The “broken window theory” is a social science or criminology theory that essentially states maintaining physical urban settings in good order will stop vandalism before it occurs. When Rudy Guiliani became mayor of New York, he and his police commissioner became well known for implementing the broken window theory; their thinking was if they prosecuted small crimes, like the breaking of windows, they would prevent larger crimes from occurring.
I know I’m not the first to write about how this theory can apply to ethics and compliance. It’s easy to see how showing non-tolerance for “small” ethics or compliance violations can prevent employees from even considering larger instances of full-blown misconduct.
I read a fascinating Harvard Business Review blog titled “How Unethical Behavior Becomes Habit.” This is one of those things that has always seemed intuitive – at least to me – but it’s nice to have some empirical data to prove it.
Madoff, Enron and a History of Bad Habits
The blog notes that Bernie Madoff, referring to someone else who had been arrested on embezzlement charges, once said to his secretary “well, you know what happens is, it starts out with you taking a little bit, maybe a few hundred, a few thousand…You get comfortable with that, and before you know it, it snowballs into something big.”
Of course, who would know more about that than Bernie Madoff? But he is not the only one. The collapse of Enron, the billions in rogue trading losses at UBS, and many other corporate misconduct scandals all followed a similar pattern to what Madoff referred to in that quote. These were not the result of one, huge bad deed. They were built up over many months and years, and constructed of many smaller instances of unethical conduct that escalated into larger and larger misdeeds. In other words, the ethical behavior of those involved eroded over time. This behavior became habitual.
This, to me, shows why the broken window theory is so valuable. We now have empirical proof showing that ethical behavior erodes over time and that misconduct becomes habit. So if you stop those small violations in the beginning, you can prevent that habit from forming. Your policy and compliance training should make it clear to employees that even small infractions are not tolerated.
How Do Unethical Habits Form?
How does this habit form? As the author of the Harvard Business Review blog notes, while few of us will ever commit crimes on the scale of Bernie Madoff (thank goodness), we all are vulnerable to the same slippery slope. People often begin with small indiscretions such as taking home office supplies, exaggerating expense statements, or miscategorizing a personal meal in a restaurant as business-related. Those things don’t “feel” like misconduct; they don’t seem like “big deals,” but they are.
The Harvard researchers found that people will rationalize their unethical conduct more when they are presented with growing opportunities over time versus an abrupt opportunity. There is a desensitizing effect over time. The researchers found that when people were given a series of problem-solving tasks, 50% of the subjects cheated to earn $.25 per problem in the first round, and 60% cheated to earn $2.50 per problem in the final round. However, the people in the abrupt change group who could not cheat during the first two rounds were much less willing to cheat big for $2.50 per problem during the final round (only about 30% did).
Rationalizing minor ethical lapses inevitably influences how employees view progressively worse behaviors and may lead them to commit bigger offenses that they perhaps would not have considered. Additionally, and perhaps even more frighteningly, the researchers discovered that people are more likely to overlook the unethical behavior of others when it deteriorates gradually over time. For example, one researcher found that people who played the role of auditors in a simulated auditing task were far less likely to report those who gradually inflated their numbers over time than those who made more abrupt changes all at once, despite the fact that the level of inflation was eventually the same.
The author of the HBR blog noted: Unfortunately, the assumption that unethical workplace behavior is the product of a few bad apples has blinded many organizations to the fact that we all can be negatively influenced by situational forces, even when we care a great deal about honesty. This is why the broken window theory can be so helpful; it can be applied broadly and can help your entire employee population from forming bad habits.
Nudging Habits: Building a Habit of Ethical Behavior
Think of your AB1825 training, your antitrust training and your compliance policy certifications, just to name a few, as ways to prevent broken windows. Make it clear in your AB1825 training that your company will not tolerate even one single incident of perceived sexual harassment, no matter how innocent or nuanced, and that will help prevent full blown sexual harassment incidents and lawsuits. And then, when the time comes, walk the talk and actually investigate and take action against an offending individual.
My colleague Jillian blogged recently about the concept of “nudging” and the HBR blog mentions it as well. In fact they mention that in a study conducted with a major U.S. insurance company, the researchers found that customers who signed the statement “I promise that the information I am providing is true” prior to reporting their annual mileage, at the top of the page, were significantly more honest in their reporting compared to those who reported first and signed at the bottom of the page.
That’s an excellent example of nudging but you can use that to prevent broken windows. Ask your employees to certify to compliance policies and to attest to your Code of Conduct annually.
The blog author notes that in a different study, the researchers found that even subconsciously exposing people to ethical content increased their moral awareness and prompted more ethical decisions, so perhaps ethical conduct can become habit as well.
One of the most detrimental things a company can do is have a culture where standards are unclear or unenforced. Employees must know what is expected of them and what consequences will ensue if they don’t live up to those standards. Use a mix of methods that are very clear (broken windows) and more subtle (nudging) to prevent employees from taking the first step on that slippery slope, and developing the ugly habit of unethical behavior.
For More Information About Ethics and Compliance Training, Check Out These Resources:
- Blog: AB1825 Training In 2015: “Nudging” Employees To Do The Right Thing
- Blog: How To Identify The 14 Red Flags Of Ethical Misconduct & Mitigate Them With Your Compliance Training Program: Part 2
- On- Demand Webinar: The 4 Lever Formula: Elevating Your Compliance Training Effectiveness
2014 Corporate Governance and Compliance Hotline Benchmarking Report
Do you know if your ethics and compliance program meets the emerging best practices for your industry? Our 2014 Global Ethics Hotline Benchmarking Report identifies best practices across all major industries to provide insight into the differences and similarities between industries, developing trends, and reporting statistics to help you ensure your ethics and compliance program meets its mark.