The single most important foundation of positive culture is an
organisation's appetite for truth.
However, even in successful organisations with respected
leaders, negative information is gradually filtered out as it rises
through levels of the hierarchy. This happens without artifice or
deceit. It is the result of human bias.
In spite of recent criticism, it is our experience that the
great majority of senior people running large organisations
genuinely intend to conduct a responsible and ethical business. We
have observed they seek advice on how to achieve this and they put
processes and policies in place to guide and monitor conduct.
However, even with the best of intentions, the information which
they are given by their staff and which they use to evaluate the
culture and conduct of their business is often incomplete or
The factors which cause this result more from natural human bias
than any attempt to mislead.
Bias to please
People have a bias to provide positive information to leaders
they want to please. Where there is an articulated goal to conduct
business responsibly, staff provide evidence of the measures which
are being taken to do this. Ironically, the more integrity a leader
has the more staff will selectively seek validation of the good
work which is being achieved to pass on. It goes against the grain
to be the person who says "we are not doing as well as you
think we are in this important area."
This has sometimes been termed the JFK effect after the famous
American President. History tells us that many bad decisions (such
as the Bay of Pigs) were made by well-intentioned, charismatic
leaders who were not called out by their senior advisors in spite
of their private doubts about the strategy. As a situation
progresses it becomes increasingly difficult to be the first person
to question something which is viewed as successful by a wonderful
Bias to self-interest
Organisations, particularly large organisations and financial
institutions, have teams of people whose job it is to monitor risk
and manage people. These teams are motivated to do a good job and
to demonstrate that they are doing a good job. They pass on the
data to support their success and in large organisations there is
plenty of supportive data to be found.
It takes a courageous and different mindset to
deliberately seek evidence of your team's short
The existence of a threat such as critical external scrutiny can
escalate this from individual self-interest to a perceived need for
self-protection. This in turn creates a defensive attitude within
the team. They become suspicious and controlling in sharing
information rather than providing full 'warts and all'
disclosure. In an uncertain or hostile environment, self-protection
overrides higher level thinking. It is likely that the current
negative targeting of financial institutions will increase this
defensive behaviour rather than increase honest self-examination.
We were informed earlier this year of a senior banking official who
suggested his team 'vote 5 to stay alive' in response to an
internal survey on staff engagement.
The existence of a threat such as critical external
scrutiny can escalate this from individual self-interest to a
perceived need for self-protection.
Humans selectively pay more attention to information which
confirms the views and attitudes we hold about our world. If we
have a positive view of our organisation and our controls and a
negative view of external regulators we view events and information
in accordance with those constructs. Without consciously
manipulating the information available to us, we see confirmatory
data as more significant and often fail to give contradictory
information sufficient weight or attention.
So what does this mean for organisations who have an appetite
for the truth?
An examination of culture and conduct will produce better
quality information if it is framed internally with the goal of
increasing awareness than if it is mandated by an external
Organisations should use independently validated criteria and
tools in assessments of culture and conduct and test their internal
control processes independently.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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