The power of behavioural ethics in leadership decision-making

Why does the head of emergency management – who manages bushfires and other natural disasters – always have a colleague stand next to them in the control room questioning their decision-making during a crisis?

Why does the legal counsel of a company keep saying “There is time” when the organisation is working out what to do under high pressure in response to a cyberattack?

Why does the nursing unit manager of the intensive care unit in a major public hospital say to themselves “What about the ethics?” when an Indigenous person with diabetes comes to ICU during a pandemic, despite a government COVID-19 mandate?

The answer is found in behavioural ethics. Over the past 20 years behavioural ethics has developed as a key part of modern ethics. Yet its full potential has not yet been realised. That is because the focus has been on using behavioural ethics to explain ethical failure and why things go wrong rather than on how its insights can promote integrity and effective decision-making when under pressure.

Behavioural ethics focuses on what people actually do not on what they say they ought to do. The gap between what we do and what we ‘ought’ to do can be consequential. In fact, most unethical behaviour of individuals and organisations comes from unintended unethical outcomes of failures to manage the decision process.

Let us seek to understand the science behind behavioural ethics to understand how we can each draw on these approaches in our own decision-making as leaders.

Behavioural ethics refers to five pathologies commonly found in decision-making that can lead to the undermining of the decision-making process and even, in some circumstances, to unintended unethical outcomes.

In the emergency management example, the science of the approach lies in the first and most well-known aspect of behavioural ethics: bias theory. Having a person explicitly questioning decision-making works to mitigate potential confirmatory bias – where people pay more attention to information that confirms their beliefs – and groupthink – where individuals conform to the dominant opinion.

In this example, a person stands beside the leader and plays devil’s advocate to counter these risks of bias. Individuals readily default to those in positional power in times of crisis, believing they have a natural power to know what is right. Under pressure, our ability to make short cuts in decision-making can morph, through bias, into simply ‘following the leader’, so blindly following authority to a sometimes unethical end.

Unchecked bias can lead to gender discrimination. Only 14 ASX 100 companies have female CEOs, just two more than was the case in 1992. Only one commercial Australian law firm has achieved gender equity, and did so in 2023.

Bias can set us on a path to the second pathology identified in decision-making by behavioural ethics: ethical blindness. This can be regarded as ranging from blind spots that can characterise a person’s decision-making through to wilful blindness, where we do not care about discriminatory outcomes.

In turn, the effect of this wilful disregard for the ethics of our decision-making can lead to further wrongdoing. As moral psychology, the third aspect of behavioural ethics, theorises, we are hardwired to ‘rational-lies’ our behaviours and talk ourselves into thinking such discriminatory outcomes are acceptable. This preserves our view that we are always ethical – because we lower the bar.

The outcome also raises the question as to whether and how decision-makers simply tell ‘rational-lies’. As the head of a major search firm told me recently, “If women will not take line roles, we cannot make them CEOs.” In other words, it is the fault of women, not the decision-makers.

This is an example of a fourth aspect of behavioural ethics, moral disengagement, where one disengages from ethical considerations to the point of blaming others for inaction on promises that organisations have made.

The fifth and final form of pathology in decision-making is cognitive psychology. This sets out how considerations of ethics in decision-making fade under pressure.

‘Ethical fading’ is evident in Royal Commissions and Commissions of Inquiry, where decision-makers realise they made decisions under pressure without regard for ethics. For example, at a recent inquiry it was revealed that a bank leadership team knowingly changed the definition of breast cancer in a life insurance policy to deny beneficiaries their right to a payout when they died. The person testifying said they were focused on reaching a target related to cost reduction.

The opposite to ethical fading is ethical connection. For our nursing unit manager in a public hospital, asking “What about the ethics?” opened them to the understanding that during the COVID-19 pandemic, the state-mandated triage system risked a racially discriminatory outcome.

Asking about ethics connected them to long-standing principles – their own and those of the hospital they worked in – that healthcare should be non-discriminatory. They regarded the government-set rule that people with co-morbidities should be excluded from ICU as a form of double punishment to Indigenous people. Indigenous people acquired such conditions because of inequitable and racially discriminatory healthcare and were now disallowed access to healthcare in a pandemic. Asking “What about the ethics?” gave a very different answer than simply allowing a risk-based view of triage to prevail.

A further concept in behavioural ethics is heuristics. The in-house counsel’s refrain of “There is time” echoes that of Daniel Kahneman, who set out in his book “Thinking Fast and Slow” that the mind under pressure rushes to an answer. Heuristics can be useful in dealing with complex dilemmas effectively. During a crisis – in this case to do with a cyberattack – decision-makers can rush to an answer believing wrongly that the speed with which the answer comes is proof of its ‘rightness’. In fact, the opposite may be true.

My doctoral research, on which these examples are based, revealed multiple instances of how people prevented flaws in their decision-making by drawing on behavioural ethics to regulate their decision-making process.

Imagine what could be achieved if we engaged in decision-making on a more systematic basis and could thoughtfully incorporate behavioural ethics into our leadership decision-making?

Get in touch to explore how we can help your organisation to realise the power of behavioural ethics to promote integrity in decision-making.

Connect with Dr Peter Collins on LinkedIn.