Integrity? Meaning what exactly?

1. "What Social Science Teaches about Policies, Procedures, and Ethical Behavior."by William J. ChrissExecutive Director and Dean of Curriculum and InstructionThe Texas Center for Legal Ethics and Professionalism

2. Integrity? Meaning what exactly? in·teg·ri·ty n. 1. Steadfast adherence to a strict moral or ethical code. 2. The state of being unimpaired; soundness. 3. The quality or condition of being whole or undivided; completeness.

3. Integrity? cognitive dissonancen.Psychology : A condition of conflict or anxiety resulting from inconsistency between one's beliefs and one's actions, such as opposing the slaughter of animals and eating meat. Two roads to avoiding cognitive dissonance

4. Integrity? First Road to avoiding cognitive dissonance: We conform our actions to our beliefs. Second Road: We conform our beliefs to our actions. Rationalization.

5. How People Respond to Ethical Rules is Important, but Culture Trumps Rules In real world organizational environments: habits of mind drastically determine employees’ moral judgment. The organizational environment produces a “choice of norm” rule that one should “look up and around” to understand one’s boss’s norms and follow them. while “morality” might require reporting misconduct, the corporate culture, nourished by boss expectations, often trumps morality in favor of other rules such as: “never go around your boss,” or “always tell her what she wants to hear.”* Culture and Motivation Trump Formal Rules *Robert Jackal, Moral Mazes: The World of Corporate Managers (1988)

6. Studies of Auditors Within accounting and other professional organizations, shareholder equity is replaced by client or customer satisfaction, either directly or as filtered through in-house supervisors Unconscious bias: Because of the often subjective nature of accounting and tight relationships with clients, “even the most honest and meticulous of auditors can unintentionally distort the numbers…” Unconscious bias, as opposed to intentional venality, cannot be deterred by criminal laws or post-hoc sanctions. • Max Bazerman, Professor of Business Administration at Harvard Business School • “Why Good Accountants do Bad Audits,” 80 Harvard Bus. Review 97 (November, 2002).

7. Relevant Psychological Research Motivation powerfully colors perception, which in turn determines moral judgments, even among people striving to be objective. Because we filter out data that conflict with our motivations and expectations. We cultivate beliefs that justify our behaviors, not the other way around. • Max Bazerman, Professor of Business Administration at Harvard Business School • “Why Good Accountants do Bad Audits,” 80 Harvard Bus. Review 97 (November, 2002).

8. Examples: Lawyers Juror perception research. Litigation experiment: Law students given data on car/motorcycle accident and injuries. Divided into equal groups of “lawyers” representing plaintiffs and defendants Told to evaluate the settlement value of the case and attempt to negotiate a settlement. Told a judge would decide if no agreement reached between the two “lawyers” Asked to evaluate case and then, after failure to agree (100%), asked to predict judicial verdict Results: Massive difference in both kinds of prediction based solely on role, controlling for all other factors.

9. Lawyers: More Results Even after subjects were offered monetary rewards for accuracy, the divergence persisted. Even after being told in advance of the results of prior testing and that they must guard against bias, the divergence still persisted The information only made subjects believetheir opponentswere likely to be biased. These are called role-conferred biases.

10. Examples: CPA’s & Auditors Auditor Experiment: 139 auditors were given 5 hypothetical vignettes and asked to judge the work the hypothetical auditor/accountant did in each vignette. Half were to assume they were with the same company/firm as the auditor; Half were asked to assume they were hired by another company that was interested in the condition of the hypothetical company. Results: Subjects were 30% more likely to find GAAP satisfied if they were told to assume they were with the same company as the hypothetical auditor.

11. Studies of Law Firm Culture Recall from the corporate world: habits of mind… In the law firm setting, partner/leader norms are most important in subordinate motivations, particularly norms of those close to clients (e.g., rainmaker partners) Yet, partner profit requires that associates produce a high volume of quality work with little supervision. This conclusion would apply to equal force to accountants in large firms. Because these norms vary from partner/leader to partner/leader, and because they change as subordinates work for different partners on different matters, a “choice of norm” rule gets established, rather than an actual norm.

12. Studies of Law Firm Culture As economics has required massive growth and consolidation of law firms, norms within firm elites have become more varied. This yields the following choice of norm rules. “Ethics” varies with: The character of the adversary; With the identity of the “customer,” e.g., partner, manager, or client; Not morality but etiquette. “The interests, indeed, probably the tastes, of clients will be enforced.”* * Kimberley Kirkland, “Ethics in Large Lawfirms: the Principle of Pragmatism,” 35 U. Memphis. Law Rev. 631 (Summer, 2005)

13. Other Behavioral Studies: Diffusion of Responsibility Deborah Rhode, “The Internal Point of View in Law and Ethics: II. Legal Ethics: Moral Counseling,” 75 Fordham L. Rev. 1317 (Dec., 2006): U. Penn Professor Scott Wharton studied group dynamics: 57 groups of execs and business students pretend to be drug company directors. Told that a profitable drug causes a lot of “unnecessary” deaths each year. A competitor’s product is just as good but safe. 79% said: Keep marketing; take political action to prevent a ban; Others similarly trained given the same hypo as individuals: 97% said: continuing to market the drug was socially irresponsible.

14. Other Behavioral Studies: Dissonance Reduction, Groups and Commitment David Luban, “Integrity: Its Causes and Cures,” 72 Fordham L. Rev. 279(Nov., 2003): Solomon Asch’s group dynamics study: A short line on paper and a long line Many people say the long one is the shorter once they hear others say so. The Stanley Milgram “commitment” experiments at Yale: Increasing volts accompanied by screams Because the voltage increased gradually, “committing” the subject.

15. Luban studied the Milgram Experiments Luban concluded that the Milgram experiments demonstrated: The Power of Authority The Power of Commitment

16. Other Behavioral Studies: Dissonance, Roles, and Victims David Luban, “Integrity: Its Causes and Cures,” 72 Fordham L. Rev. 279(Nov., 2003): The Stanford Prison Experiment: Students as “guards” or “inmates.” Within one day, guards begin brutalizing inmates; Day 2: “inmates” revolt; Revolt put down violently; Even parents who visited were convinced to back down. 1970s “blame the victim” experiments by Melvin Lerner: The worse someone is treated, the more likely they will be regarded as unattractive and flawed; Because the difference between us and the victim allows us to “reassure ourselves that we won’t be victmized next.”

17. SUMMARY People do not behave “rationally.” They act and believe based on unconscious factors. Unconscious biases: Profit andclient caremotives are strong role biases; Corporate culture: Habits of mind teach “look up and around.” This produces a “choice of norm” rule, not a norm. “Ethics” varies with opponents, supervisors, clients etc. It becomes etiquette. Diffusion of responsibility. Commitment and dissonance: “I believe in ways that will assure me I have not done anything wrong.”

18. Recommendations/ Responses Unconscious bias cannot be deterred; Therefore, persistent awareness is likely to do more good than more rules: Educating clients who lack the vision to see how moral conduct can transform markets, brands, and thus the bottom line. Awareness of conscious biases and how “choice of norm” occurs. Structural changes: Anything that reduces professional dependence on client motivations: The Texas Lawyers Creed Promoting a diverse and broad market for legal and accounting services, and a diverse customer base, i.e., encouraging small business and many small clients, rather than monolithic ones. This is classic capitalist theory.

19. The Noble Professional Abraham Lincoln and Dr. Phineas Gurley’s sermons The Texas Center for Legal Ethics and Professionalism: BECOME A MEMBER AT www.txethics.org