By: Jim Nortz
This article appeared previously Association of Corporate Counsel’s ACC Docket and is published here with permission from the journal.
Virtually everyone who has ever driven a car on a busy highway has experienced the hazards associated with blind spots. Like many others, I have had several heart-stopping moments in the midst of a lane change where I’ve narrowly avoided colliding with cars that I did not know were there until it was nearly too late to avoid them. I’m happy to report that I’ve been fortunate to avoid such collisions, but I recognized long ago that I couldn’t count on luck and the nimbleness of other drivers to avoid catastrophe over the long term. Instead, like most experienced drivers, I have deliberately developed a habit of checking my blind spots very carefully before making lane changes. As business leaders, we must do the same to avoid inadvertently driving our companies into harm’s way.
The blind spots that get corporate leaders and their firms in trouble are not physical — they are ethical. In a recently published article in The Journal of Business Ethics, entitled “Ethical Blindness,” the authors observe, “Formally, ethical blindness can be defined as the temporary inability of a decision maker to see the ethical dimension of a decision at stake.” They further state, “Ethical blindness refers to the fact that ‘good people behave in pathological ways that are alien to their nature.’”
Corporate calamities caused by ethical blindness abound; there are thousands of instances in which companies and their leaders have been excoriated for engaging in behavior that seems to lack all moral common sense: chronic under-investment in safety systems, resulting in deadly coal mine explosions; the banking industry’s assistance to tax cheats by hiding billions from tax collectors; the systematic bribery of government officials; the pharmaceutical industry’s rampant off-label product promotion; and mortgage originators’ falsification of borrowers’ credit history are just a few examples of unethical behaviors that resulted in catastrophe for both the firms and the individuals involved.
When the press, the public and regulators examine such behaviors, we often find ourselves asking: “What were they thinking?” How could such smart, successful people have been so blind to the moral implications of what they were doing? But despite the harsh judgment of those outside these companies, it’s likely that the view from inside was, and may remain, quite different.
Leadership in coal companies that have experienced horrendous loss of life likely believed they were doing enough to create a safe work environment. Bank management likely viewed the services they offered to avoid tax liabilities as necessary to meet their customers’ needs. Many companies view paying bribes as a necessary part of doing business. Leaders in the pharmaceutical industry likely rationalized off-label product promotion by thinking they were benefiting patients by advocating the standard of care offered by the best doctors. And mortgage originators may have justified their fraudulent activities by thinking they were doing good in getting families into homes that would have otherwise been denied them. These are all examples of ethical blindness at work.
As these and many other notorious cases show, failure to both recognize and respond to our own blind spots puts us in jeopardy of getting clobbered by legal and ethical issues we may never see coming. The following are three steps you might consider taking to avoid this fate.
1. Increase ethical awareness
Just as it is important for drivers to know they have blind spots, the first step in addressing ethical blindness is to acknowledge that both you and everyone else in your company suffers from this malady. Coming to grips with this reality is easier said than done. We all think of ourselves as reasonable, honest people and we create cognitive frameworks that help us make sense of a complex world. Acknowledging that we have ethical blind spots requires us to call into question the completeness and accuracy of our self image and worldview, which we depend on to operate. We must have the courage to face the possibility that the practices upon which our personal and corporate prosperity depends are wrong. But the calamities that have befallen some of the world’s most renowned and respected institutions should provide ample incentive to recognize that we often lack a complete understanding of the ethical implications of our actions.
2. Develop your moral imagination
Like the cautious driver who leans forward to check the blind spot before changing lanes, you can take deliberate steps to escape your company’s moral microcosm by looking at issues from multiple vantage points and getting your colleagues to do the same. To do so requires the development and application of “moral imagination,” where you strive to take seriously the views of others who may oppose what you and your firm are doing or desire to do. This involves far more than just taking a hard look in the mirror or trying to see someone else’s point of view. It requires full acknowledgement that you and your company may be wrong and that your opponents may be right.
3. Actively promote dissent
As important as it is for your company to check its blind spots, it’s unlikely to happen absent active leadership support. One effective way leaders can provide the support needed to help their firms do this is to actively ask for dissenting views. Alfred P. Sloan, Jr., a director for General Motors, is cited as modeling how leaders might encourage dissent:
“Gentlemen, I take it we are all in complete agreement on the decision here. … Then I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about.”
Leaders have to avoid the dangers of paralysis by analysis. But when critical decisions are being made that may impact people or the environment, taking a little more time to ask everyone to check the “side mirror” may be well worth the trouble.
Advising your colleagues to check for ethical blind spots when making important business decisions is clearly a sensible and prudent thing to do. However, if you do so, rather than being thanked for your insight and sage advice, you may be greeted by open hostility. In addition to being handicapped by their unwitting blind spots, those driving your “company car” are trying to get to their destination on a highway filled with others who are intent on driving them off the road. To make things worse, the car is jammed full of colleagues and shareholders who always want whomever is driving to go faster and are certain to question any “turns” that change course from what appears to be the shortest path to financial success. But exhibiting the moral courage to help everyone in the car see the hidden perils in your path may be the best way to avoid unnecessary accidents.
Jim Nortz is a nationally recognized expert and thought leader in the field of business ethics and compliance. Jim spent the first 17 years of his career as a litigator trying both criminal and civil cases before becoming Crompton Corporation’s first Vice President, Business Ethics and Compliance in 2003. Since then, Jim has served as a compliance officer at Crompton and for four other multinational corporations and is now Corporate Compliance Director at Sutherland Global Services. Mr. Nortz is a frequent guest lecturer at the University of Rochester’s Simon School of Business, RIT’s Saunders School of Business, St. John Fisher College and Nazareth College.
Jim writes the monthly business ethics columns for the Association of Corporate Counsel Docket magazine and the Rochester Business Journal and is a contributing writer for Corporate Compliance Insights and The Business Journals. Jim served on the Board of Directors for the Ethics and Compliance Officers Association (“ECOA”) for eight years. He currently serves on the Board of the Rochester Area Business Ethics Foundation and is a member of the Rochester chapter of Conscious Capitalism.
Contact Information: Phone: 585-260-8960 Email: james.nortz@sutherlandglobal.com
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