Harvard Business School2014-07-16 11:11 AM

Becoming a First-Class Noticer: How to Spot and Prevent Ethical Failures in Your Organization


Max Bazerman

We'd like to think that no smart, upstanding manager would ever overlook or turn a blind eye to threats or wrongdoing that ultimately imperil his or her business. Yet it happens all the time. We fall prey to obstacles that obscure or drown out important signals that things are amiss. Becoming a "first-class noticer," says Max Bazerman, requires conscious effort to fight ambiguity, motivated blindness, conflicts of interest, the slippery slope, and efforts of others to mislead us. As a manager, you can develop your noticing skills by acknowledging responsibility when things go wrong rather than blaming external forces beyond your control. Bazerman also advises taking an outsider's view to challenge the status quo. Given the string of ethical failures of corporations around the world in recent years—from BP to GM to JPMorgan Chase—it's clear that leaders not only need to act more responsibly themselves, but also must develop keen noticing skills in their employees and across their organizations.

Full Article
I’ve spent the past decade studying why some people notice and act on organizational threats and opportunities while others do not. The failure of leaders to notice ethical transgressions has been a key area of my research. How is it that smart, upstanding managers miss—or turn a blind eye to—wrongdoing that ultimately imperils their businesses? One of my personal learning moments came in 2005 when I witnessed what I later realized was an ethical breach and, in spite of my knowledge, experience, training, and values, initially did nothing about it.

I’d agreed to serve as an expert witness for the U.S. Department of Justice in its landmark case against the tobacco industry. My job was to suggest corrective actions should the defendants be found guilty of a conspiracy to commit multiple frauds to deceive the public about the risks associated with smoking. In my written testimony, I urged the court to make significant changes to the industry, such as appointing external monitors with the power to restructure the tobacco companies and remove executives from their roles. But four days before I was to testify in court, a member of the DOJ legal team asked me to amend those recommendations to state that many of them would not be appropriate if four conditions (that he read to me) existed. I didn’t have the legal knowledge to evaluate the changes he was suggesting, but my on-the-spot assessment was that they would weaken my testimony. When I asked him why I would make the changes, he said that if I didn’t, senior DOJ officials might not allow me to testify, which would result in more than 200 hours of wasted work, at taxpayers’ expense. I told him I stood by my opinions, and on May 4, I gave them on the stand.

Still, at the time, I told no one in a position of authority about the interaction. A month later, the DOJ made an unexpected and stunning retreat, cutting its request for financial penalties against the tobacco firms (which would have helped fund smoking prevention efforts) from $130 billion to $10 billion, just as the trial was coming to a close. The government formally won its case, but in my view the remedies were trivial, and society missed an opportunity to save millions of lives. Members of Congress and consumer advocates protested the reversal, specifically questioning the impartiality of U.S. associate attorney general Robert D. McCallum Jr., a former partner of the Alston & Bird law firm, which had previously represented R.J. Reynolds Tobacco Company, a defendant in the case, on trademark and patent matters. In light of those reports, the request to change my testimony seemed (to me) more suspicious, and likely unethical.

I’m generally an inquisitive person. So why, in the spring of 2005, didn’t I probe further into what had struck me as unusual conduct? Because I was susceptible to the same factors that prevent many well-intentioned people from recognizing and acting on questionable behavior. Warren Bennis said long ago that the best leaders are “first-class noticers” (a term borrowed from Saul Bellow’s novel The Actual). That means they pay close attention to what is happening around them. They see things that others miss and understand when to dig deeper so that they can make informed decisions about whether action is appropriate. In this article, I describe six key obstacles to this type of noticing and offer insights into how to overcome them. Given the string of ethical failures we’ve seen in corporations around the world in recent years—from BP to GM to JPMorgan Chase—it’s clear that leaders need to not only act more responsibly themselves but also develop keen noticing skills in their employees and across their organizations.

Identifying the Challenges
Let’s take a look at the obstacles we all face in becoming first-class noticers. My research identifies key barriers that can cause even the most upstanding employee to ignore, overlook, or misinterpret important signals. Failure to “notice” and take action can mean losing an important customer, getting edged out of a market, or even going to jail.

Ambiguity: Important executive decisions rarely require deliberation among options that are clear and unambiguous. Often the data provide only strong hints, but not convincing evidence, that something is amiss. For example, I wasn’t absolutely sure that something was wrong about my conversation with the DOJ lawyer in April 2005. My intuition that his request was unusual should have prompted me to learn more, but instead I tolerated the ambiguity, due to several factors, including my own exhaustion, the difficulty of getting useful advice from others on the DOJ team, and my awareness that all were concerned that media attention would hurt their cause.

Motivated blindness: When we have a vested self-interest in a situation, we have difficulty approaching it without bias, no matter how well-calibrated our moral compasses may be. Motivated blindness helps explain why we want to think the best of our family members, friends, and colleagues and are disinclined to speak against those with influence in our offices and workplaces. It could also explain why, for decades, high-ranking officials in the Catholic Church failed to investigate complaints of child sexual abuse by priests, and why some Penn State University officials failed to report evidence of similar crimes committed by former assistant football coach Jerry Sandusky to the police. Because of their biases, some of these officials challenged the accounts of victims and witnesses, minimized the severity of the abuse, and overestimated their ability to address the crises on their own.

Conflicts of interest: Extensive research shows that our desires influence the way we interpret information, even when we are trying to be objective. This is particularly true when our responsibilities are not aligned with the actual incentives in place. Consider a lab experiment I conducted with Don Moore, of the University of California, Berkeley, and Lloyd Tanlu, of the University of Washington. We gave participants packets of information to help them estimate the value of a fictional company up for sale, and then assigned them to one of four roles: buyer, seller, buyer’s auditor, or seller’s auditor. Although everyone had the same data on the company, estimates from the sellers and the sellers’ auditors came in significantly higher than those from participants on the buying side...

Published on Harvard Business Review in July-August, 2014.





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