Ethical fading: What is it and how can we counter it?

How could an Australian cricketer rub a cricket ball with sandpaper, doing the wrong thing in front of a live crowd of thousands of people and millions of television viewers, while acting as though nothing were happening?

The answer lies in ethical fading: the mind’s tendency to overlook ethical considerations when experiencing cognitive overload. Ethical fading explains why people doing the wrong thing can believe their actions have nothing to do with ethics.

This happens, cognitive psychologists tell us, when we are under significant stress. Humans demonstrate bounded rationality – that is, once in overload, our minds default to what they can process and push out everything else. This means often ethical considerations fade. Bounded rationality leads to bounded ethicality.

The limit of our cognitive processes affects our decision-making at just the wrong moment. Which leader of a business, organisation or sporting team is not under pressure to meet a challenge? This pressure can, at times, lead us to fail to factor ethics into our decision-making.

Ethical fading reminds us that we, as humans, are at risk of being too ready to falsify when under pressure. Making decisions without taking ethics into account can have very serious consequences.

The 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry offers some examples. The Royal Commission found that a bank’s leaders redefined breast cancer with the effect of denying people a payout when their loved ones died. It also found an insurance company set up a system of extracting commissions from the dead. These instances demonstrate the power of ethical fading.

There is good news.

Given the prevalence of ethical fading, fighting its forces requires skilled and courageous ethical leadership. We have identified a five-step process to keep ethical fading at bay.

The first step is to do a sense-check about what organisational factors, including incentives and rewards, drive behaviours. An incentive scheme that pays a commission for sales can motivate a salesperson to offer a product that is not in the best interests of specific clients. The cricketers caught using sandpaper were on a win-at-all-costs incentive plan – borrowed from banking. These schemes imply that it is ‘right’ to pursue targets built into the incentives without paying regard to the potential unethical consequences.

It is important to explicitly run the ‘ethical ruler’ over decisions, including asking what the unintended consequences of the design of organisational systems and schemes might be. Raising awareness of ethical fading, and the conditions that make it more likely to prevail, allows a leader to counter some of the impact and make more solidly ethics-based decisions.

The second step is to trigger the full cognitive power of our minds when making ethical decisions. Many organisations commence regular team meetings with ‘integrity shares’, where staff are encouraged to share situations when they have been challenged on issues of integrity in their work. This brings ethical considerations front of mind. Once we understand the predictable nature of the pathology, the causes and effects of ethical fading, we can implement simple preventive measures. We know that being able to talk in an environment where it is safe to speak up ensures people are constantly bringing ethical perspectives into issues that lack clarity.

The third step is to break stress’s grip over our cognitive ability. This can be as simple as going for a short walk. For example, we know of the head of an Australian emergency services organisation who would pause a meeting and go for a brief walk when under extreme pressure. US President John F. Kennedy used the White House pool at the height of the Cuban Missile Crisis. This circuit-breaking behaviour is smart; it restores our cognitive capacities, which reminds us to consider the ethics of decisions before we make them.

The fourth step is to refocus our mind. A leader in the Australian Border Force (ABF) we spoke to has developed a habit of walking around the bridge of the vessel to shift their focus and reflect on the wider mood of the crew. Sensing that some of the crew had serious misgivings about the orders they had to obey, he reflected on the crew’s moral unease. They were engaged in Operation Sovereign Borders, which obliged them to intercept boats in international waters and tow them back to nearby land – but not Australia. (We will discuss the ABF further in a moment.)

The fifth step is to ask, “Where are the ethics in this issue?” This simple question focuses our attention on ethical considerations. At a personal level this type of question enables leaders to consciously factor in ethics in their decision-making.

Complementing this leadership accountability, while many organisations consider risk, reputation and compliance in decision-making, only three ASX 100 companies have ethics committees, even after the many royal commissions and inquiries of the past decade. These forums ensure that ethics is considered systematically before the fact, rather than with hindsight.

Once our capacity as leaders to make considered decisions is restored, we can take time to work through complicated issues.

An ethics-informed approach to decision-making can be invaluable for organisations facing dilemmas, be they managing customers with competing interests, caring for patients, awarding contracts, recruiting new team members, establishing taskforces, drawing up terms of reference, or appointing new members to committees and boards. Following these five steps will keep ethics firmly in sight at an organisational level where it can usefully inform decision making, helping leaders feel more confident to navigate complex challenges.

A striking example of ‘unfading’ ethics is seen in the ABF. Key leaders in the ABF took an ethics-informed approach in handling complicated dilemmas faced by those ‘on water’, such as when they receive orders to tow unauthorised boats back out to sea. Continually reflecting on how some of his crew felt a moral unease about their role, a senior leader instituted a policy of conscientious objection, whereby Defence personnel could opt out of missions that may contravene their conscience. When he worked his decision up the line, he was supported by chiefs within Defence.

Developing and sharing ethical guidelines for your organisation and enabling groups to raise dilemmas they are facing at senior levels are among the practical actions you can take to ensure your people maintain a focus on ethics. Holding each other to account in accordance with these guidelines can help ensure ethical considerations endure.

We are not captive to the limitations of our cognitive processing. Understanding the forces that work against thinking clearly when making ethically based decisions under pressure can arm us with the capacity overcome them.

Get in touch to discuss how we can help your organisation to consider ethics when making decisions.

Connect with Dr Peter Collins and Samantha Winnall on LinkedIn.