3 Dynamics of Unethical Behavior​

When someone in your  organization behaves badly, do people speak up? Too often, the answer  is "no," even for internal auditors. The best policies and procedures  around ethical behavior are no match for the psychological challenges  people experience when faced with someone else's bad behavior.

Most of us know what we should  do when someone steps out of line, but do we do it? Is it out of fear  for our job that we say nothing? Is it because we can see no one else is  stepping up and/or fear being rejected by the group?

In the Harvard Business Review  article, "The Psychology Behind Unethical Behavior," organizational  psychologist Merete Wedell-Wedellsborg describes three psychological  dynamics that she says prevent people from behaving ethically:  omnipotence, cultural numbness, and justified neglect. These dynamics  actually lead to the crossing of ethical lines, and as such are  important situations for internal auditors to watch out for.

Omnipotence  is when people feel so entitled they believe the rules around decent  behavior don't actually apply to them. Power corrupts and crossing a  line feels like something they are owed, not a transgression.

Omnipotent  behavior can be a good thing when it leads to innovation and  breakthroughs in thinking. Unfortunately, it too often becomes a problem  when it leads to bad behavior where fewer and fewer people are willing  or able to keep the person grounded.

For internal auditors, this  characteristic often is easy to spot. It manifests in the type of  treatment executives begin to expect and starts showing up in expense  reports. It's demonstrated when managers are given too much power and  authority and begin to treat others poorly. It also can show up in  instances where individuals become so attached to their work that their  sense of ownership begins to significantly outweigh their sense of  loyalty. In that case, this could be an early warning sign for someone  becoming capable of rationalizing, and ultimately perpetrating, fraud.

How do you make sure this doesn't happen to you? Recognize you have weaknesses, own your flaws, and think about them regularly.

Cultural numbness  occurs when people play along and gradually accept and embody deviant  norms. No matter how principled someone is, Wedell-Wedellsborg writes,  time erodes the "bearings of your moral compass," which results in a  shift toward whatever the accepted culture of his or her own  organization is.

This slow shift is difficult to detect, but  devastating to ignore as this unethical behavior becomes completely  normal and accepted no matter how bad it gets. In many cases, the  unethical behavior becomes so embedded that employees, particularly  management, will rationalize and defend it to the point where good  employees are left with an awful choice: accept it or look for a new  job.

As internal auditors continue to have an increased focus on  auditing culture, we must be careful not to allow ourselves to become  culturally numb. One simple tactic to identify cultural numbness: Think  about how the behavior would sound to an outside audience. Consider  "MNJ" — Mom, Newspaper, Judge. If any of these trusted sources would  react negatively to the behavior in question, think twice.

Justified neglect  is when people don't speak up about ethical breaches due to thoughts of  more immediate rewards such as staying in the good graces of the  powerful. Wedell-Wedellsborg explains that the human mind is skilled at  justifying something as a minor issue when there is a tangible reward at  stake, and when the risk of getting caught is low. The problem is that  bending the rules becomes a slippery slope on which it is easy to gain  speed.

Creating strong policies, procedures, and controls are the  best way to combat this dynamic. Internal audit is uniquely positioned  to provide assurance that such protections are in place within an  organization, are effective, and are being followed.

Whether  unethical behavior occurs among peers, those being audited, or at the  highest levels of the organization, internal auditors need to be  prepared to identify and deal with it. Be aware of psychological  conditions that push people across ethical lines. It also doesn't hurt  to perform a quick self-check every now and then to ensure you aren't  falling victim to these dynamics.

That's my point of view. I'd be happy to hear yours. For additional guidance specific to The IIA's Code of Ethics, clickhere.