Ah well!

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11 December 2019

Two weeks ago the news appeared in Dutch media that a group of impostors was passing the homes of elderly people. They imposed as nurses of the injection service. Whilst the elderly person willingly received the injection from the one impostor, the other calmly took whatever he could from the home of the elderly person. The journalistic comment with this news was that this form of theft is truly of the lowest kind.

I thought that was remarkable. So we divide theft into various categories. You have high-quality theft (Robin Hood?), remarkable theft (the Great Robbery), normal theft (you home is empty when you return from vacation), horrible theft (Atrako) and theft of the lowest kind. And that would then be the misleading and robbing of elderly people. Yet it is still theft.

It is more or less the same with integrity. Most people answer the question “can you be somewhat ethical?” in the negative: either you are or you are not ethical. That is important to corporate governance. After all, if you are ethical, or rather not ethical, then as a Board of Supervisory Directors you must immediately get rid of a director who appeared not to be ethical.

“The biggest problem and also the biggest harm to the organization can actually be found in the gray area between conduct that is just about not ethical and conduct that is just about ethical”

Practice teaches that this is much too easy. The biggest problem and also the biggest harm to the organization can actually be found in the gray area between conduct that is just about not ethical and conduct that is just about ethical. In this gray area you can differ of opinion whether it regards ethical conduct or not. Hence, integrity is not digital. This has a number of reasons. Ethical conduct differs from place to place and from time to time. As a consequence some people, and also organizations, are not even aware of a lack of integrity.

Social-psychological research from the 1950s (Leon Festinger, 1957) has already demonstrated how we, humans, all tend to, as it were, argue away a sense of unrest that we experience. We do this because our conduct is not actually in line with how we feel it should be. Social psychologists refer to this as cognitive dissonance reduction. If you want to buy a new car and you are indecisive about diesel, petrol and electrical then you properly balance everything. Once you have made your choice for one of the three, for instance diesel, then you will easily completely dismiss the two other options. You bury the gnawing feeling that, afterwards, diesel may not be the correct choice as deeply as you can. This also affects your perception. After your choice for diesel, you suddenly note that there are many diesel cars driving around. At a party you mostly talk about its many advantages.

The same mechanism applies to all those Republicans in the United States who constantly justify the lies and abuse of their President. Cognitive dissonance reduction. It is exactly the same with integrity. If someone who sits on the Board of Supervisory Directors balances on the fringes of integrity (for instance in case of an imminent conflict of interests) then all sorts of arguments are quickly brought to the fore why it is actually not a conflict of interests. If a director / manager acts impertinently in respect of his secretary then it is quickly noted that “it was just a joke” or “she is an adult woman and couldn’t she simply have said ‘no’?”.

Everybody has the tendency to justify undesirable conduct in this gray area. It goes without saying that Boards of Supervisory Directors also do this. One of the biggest challenges, and also interesting parts, of monitoring integrity within an organization is exactly facing this gray area and taking the right measures to deal with it effectively. Nothing ‘aw well’!

This blogpost is also available in Papiamentu. Download the PDF version. You can also download the English PDF version.

Do you have a question about corporate governance? Please email it to governance@ekvandoorne.com and perhaps your question will be discussed in the next blogpost.