Checking Ethical Culture

What is Conformity?

People have a tendency to think differently in a group, compared with how they might do so when on their own. There are team-related dynamics at play in this, with loyalty being an important one. Many of us like being part of a team and this is made use of in business settings by the way in which people are organised.

However, loyalty can be a double edged sword and insurance executives need to be aware of its downside when it comes to how their people make decisions.

This flip side of team loyalty is a pressure to conform: in other words, to make decisions according to what other people are doing and saying, rather than weighing up the pros and cons of a situation for yourself. Some people refer to this as ‘groupthink’.

Where Conformity can Arise

Conformity is likely to arise in teams that often make decisions in situations that aren’t always clear cut. There are two sides to this. On the one hand, in such subjective situations, consistency is good. On the other hand, there’s a danger that one’s normal critical faculties might be overridden. The benefits of the former and the risks from the latter have to be understand and in some form of balance.

If the firm uses systems to support decisions, then there’s a danger of conformity being embedded into those systems. People then tend to ‘follow the system’, assuming that it knows best. This points to the importance of decision flexibility being designed into such systems.

Performance management plans can also reinforce conformity. Where decisions need to conform in order to meet performance targets, the risks of groupthink increases. Incentives need careful design, with a close watch kept on unintended consequences.

Where a team is closely managed, or the cohesiveness of the group is viewed as important, the pressure to conform is increased. And in investigative operations like counter fraud, there can be a tendency for group defensiveness to be even stronger.

If a team has recently experienced some form of failure, they can sometimes draw together and emphasise loyalty. This in turn increases the risk of conformity.

Finally, if the team or group is made up of people with a similar background, then conformity can take hold quite quickly. People who think differently are eased out and new people are kept at a distance, using both formal and informal means.

A Famous Example

There’s a famous case of a group of people being asked to judge the length of some lines drawn on a piece of paper. On their own, it was a simple task for this group of people. However, when another group of people (primed to give wrong answers) joined in, that original group of people struggled to give the right answer and many gave a wrong answer. Conformity ruled.

Whistleblowing

Functions where pressures to conform are high are also likely to see increased levels of whistleblowing. This is because the alternative views that conformity seeks to stifle can often re-emerge in other ways, one of which is speaking up. If the function’s culture is strong on loyalty (for which read conformity), then the danger of whistleblowing retaliation is heightened as well. The whistleblowing champion should be aware of this and monitoring it.

Tackling Conformity

So how might an insurer lean their teams in a more favourable direction? Here are five suggestions:

· encourage debate about the ‘right and wrongs’ of certain decision situations, making sure that a real diversity of views is encouraged. Bring in a ‘critical friend’ to facilitate this;

· encourage learning loops to help capture variations in decisions that need to be recognised within team protocols. In other words, build some flexibility into how your people work;

· ensure that your supervisors and managers are well trained in how to handle an approach by a whistleblower, and ensure that robust procedures are in place to protect a whistleblower from any form of retaliation;

· look in your code of ethics for examples of where ‘raising a question’ or ‘challenging the necessity of something’ are framed in a positive way;

· review internal communications relating to business values like loyalty and teamwork. Do they allow for non-conformity in circumstances where ethical risk is above average?

That Famous Example Again

There’s a further part to the research I mentioned above, about the group of people asked to judge the lengths of some lines drawn on a piece of paper. The second part of the experiment involved a group of people being introduced, primed to give the wrong answer. The original group of people struggled to give the right answer and many gave a wrong answer.

There was a third part to the experiment. While the original people and the ‘primed to give the wrong answer’ people were still together, a further person was then introduced, tasked with emphasising the right answer. The result? The original group very quickly returned to giving the right answer. What this told the researchers was that conformity can quickly be disrupted, even with just one person willing to speak out. That ‘critical friend’ role I mention above can make a big difference.

Behavioural Ethics

Conformity is one of a number of ethical culture themes that fall under the heading of behavioural ethics. Look out for other toolkits that explore other aspects of ethical culture / behavioural ethics.