2017 End of Year Letter from Jonathan Haidt and Azish Filabi

Dear Friends,

2017 has been a year of surprises, transformation, and growth. Thirteen months ago, on the morning after Election Day, we walked in to the conference room of a global consulting firm based here in New York City. We sat down at a long table with 30 ethics and compliance officers. We gave our talk as planned—a talk on designing ethical systems. But all of us around the table were in a state of… surprise to say the least. Our conversation focused primarily on the consequences of the rather unexpected election of Donald Trump. What were the implications for businesses? How would rules and enforcement change?

Now, a year later, it is clear that whatever regulations are rolled back, businesses face an ever-changing landscape of ethics challenges. Questions of business ethics and ethical culture are front and center in national discussions on sexual harassment in the workplace, diversity and inclusion (which may include viewpoint and political diversity, as we learned in response to the famous “Google memo”); fairness and cheating, and new pressures on leaders to take stands on political controversies. We are on a path to further deregulation of business. The compliance workload may decrease, but the ethics workload will likely increase. This is the time for the business ethics community to show that, together, we can create a better society through ethical business behavior.

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2017 Ethical Systems Collaborator Highlights

For our expanding collaborator network, 2017 was a year of many achievements, significant contributions to research, and broad recognition of their work. We invite you to browse a highlight list of the research, articles, appearances and talks that helped advance our mission and promote a greater understanding of ethics, decision making, and ethical systems design.

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Bridging the Gap: The Oxford Review on the problem of academic-practitioner distance

David Wilkinson, Editor-in-Chief of The Oxford Review, has written an incredibly insightful piece on the gap between the world of research and that of business- what he deems the “academic-practitioner distance.” It both underscores the mission of Ethical Systems and spotlights the reasons why it is in the best interest of both communities to close this chasm.

Wilkinson shows how “The gap isn’t just a physical one, [extending to] a gap of perspective, language, understanding and thinking.” 

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Ethical Systems Files Amicus Brief in Defense of Internal Whistleblowers

This post originally appeared on The FCPA Blog. It is cross posted here.

On November 28, 2017, the Supreme Court will hear arguments in Digital Realty Trust v. Paul Somers on the question of whether the whistleblower protections of the Dodd-Frank Act extend to internal whistleblowers, or only to those who report to the SEC.

Research shows that the majority of employees who report misconduct do so internally, through informal discussions with managers and other conduits.  If the Court interprets the Act’s protections as extending only to those who provide information to the SEC, it could stymie and complicate the important work of ethics & compliance ers.

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Cathy O’Neil to the Ivory Tower: Stop ignoring the ethics risks in tech

The use of artificial intelligence (AI) in most all aspects of modern business and social life is now ubiquitous. From wealth management, to hiring employees, assessing the effectiveness of teachers, and our news feeds, AI impacts most every aspect of our day-to-day life — whether or not we are aware of it.

As the use of AI has grown, so has a corresponding gap in the ability of many companies and people to explain what, how, and most importantly, why these bots make certain decisions.  In a NYT op-ed this week, Cathy O’Neil gives academics a call to action — the time has come to provide a deeper, and unbiased view of the risks of AI and the ethics challenges we face as their power and influence grows.

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Featured Ethics and Compliance Expert: Hui Chen

Featured Interview: Hui Chen, Compliance and Anti-Corruption Consultant and First-ever Compliance Counsel Expert at the United States Department of Justice

 

As the first lawyer to hold the post of Compliance Counsel in the DOJ, how would you articulate the goal of the DOJ’s expansion with respect to the role of compliance in corporate crimes?

DOJ Policy requires federal prosecutors to consider certain factors in corporate prosecutions, including the state of the company's compliance program at the time the misconduct occurred, and any enhancements made in remediation to the misconduct. By creating the Compliance Counsel role, the Fraud Section in the Criminal Division sought to bring in-house expertise to that evaluation. In doing so, the Fraud Section both recognizes compliance as an area of professional expertise, and heightens the significance of that expertise as something that is critical to companies.

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The Flip Side of the Quarter: Only 25% of employees think colleagues model ethical behavior

A recent survey by Gartner (formerly CEB) indicates some bleak stats for companies —  the 2017 poll of 5,000 workers in the U.S. indicates that “only 25 percent of employees believe their teammates and colleagues engage in and model the right ethical behaviors.”

This is a lost opportunity for many organizations. Research that shows that running an ethical organization pays off financially in the long-run. The CEB/Gartner findings also indicate, “Employees from strong cultures of integrity are 90 percent less likely to observe misconduct and are more likely to report that which they do see. They are also more likely to over-perform on individual and team goals. Gartner also notes financial opportunities – notably, that companies with strong cultures of integrity have 10-year total shareholder returns 7 percentage points higher than companies with low perceptions of integrity.”

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ECI Webcast Recording: New Behavioral Science Tools from Ethical Systems

Azish Filabi (Executive Director of Ethical Systems) and Jeffrey Kaplan (ES collaboarator and Partner at Kaplan & Walker, LLP) recently led a webcast about ethics, research, and culture highlighting new behavioral science tools for the ethics and compliance field. The slides and recording are now available.

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Richard Thaler, The Nobel Prize and Nudge

All of us at Ethical Systems extend a hearty congratulations to Richard Thaler on the announcement of his Nobel Prize for his pioneering research around nudging.

From The New York Times announcement:

The Nobel committee, announcing the award in Stockholm, said that it was honoring Professor Thaler for his pioneering work in establishing that people are predictably irrational — that they consistently behave in ways that defy economic theory. People will refuse to pay more for an umbrella during a rainstorm; they will use the savings from lower gas prices to buy premium gasoline; they will offer to buy a coffee mug for $3 and refuse to sell it for $6.

The committee credited Professor Thaler, who teaches at the University of Chicago Booth School of Business, for moving economics toward a more realistic understanding of human behavior, and for using the resulting insights to improve public policies, notably a sweeping shift toward the automatic enrollment of employees in retirement savings programs.

 

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Featured Culture and Business Ethics Expert: Marshall Schminke

Featured Culture and Business Ethics Expert: Marshall Schminke, BB&T Professor of Business Ethics at the University of Central Florida

 

 

What are your main areas of research around business ethics?

 

I focus on the idea that ethics don’t happen in isolation.  They emerge from a complicated mix of individual and situational factors.  My research explores this messy stew and how it drives ethical behavior.  More specifically, I study the impact of organizational structure and culture on individual ethics, such as trying to understand climates that support or resist ethical decision making, abusive supervision, moral emotions, and ethical efficacy.  My work also examines how ethical and unethical action drifts through organizations.  I study how factors like trust and fairness—which provide the foundation for organizational ethics—“trickle down” the organization from managers to supervisors to line employees. Understanding these patterns helps to explain why relatively small changes in ethical or unethical activity may lead to profound, organization-wide effects.

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