The Psychology Behind Unethical Behavior

On a warm evening after a strategy off-site, a team of executives arrives at a well-known local restaurant. The group is looking forward to having dinner together, but the CEO is not happy about the table and demands a change. “This isn’t the one that my assistant usually reserves for me,” he says. A young waiter quickly finds the manager who explains that there are no other tables available.

The group tries to move on but is once again interrupted by the CEO. “Am I the only one annoyed by the view? Why is there construction happening today?” he demands to know. The waiter tries to explain, but to no avail. “You really need to up your game here,” the CEO replies. The air is thick with tension. After the waiter walks away, someone makes a joke about the man’s competence. This seems to please the CEO, who responds with his own derogatory quip. The group laughs.

If you were present at that dinner would you let the CEO know that you disapprove of his language and behavior? Would you try to better a better example? Or stay silent?

This scene encapsulates three psychological dynamics that lead to crossing ethical lines. First, there’s omnipotence: when someone feels so aggrandized and entitled that they believe the rules of decent behavior don’t apply to them. Second, we have cultural numbness: when others play along and gradually begin to accept and embody deviant norms. Finally, we see justified neglect: when people don’t speak up about ethical breaches because they are thinking of more immediate rewards such as staying on a good footing with the powerful.

The same dynamics come into play when much bigger lines get crossed in the corporate arena: allegations of corruption at Nissan, sexual harassment charges in the media sector, privacy breaches at Facebook, money laundering in the financial sector, and pharmaceuticals’ role in the opioid crisis.

While it is hard, if not impossible, to find evidence that leaders in general have become less ethical over the years, some are sounding the alarm. Warren Buffett, explaining Berkshire Hathaway’s practices in the annual letter shareholders, notes that he and vice chairman Charlie Munger

“…have seen all sorts of bad corporate behavior, both accounting and operational, induced by the desire of management to meet Wall Street expectations. What starts as an ‘innocent’ fudge in order to not disappoint ‘the Street’ — say, trade-loading at quarter-end, turning a blind eye to rising insurance losses, or drawing down a ‘cookie-jar’ reserve — can become the first step toward full-fledged fraud.”

Buffett’s note is important because it’s really about the majority of us:  neither saints nor criminals but well-meaning leaders who sometimes fail to consult their moral compass while speeding ahead in a landscape full of tripwires and pitfalls. For that majority, moral leadership is not simply a question of acting in good or bad faith. It is about navigating the vast space in between.

So how do you know when you, or your team, is on the road to an ethical lapse?  Here’s more on how to identify omnipotence, cultural numbness, and justified neglect in yourself and on your team, and a few tips on fighting each dynamic:

Omnipotence. Many moral lapses can be traced back to this feeling that you are invincible, untouchable, and hyper-capable, which can energize and create a sense of elation. To the omnipotent leader, rules and norms are meant for everyone but them. Crossing a line feels less like a transgression and more like what they are owed. They feel they have the right to skip or redraw the lines. In the dinner party example above, it is no coincidence that the CEO’s entitled and condescending behavior comes after a day of strategizing and masterminding the next big moves.

Omnipotence is not all bad. Sometimes the rush you get from bold action is what’s required to make breakthroughs or real progress. But, the higher you climb on the ladder, the more it can become a liability. This is especially true if fewer and fewer of the people around you are willing and able to keep you grounded. If no one tells you “no,” you have a problem. One way to gauge whether you’ve reached “peak omnipotence” is if your decisions are met only with applause, deference, and silence.

The psychological counterweight to omnipotence is owning your flaws. It’s a mature capability to look in the mirror and recognize that you are not above it all. Especially if you’re in a leadership position, assume you have weaknesses and think about them regularly.

Sometimes, you’ll need help with this. The best performing executives I see have close colleagues, friends, coaches, or mentors who dare to tell them the truth about their performance and judgment. You should cultivate a similar group of trusted peers who will tell you the truth even when it is unpleasant. In addition, make sure to encourage an “obligation to dissent” among your core team.

Cultural numbness. No matter how principled you are, you must recognize that, over time, the bearings of your moral compass will shift toward the culture of your organization or team.

From my work with police and military units infiltrating criminal groups, I have seen examples of how cultural numbness makes leaders cross lines. It usually starts subtly. Officers need to get to know and infiltrate a new culture. They need to fit in by speaking the language, acting according to code, and dressing to fit in. But, in doing that, they risk going too far — mimicking the culture of the gang members they are out to stop and getting caught up in a group’s values system.

The same kind of “moral capture” takes place in companies, not overnight, but gradually. Psychologically, you’re making a trade-off between fitting into the culture and staying true to what you value.

At first, cultural numbness can take the shape of ironic distance or disillusioned resignation when there is a discrepancy between the two, or between the ideals your company espouses and what you see demonstrated and rewarded. But the mind needs resolution. So, over time, you stop noticing when offensive language becomes the norm or you start to behave in ways that you would never have expected to be part of your repertoire.

Cultural numbness is where I have seen the most severe breakdowns in ethical leadership because it’s so hard to detect. Leaders who have crossed a line never describe this as a clear choice on that path but as wandering down a muddy road, where there they lost track of what was right and wrong. They describe a process where they became numb to others’ language and behavior and then to their own and lost their sense of objectivity. In essence, their warning bells simply stopped ringing.

So, start looking out for signs of moral capture:  those brief moments when you don’t recognize yourself and any other indications that you are subjecting your own personal agency to the deviant norms of the collective. Another regular gut-check you can use involves asking whether you would be comfortable telling a journalist or a judge about what’s going on.

At the same time, you can’t always trust yourself in these situations. As with omnipotence, it can help to get an outsider’s perspective, turning to a trusted friend or family member, who might be able to detect changes in you that you are not able to see. Also remember to regularly extract yourself from your organization to compare and contrast its culture with others and remind yourself that the rest of the world may not work the same way.

Justified neglect. The human mind is skilled at…

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