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March 1, 2003

3 Min Read
Under the Influence

Posted: 3/2003

Under the Influence

An
editorial cartoon by Leo Cullum in the New Yorker shows an executive speaking to
company shareholders. He says, "I want each of you on the way home tonight
to stop, look up, ponder the heavens and consider how insignificant our
second-quarter loss really is."

The bit was published in July 1991,
but perhaps is more relevant today — eerily so given that as I write this, the
Space Shuttle Columbia has fallen from the sky in pieces scattered over Texas
and Louisiana.

It’s tempting to minimize everyday
problems by putting them in a larger context or contrasting them with greater
tragedies. People do it all the time to suit their purposes. (Teen to parents:
"I’m not pregnant, but I am failing math." President to constituents:
"Don’t worry about that pesky economy; we are under imminent threat of
weapons of mass destruction wielded by a malicious dictator.") It even has
a name, "the principle of contrast," and is considered a primary
weapon of influence and persuasion by social psychologists like Robert Cialdini
Ph.D.

Only trouble is that it’s also a lot
like a magician’s sleight-of-hand, drawing the viewer’s attention away from what
he is doing with his right hand by showing them what’s in his left hand.
Granted, it can be entertaining, but once you know the trick, it’s not worth
watching.

The same should be true of real
life’s stage. Transparency and accountability are key. With all the corporate
scandal, these principles are en vogue. I guess that’s better than not, but like
all things fashionable, it easily could fade away.

If I sound cynical, perhaps I am. I
am encouraged, however, by the passage of certain laws that have cast a
spotlight on corporate ethics.

Many of the provisions under
Sarbanes-Oxley, for example, are likely to become standards for "best
practices" for both public and private companies, according to
attorneys Stanley M. Gorinson and Neil D. Falis in their article on page 40.
"In particular," they write, "lenders, investors and other
stakeholders may require private firms to comply with certain provisions of the
act, such as its required financial disclosure, audit committee interaction with
accountants and implementation of codes of conduct, even if such compliance is
not legally required."

On the other hand, laws have not
proven to prevent lapses in the past. Consultant Wayne M. Thomas says
(click here), there are more than 300
laws on the books against fraud and corporate crime. Rightly, he asks, "If
300 previous laws haven’t done the trick, is there any reason to believe that
the latest ones tip the scale in favor of justice for employees, shareholders or
customers?"

Instead of counting on punishments
as deterrents, we could reward good behavior. (Yes, I took Parenting 101.) I
like this idea on the surface, but it would be nearly impossible to be sure the
companies we laud are squeaky clean. There aren’t the resources to monitor each
one so closely, and history has proven we can’t rely on self-auditing.

Like the principle of contrast, the
principle of social proof is also a powerful weapon of influence. It says that
we tend to get our cues for how to behave from others. You’ve all heard the
story of Kitty Genovese, who was killed as 38 of her neighbors watched —
without coming to her aid, even to call the police. One explanation was that
each person decided that since nobody else was concerned, nothing was wrong.

In the case of good corporate
citizenship, most people recognize that something is wrong and they are
concerned. Behavioral science, at least, says that bodes well for something to
be done about it.

KHALI HENDERSON

[email protected].
Editor in Chief 

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