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Ethics and Behaviour

Introduction

Demonstrating ethical decision-making consistently is challenging and is not unique to the banking industry. Feedback from staff in our member banks and other stakeholders including customers, highlighted the challenges involved in linking an organisation’s stated ethical values and behavioural requirements with the day to day decisions which staff across banks make on an ongoing basis.

Prompted by this feedback the IBCB decided to develop a practical decision-making framework aimed at staff at all levels in banks, from the top down.

What is the DECiDE Framework and how should it be used?

Ethical decision-making means different things to different
people. Generally, it relates to decisions which:

  • require a judgement call;
  • where there is no black and white answer, where the ‘grey’ can be difficult to navigate or identify;
  • where there are multiple and different impacts for stakeholders.

 

The purpose of the DECiDE framework is to assist with this decision-making process by prompting you to consider various elements which will enable you as the decision-maker to be able to stand over the decision you took at a point in time, even if it transpires in due course that the decision was not optimum.

Discover

understand the facts 

Discover

What is the Dilemma / Issue / Situation?

  • What is the issue requiring a decision? What are the reasons for this situation?Where should you start? 
  • What is the prevailing culture in your organisation / what is going on now and what has happened before – and how could/should this be taken into account? 

Required Information / Facts

  • Consider the information you currently have and gather any additional facts you’ll need to make an informed decision. Try to determine what information is relevant and try to focus only on that – be aware that sometimes too much information can be a distraction. 
  • Understand and verify the facts. Ask questions and seek more clarity where it is needed. 
  • Is this decision part of a wider decision? 
  • Identify if assumptions are being made. A situation can change when all the facts  are known – making a decision based on incomplete information could lead to undesired outcomes.
  • What is the culture/ prevalent behaviour within your own team? Does this help or hinder the process and decision? If you were part of a different team, would your answer/ decision be the same?
  • How much time do you have? Is there enough time to make a balanced and informed decision? Are you subject to ‘hot state’ decision making?
  • Are there other pressures? If so, what do they relate to?

Who needs to be involved?

  • Who should be involved in the decision? Who is ultimately responsible? Are you the right person to make the decision? (NOTE: this is not a prompt to avoid accountability, but it is important that decisions are taken by the right people)
  • Is there anyone else you should engage with prior to making the decision?
  • Have you considered alternative perspectives? How inclusive is your process?
  • Are there any conflicts of interest that might affect your ability to make a fair decision?
Ethical Considerations

take the time to consider the alternatives, different perspectives, the implications for the range of stakeholders involved and the likely impacts and consequences

Ethical-Considerations

Consider the question ‘what should I do?’ versus ‘what can I do?’

Alternative actions

  • What are the alternatives? Consider other available options.
  • Are there internal or external policies / regulations/ rules / principles / guidelines / to be followed? How have they been applied in the past? 
  • Consider how you will look to balance achieving the required outcome with demonstrating that the right behaviours have been applied in getting to that outcome? 
  • Are you following the ‘spirit’ of the law or guidance as well as the ‘letter’ of the law/guidance? 

Impacts and Consequences

  • Are you aware of the potential impacts of this decision? What are the positive and negative consequences on: reputation, cost, and legality?
  • Consider and weigh the outcomes and consequences for each identified solution. Are you favouring short term over long term benefits? Consider the impact of ‘Present Bias’ and potential risks associated with ‘short-termism’.
  • How would your decision be perceived both internally and externally? 
  • How does the decision fit with your organisation’s values?

Stakeholders

  • Who will be impacted by this decision? (e.g. customers, society, your family, work colleagues, management, your organisation, shareholders). 
  • What are the consequences for these individual stakeholders? What do you think their concerns would be?
  • What is the right thing to do for each of those stakeholders? For example, does this decision achieve a positive outcome for customers? 
  • Are you trying to appease a particular person, customer, or stakeholder? 
I

ask yourself the questions: How do I impact the decision? What are my personal biases or influencers likely to impact my decision? These are often unconscious or below the line factors that we must make a conscious effort to consider

Self-Reflection

DECiDE The importance of I

Self-reflection

Ask yourself the question – How do I impact the decision? What are your personal biases or influencers likely to impact your decision? These are often unconscious or below the line factors that we must make a conscious effort to reflect upon.

What are the factors that influence your decisions? Consider your own personal character. What do you know about yourself that might impact on your decision-making process?

  • What are your values? What are your organisation’s values? Do they differ? Are your personal principles and the organisation’s rules aligned?
  • What are your red-lines?
  • Are you making the decision by assessing the business/commercial implications only/primarily? Ensure you have reflected on the ethical considerations also. (Like all businesses, bank staff are frequently required to make commercial decisions which will not always be popular, the challenge is to ensure that these decisions are taken fairly and transparently, with appropriate consideration of their impacts).
  • Is there a prior history or personal experience that could be influencing your decision?
  • Do you have a conflict of interest?
  • Are you in the best frame of mind to make this decision: are you tired, hungry, ill, worried, anxious, or stressed?
  • What is your gut telling you?
  • What is your hierarchy of loyalties?
  • What are you usually most guided by, Mercy or Justice?
  • How would you like to be remembered?

Hierarchy of loyalties – Where do your loyalties sit and in what order e.g.

  • is it 'family first' for you?
  • Would your organisation’s values be above your own?
  • Or vice versa?
  • Is your career more important than your relationships?
  • Or vice versa?

Are you more inclined to show leniency, compassion, and forgiveness (mercy) or to want fairness and for people to get what they deserve (justice)?

Unconscious Bias - what lies beneath the surface?

  • We all have personal biases. What might your unconscious biases be and how could you identify them? 
  • Are you aware of your own preconceived ideas, beliefs and assumptions which could impact this decision? 
  • If this situation were about you, would you be happy with this decision/ the outcome? 
  • Are you allowing your own circumstances to impact your choice? 

 

Having considered these questions and understood the biases and influences at play, you will be better placed to make a balanced decision.

THE MIRROR TEST

ENVISAGE YOU ARE LOOKING INTO A MIRROR:

  • Consider how you would explain your decision to your sibling/your mother?
  • Is this different to how you would explain it to a regulator or a journalist?
  • If you visualise seeing your decision in the media or on your social media feed does this impact your decision?

Biases1

‘Bounded Rationality’ suggests our decision-making is limited by the information to hand, the cognitive limitations of our minds, and the finite amount of time we have to make a decision. While we often use ‘heuristics’ (mental rules of thumb) to assist us in making decisions, they can lead to biases. Some of the most relevant behavioural biases are: 

Present bias
Present bias refers to the tendency to give stronger weight to results that are more immediate as opposed to longer term when considering options.
Bias Blind Spots
We believe we are less susceptible to biases than our peers. We assume we will act more ethically in a given situation than we are likely to do.
Motivated Blindness
We tend to overlook or excuse unethical behaviour when it is in our interest to do so.
Omission Bias
We judge actions as being worse and more immoral than otherwise equivalent failures to take action.
Halo Effect Bias
Having formed a positive/negative impression of a person, we tend to like / dislike everything about that person.
OUTCOME BIAS​
We assess the quality of a decision by focusing on its eventual outcome rather than on the circumstances that existed at the time it was made.
AVAILABILITY BIAS​
We place undue weight on recent events and other information which comes easily to mind.
ANCHORING BIAS​
We over-rely on an initial piece of information and make subsequent decisions in relation to that information. For example a realised loss of €1000 seems less when the expected loss was €2000 rather than if it was €500.
Confirmation Bias

We interpret evidence as supporting our prior beliefs/decisions to a greater extent than is warranted. When we believe a conclusion is true, we seek out and believe arguments that appear to support it and reject evidence that undermines it.

Group Think
Being part of a group may drive us towards uniformity and cause us to rationalise warnings that might challenge the group’s assumptions. It also leads us to adopt a certain behaviour or viewpoint just because a large number of people have also accepted it.
Commitment Bias
We persist with a poor decision or action rather than accepting that a mistake has been made and changing course.
Hindsight Bias
We see past events as having been more predictable than they actually were at the time thus making us overconfident in our prediction of future events.
Framing Related Biases
We respond differently to the same information depending on how it is presented to us. For example, we tend to consider a ‘95% success rate’ better than a ‘5% failure rate’.

1 Source: Professor Blanaid Clarke, McCann FitzGerald Chair of Corporate Law, School of Law, Trinity College Dublin and Deputy Chair of the IBCB.

Present bias refers to the tendency to give stronger weight to results that are more immediate as opposed to longer term when considering options.

Group dynamics

  • Are you making this decision to fit in?
  • Are you making this choice to avoid conflict? 
  • Is your decision being influenced based on the expectations of your peers/ line manager?

‘Hot-states’ are caused by physical factors such as hunger or tiredness or emotional factors such as time pressure, stress, anger, or grief and can result in specific goals being overshadowed by short-term influences. For example, assume you have set yourself a long-term goal of maintaining a healthy weight and eating nutritiously. However, when you walk into the supermarket you haven’t eaten in five hours. When you see biscuits, the driving force of your hunger leads you to seemingly act irrationally by behaving in contradiction to your long-term goals. You are in a ‘hot-state’, so you buy and eat the biscuits.

All that has happened is that your emotions, which dictate your preferences, have shifted and intensified on a particular object. In the moment, you have a greater emotional reaction that motivates you to alleviate your hunger and give in to your gut, quite literally, rather than abide by your long-term values of health and nutrition. Your values have not necessarily changed. Instead, the quantity and intensity of the emotion resulting from a particular stimuli (hunger) has increased, resulting in you making a decision based on a short-term need rather than your long-term goal.

Decision
make the decision and communicate it clearly
Decision

Make your decision

  • Decide on your course of action – be prepared to deal with opposing arguments. 
  • Make your decision based on the information you have to hand and plan for its implementation. 
  • Be honest with yourself and acknowledge that you don’t know what you don’t know! You are making this decision at a point in time. In due course, more information might come to light. Consider do you need to document the facts and information you have at this point in time which has led to your decision and why you are happy to stand over it? 
  • Communicate your decision – include your rationale and how you arrived at the decision so it can be understood by others. Be transparent about your decision.

Consider discussing with your team if any elements of the decision should be documented. As part of this process consider also how you would document where there are exceptions to the use of the framework.

Don’t underestimate the importance of communications, in particular if the decision is an exception to the prevailing rules/guidance/values. Focus on explaining why an exception is appropriate and whether a change to the prevailing rules/guidance/values is required as a result. Consider the question: Is the rule wrong, or is it just inconvenient?

Evaluate
post the decision, take the time to reflect on it and identify any lessons learned.
Evaluate

Following the decision, take the time to reflect on it and identify any lessons learned.

Follow-up

  • Follow-up to ensure the decision has landed/embedded as was envisaged.
  • Seek feedback from those impacted by the decision 
    » Consider when to do this in order to ensure the feedback reflects the impact.

Lessons learned

  • What have you/your team/your organisation learned from the decision, the process, and the outcome? 
    » What, if anything, would you do differently with the benefit of hindsight?
  • Consider how best to share those learnings. 

SUPPORTS

‘A problem shared is a problem halved’

  • Reflect on what supports are available to you to help with this decision. It may be appropriate to seek counsel from other people with knowledge and expertise in relevant areas or whose opinion you value. You might have ‘blind spots’ in terms of your decision and these can be circumvented by discussing this dilemma with someone else – particularly someone who is very different to you! Seek out the views of those who are likely to have different perspectives. Should you seek the input of others to challenge your decision? Are there any issues relating to confidentiality?
  • Who can you reach out to as a ‘sounding board’ or mentor? Where does their moral compass sit? Is this person detached or have they a vested outcome in the decision? Have they been through something similar before? Can they bring a different view or insight?
  • A lack of diversity of thought increases the risk of poor decision making. Challenge yourself to incorporate diversity and inclusion considerations in your decision-making process as relevant.
  • What resources does your organisation have available to support you in this decision?
  • Have you refrained from seeking guidance or advice from others out of fear of appearing less competent?

Possible resources: Intranet site, Support/Helplines, Line Manager, Mentors, Coaches, In-House Counsel, Compliance Officer.

Speaking Up: An effective ethical decision-making framework must be supported by an effective and transparent approach to Speaking Up. All staff must feel encouraged, supported, and protected to report instances where they consider behaviour and/or decisions are contrary to stated values and ethics. Staff must feel they have ‘psychological safety’ to speak up and report poor behaviour and decisions.

Video Content

VIDEOS

Ethical decision-making - 01 Introduction

Ethical decision-making - 02 Frameworks

Ethical decision-making - 03 Key considerations

Ethical decision-making - 04 Hypothetical scenario

Background and Context

What we heard

Positive cultural change is founded on ethical behaviour. Demonstrating ethical decision-making consistently is challenging and is not unique to the banking industry. Feedback from staff in our member banks and other stakeholders including customers, highlighted the challenges involved in linking an organisation’s stated ethical values and behavioural requirements with the day-to-day decisions which staff across banks make on an ongoing basis.

What we did

Prompted by this feedback the IBCB decided to develop a practical decision-making framework aimed at staff at all levels in banks, from the top down. To do this, the IBCB worked with staff within our member banks to create DECiDE. Founded on established academics – with input from IBCB Deputy Chair Professor Blanaid Clarke, the IOB, the Financial Services and Pensions Ombudsman (FSPO) and journalists via a series of ‘co-create’ sessions, the purpose of DECiDE is to act as a practical guide and tool for bank staff, regardless of level, when making difficult decisions. The framework prompts staff to consider a range of issues such as the impact of Group dynamics, personal bias, the importance of diversity & inclusion, the need to consider the potential risks associated with short-termism vs more long-term and sustainability considerations etc.

The final Framework was launched by the IBCB at a virtual event on 29th September 2020 and included an opening address from the IBCB Patron, Dr. Martin McAleese, an interactive session with Prof. Frank Flynn, the Paul E. Holden Professor of Organisational Behaviour at the Stanford Graduate School of Business, California and a panel discussion led by Prof. Blanaid Clarke. The launch event was attended by member bank staff, IBCB Board members; and a small number of attendees from external organisations who participated in the co-create sessions e.g., the Financial Service and Pensions Ombudsman and IOB.

The IBCB’s 2021 éist Staff Culture Survey shows that DECiDE has made a positive impact, where staff are aware of and have used the framework.

In 2022 the IBCB developed some further resources and tools to support bank staff in the context of ethical decision-making. The DECiDE framework has also been brought to life, you can explore DECiDE in an interactive way here.
We have also developed a series of short videos and an interactive site to prompt users to challenge their own thinking and consider topics such as Present Bias, the Mirror Test and contemplate a hypothetical scenario. Each of our member banks also have their own internal decision-making frameworks and these assets have been designed to compliment those frameworks further.

The IBCB will continue to work with our member Banks to further enhance and support the use of DECiDE and other internal decision-making supports.

IoB
We continue to partner with and support the IOB and contribute annually to their Level 9 Professional Diploma in Leading Cultural Change and Ethical Behaviours in Financial Services.

Artificial Intelligence (AI)

AI is being increasingly used throughout numerous industries, with banking being no exception. The challenge for all industries and in particular for banking, is that the use of AI in making credit and other decisioning for customers (or staff), is that this is done in a transparent manner resulting in fair outcomes. The IBCB began focussing on this topic in 2021 as part of our work on ethical decision making. In December 2021 the IBCB facilitated a workshop on the topic of Artificial Intelligence (AI) and Ethics in Banking.

This event explored the ethical challenges posed by the increasing use of AI in the banking sector, via the lens of trust and reputational risk, with a view to developing steps banks can take to mitigate against these risks and protect, and potentially enhance trust. We were joined at the event by leading international experts Prof. Hse-Yu (Iris) Chiu from University College London and Prof. Katja Langenbucher from the Goethe University of Frankfurt..

Related Publications
IBCB DECiDE - one page infographic
IBCB-Decide-booklet-cover
IBCB DECiDE Framework booklet
Related Videos
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