Thursday, November 28, 2013

“The Globalization of Indifference”

I have it on good authority that many of those people who line up days in advance outside of “big box” retailers for Black Friday sales specials endure the wait so they can buy tens of thousand of dollars in merchandise.

The items are quickly shipped to other countries where resale will double the return on their investment.  Puts a whole new spin on the holiday spirit and an exclamation point on what Pope Francis recently bemoaned as the “globalization of indifference.”

However, studies have shown that making actions transparent backfires as a means to discourage ethical behavior due in part to what Dr. George Lowenstein, a behavioral economics researcher at Carnegie Mellon’s Center for Behavioral and Decision Research calls “motivated bias.”

He is famously quoted as saying, “Transparency is well and good, but accuracy and objectivity are even better.”  It turns out that one person’s transparency can be an enabler for other people to not only cross the line but feel good about it.

I know - I’ve always been drawn to the counterintuitive when revealed by data, which explains my interest in a great website,, a collaboration by more than 20 researchers, most at business schools, including Dr. Dan Ariely in Durham, North Carolina where I live.

Ariely gave a speech a year ago about “what makes us feel good about our work.”  His research shows that motivation is about much more than payment.  It also involves “meaning, creation, challenge, ownership, identity, pride etc.”

This was certainly true in my now-concluded forty-year career in visitor-centered cultural and economic development, and one reason I always employed MBWA (management by walking around).

It wasn’t to monitor employees as much as to answer questions they might have, give feedback, encourage entrepreneurial thinking and help resolve any obstacles, including the need for any additional resources or support.

A few may have viewed it as micromanaging but as Hertz CEO Mark Frissora explained in an interview this month for McKinsey and Company (paragraph breaks are mine):

“I have to get ‘too involved’ in the business because I’m setting the strategy.

If I don’t understand the business, then I’m a poor manager and I’ve failed as a leader. It’s critical that leaders spend a lot of time where the work actually gets done—that they get into the guts of the business and see what happens there.

The further down the chain you go, the easier it is to see how your strategy might not work the way you’d intended. You might even discover that the strategy itself is backwards.

You always walk away with a new insight or a new opportunity.”

He manages 41,000 people.  In my career I never managed more than 30 and the average was below 20, but one of the reasons I found MBWA effective was to resolve any ethical issues in real time.

Ethical behavior has always been important to community destination marketing.  In fact, the association of community marketing organizations (DMOs)was organized 100 years ago primarily to create and embed a code of ethical behavior for members.

Up until a decade ago, every employee of each member organization was required to sign and return this code of behavior.  This process seems to have fallen through the cracks during a leadership change or worse, vetoed by those walking too close to the line.

However, at the organization where I worked up until retirement, we deepened the code and continued the practice of re-signing it each year.  The organization's governing board adopted a similar practice for each newly appointed member.

It would be a good idea on the 100th anniversary for Destination Marketing Association International to update that code and to reinstitute having the staffs of member organizations sign it annually.  As a template, it could use this best practice example.

Research shows that a code of ethics is more effective if signatures are required and especially if the signature is at the very top of the document rather than at the end, which is more customary.

During the latter stages of my career there were persistent rumors within the development sector of another community with which I was familiar that one of my peers in economic development was taking money off the books from a special interest.

I never gave it credence because I knew that money was far from being the primary motivation for this peer, but a soon-to-be published study by Harvard researchers explains why “reputational risk” may be the best way to ensure ethical behavior, especially among very “successful, higher-status” executives.

The more successful a person becomes and the higher they climb in the social hierarchy of an organization or a community, the more likely it becomes that they will be tempted to engage in deception to maintain the appearance of success.

This is why a code of ethics, especially in smaller organizations, must be backed up by a strict separation of accounting and performance reporting controls and board officer review of the CEO’s expense account.

Also essential is that CEO performance evaluations involve each member of the entire board through a mechanism that provides anonymity and eliminates politics.  And if need be an examination of personal bank accounts if questions of objectivity are ever raised.

Much of what we call corruption is perfectly legal, including Black Friday.

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