Behavioral Science.

 

Location:

Thomson Reuters 
3 Times Square
30th Floor
New York, NY 10036

 

Date and Time:

Monday, April 9th
8:30 a.m. – 12:00 p.m. ET

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