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3 Dynamics of Unethical Behavior​

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When someone in your organization behaves badly, do people speak up? Too often, the answer is "no," even for internal auditors. The best policies and procedures around ethical behavior are no match for the psychological challenges people experience when faced with someone else's bad behavior.

Most of us know what we should do when someone steps out of line, but do we do it? Is it out of fear for our job that we say nothing? Is it because we can see no one else is stepping up and/or fear being rejected by the group?

In the Harvard Business Review article, "The Psychology Behind Unethical Behavior," organizational psychologist Merete Wedell-Wedellsborg describes three psychological dynamics that she says prevent people from behaving ethically: omnipotence, cultural numbness, and justified neglect. These dynamics actually lead to the crossing of ethical lines, and as such are important situations for internal auditors to watch out for.

Omnipotence is when people feel so entitled they believe the rules around decent behavior don't actually apply to them. Power corrupts and crossing a line feels like something they are owed, not a transgression.

Omnipotent behavior can be a good thing when it leads to innovation and breakthroughs in thinking. Unfortunately, it too often becomes a problem when it leads to bad behavior where fewer and fewer people are willing or able to keep the person grounded.

For internal auditors, this characteristic often is easy to spot. It manifests in the type of treatment executives begin to expect and starts showing up in expense reports. It's demonstrated when managers are given too much power and authority and begin to treat others poorly. It also can show up in instances where individuals become so attached to their work that their sense of ownership begins to significantly outweigh their sense of loyalty. In that case, this could be an early warning sign for someone becoming capable of rationalizing, and ultimately perpetrating, fraud.

How do you make sure this doesn't happen to you? Recognize you have weaknesses, own your flaws, and think about them regularly.

Cultural numbness occurs when people play along and gradually accept and embody deviant norms. No matter how principled someone is, Wedell-Wedellsborg writes, time erodes the "bearings of your moral compass," which results in a shift toward whatever the accepted culture of his or her own organization is.

This slow shift is difficult to detect, but devastating to ignore as this unethical behavior becomes completely normal and accepted no matter how bad it gets. In many cases, the unethical behavior becomes so embedded that employees, particularly management, will rationalize and defend it to the point where good employees are left with an awful choice: accept it or look for a new job.

As internal auditors continue to have an increased focus on auditing culture, we must be careful not to allow ourselves to become culturally numb. One simple tactic to identify cultural numbness: Think about how the behavior would sound to an outside audience. Consider "MNJ" — Mom, Newspaper, Judge. If any of these trusted sources would react negatively to the behavior in question, think twice.

Justified neglect is when people don't speak up about ethical breaches due to thoughts of more immediate rewards such as staying in the good graces of the powerful. Wedell-Wedellsborg explains that the human mind is skilled at justifying something as a minor issue when there is a tangible reward at stake, and when the risk of getting caught is low. The problem is that bending the rules becomes a slippery slope on which it is easy to gain speed.

Creating strong policies, procedures, and controls are the best way to combat this dynamic. Internal audit is uniquely positioned to provide assurance that such protections are in place within an organization, are effective, and are being followed.

Whether unethical behavior occurs among peers, those being audited, or at the highest levels of the organization, internal auditors need to be prepared to identify and deal with it. Be aware of psychological conditions that push people across ethical lines. It also doesn't hurt to perform a quick self-check every now and then to ensure you aren't falling victim to these dynamics.

That's my point of view. I'd be happy to hear yours. For additional guidance specific to The IIA's Code of Ethics, click here.

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