May 23, 2024 5 min read

How Ethical Dissonance Influences Personal Accountability

Insurers are expected to be accountable to all sorts of key audiences: clients, investors and regulators for example. Yet there is another dimension to accountability that is just as important for each of us as insurance people. We need to be accountable to ourselves.

ethical dissonance

You can look at personal accountability in two ways. Firstly, it is a feature of the UK’s SMCR regulations and one that in the recent past, senior insurance people have said they are particularly concerned about. This is looking at it through an ‘obligation lens’.

Another way of looking at personal accountability is through a ‘personal lens’. We want to be good people, and be seen to be good people, but often face situations where that notion is put at risk by questionable opportunities that bring us some form of benefit.

So how can we handle that sense of wanting to be a good person, when we are tempted by those questionable opportunities just waiting to be taken? It’s worth thinking about this, for two reasons:

  • It reduces the feelings of exposure that senior people have from regulations like SMCR;
  • It’s good for our wellbeing when we’re honest with ourselves about what being ‘a good person’ really means.

Decisions, Decisions

Academics in the field of behavioural ethics have been researching this widely held desire we have to maintain a positive moral image of ourselves. We see ourselves as good people and want to be seen by others in that way. And of course, we make lots of good decisions every day. We must also recognise that we make some bad decisions from time to time as well.

Ethical dissonance focuses on that conflict, between the moral self image we hold of ourselves and the temptation to benefit from those bad decisions. We'll be looking at it in three ways. Firstly, how we can sometimes both recognise that dissonance and try to cover it up. Secondly, how to recognise it in other people in your firm. And thirdly, how we can structure our response to it.

Handling Ethical Dissonance

Poor decisions do happen, and when they do, it’s common for us to try to fit that unethical behaviour with the self image we have of ourselves as a moral person. We respond to the inherent conflict in this by resorting to all sorts of psychological tricks to maintain that moral self image.

So for example, we may recall some more ethical decisions we've made in the recent past and apply a set of moral weighing scales. We convince ourselves that those good works allow us to act unethically from time to time. This is referred to as 'moral licensing’.

Or we might resort to ‘ethical distancing’. This involves justifying our unethical behaviour by pointing to the unethical (perhaps even more unethical) behaviour of others. This can evolve into a demonising of others in order to reduce a discomfort with our own ethical dissonance.

Then there is ‘self serving altruism’, in which we see our actions as causing no apparent harm to a specific person, but at the same time benefiting both ourselves and others. This can cause some people to view an unethical decision as a legitimate course of action on the basis that it serves a greater good.

Do such psychological tricks turn up in insurance decisions? Of course they do, and I’ve written about some of them on several occasions over the years. So let’s be honest with ourselves and acknowledge that most of us will have experienced ethical dissonance at some time in our work. Equally important, we can often pick up signs that others are experiencing it too.

Rationalisations People Resort To

In my learning recourse on ethical decision making, I look at examples of what are called rationalisations. These are excuses used by someone trying to make their bad decision look better than it really was. In other words, they’re struggling with ethical dissonance. Here are five common rationalisations:

  • The people who deny responsibility – they say things like “I had no choice! There was no other option.”
  • The people who deny there’s any loss - they say things like “No one will really be worse off. And, who are these people anyway?”
  • The people who try to appeal to other loyalties – “the company expects this from me”
  • The claim to entitlement – “I’ve worked hard on this deal; I deserve to win it”
  • The most popular one, and what Warren Buffet has described as the five most dangerous words in business  – “Everyone else is doing it”.

In the workshops I run with firms, I often ask attendees if they’ve ever heard that last one. Most of them have. This points to ethical dissonance being fairly common across the market.

Structuring our Response

If it’s more common than we think, then we should start thinking of better ways to address it. Researchers tend to distinguish between what they call pre-violation rationalisations and post-violation rationalisations. They also distinguish between unintentional unethical acts and intentional unethical acts. This gives us a simple two by two grid into which we can organise the different types of responses and support.

And this is important, for we can do something about ethical dissonance. It’s not something that we just have to live with. The research literature points to this happening on three levels.

Three Ways of Responding

Firstly, we can employ a variety of tactics to raise the prominence of how to act ethically, and which at the same time reduce the scope for justifying unethical behaviour. The watchword here is communication and the focus is on reducing ambiguities.

Secondly, we can act to increase the visibility of decisions. This is about encouraging an openness around what we do and why, and being accountable for the decisions we take. So the watchword here is culture and the focus is on leading by example.

And thirdly, we can be more honest with ourselves. This is about reflecting on what we are doing and thinking beyond our immediate situation, be that what other people might think of what we’re about to do, or what it would look like in hindsight. The watchword here is awareness and the focus is on reflective thinking.

We need to engage with ethical dissonance – after all, most misconduct in corporate settings is not down to bad people doing bad things, but good people making bad decisions. Most importantly, it should not just be viewed as something that is inevitable in a competitive market.

And we need to engage with it on two levels – the personal and the corporate. We can change how we approach the decisions we make at work. And firms can support us in doing so, by having work environments that encourage more ethical decisions and that define more clearly what is a good decision and what is a bad decision.

To sum up, these things don’t just happen. We allow them to happen, and we can do something about it.

Free Guide : Ethical Decision Making
Insurance is full of good people. I’ve worked with lots of them, and learnt from them too. At the same time though, I’ve also come across some pretty poor decisions in my time. Some of them were real eyebrow raisers, while others were just plain puzzling.
Duncan Minty
Duncan Minty
Duncan has been researching and writing about ethics in insurance for over 20 years. As a Chartered Insurance Practitioner, he combines market knowledge with a strong and independent radar on ethics.
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