Efforts to deal with corporate malfeasance, employee misconduct and ethical failings are falling short. Nowhere is this more visible than in the financial sector. But one corner of the industry offers hope: It is using behavioral science tools to identify risky behavior early on.
Three of Europe’s largest banks — ING Group and ABN Amro in the Netherlands and RBS in London — have created behavioral risk teams composed of professionals trained in organizational psychology, anthropology, forensics and other disciplines. Let’s look at how the RBS team operates. It searches for in-depth, granular insights specific to certain “subcultures” where ethical lapses may be occurring.
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Once the team selects a business unit for examination, it assesses it in five ways: surveys; confidential conversations; focus groups; examinations of the formal environment; and independent observations. The team’s findings are shared with executives of the unit in question, who are expected to act on any recommendations for change within a specified period. The efforts we have studied share certain characteristics:
— Executive sponsorship is critical.
— Teams are small. — Effectiveness is difficult to measure, given that the goal is to mitigate risky behavior at an early stage.
— Direct employee engagement is crucial. Although surveillance technology can play a role — companies can monitor conversations, chat rooms, email and so on — people themselves lie at the core of teams’ efforts.
Wies Wagenaar leads a team of eight behavioral scientists at ABN Amrohere’s how she describes its methodological framework: “We believe the behavior of our employees and leadership and the choices that they make are the outcome of all the signals they get from our organization as a whole.”
As the behavioral risk teams at these European banks can attest, the key to preventing ethical scandals is identifying risky behavior before it’s too late.
