Table of Contents
Writer and philosopher Ayn Rand once said, “Rationalization is a process not of perceiving reality, but of attempting to make reality fit one’s emotions.”[1]
Psychoanalyst Karen Horney once said, “Rationalization may be defined as self-deception by reasoning.”[2]
Someone in compliance once told me, “If you find yourself trying to explain something after you did it—that’s rationalization.”
I say, “Rationalization is at the root of many bad decisions.”
Rationalization is a disease that infects good decision-making. It helps wrongdoing persist. It convinces otherwise ethical people to do or ignore unethical things. Here’s a prime example. I posted something on social media about an organization that in the eyes of many people did not adequately address a known problem. It involved child abuse. One employee witnessed a particularly terrible crime. Yet the organization did very little about the problem. The perp continued abusing children and suffered little-to-no consequences until society found out about the abuse many years later. Then all heck broke lose. The organization suffered greatly in terms of bad PR. The perp went to jail, but numerous victims were left to deal with the effects of his abuse for the rest of their lives. Many people who did nothing except help cover up the problem lost their jobs, and their reputations and careers suffered. My post was critical of the organization’s handling of what I considered to be a terrible crime and a wildly inadequate response by leadership.
Then an ethicist from that organization posted a comment. It said that I had not studied the facts and there was some question about who knew what when. I was dumbfounded. I had studied quite a bit, but that was irrelevant. The organization had an eyewitness to a terrible crime and did little to nothing. I couldn’t believe what I was reading—an ethicist rationalizing? This individual was pretty well respected in the ethics community . . . a leader really. If an ethics leader can rationalize an incident like this, we are all doomed―unless we work with compliance professionals who are trained to spot and stop rationalization. It’s a big part of why the profession was created. Too many people, like this ethicist, rationalized doing too little in response to serious issues.
When Rationalization Creeps In
If you see the following conditions developing in your organization, be ready to help leadership see what’s coming. They often cause people to rationalize doing too little about a known problem. They include:
-
Discovering a very big problem
-
Disclosing the problem could hurt somebody’s reputation
-
Disclosing the problem could hurt the organization’s reputation
-
Having employees who feel badly because the problem happened on their watch
-
Knowing that the perp is a colleague
-
Believing the perp is an otherwise good person
-
Having leadership surrounded by people who want to help minimize the problem
-
Having leadership surrounded by very smart people who are excellent at rationalization
-
Having leadership that strongly trusts in their advisors
-
Having people involved in the problem resolution who are conflicted
If you can check most of these boxes, be on the lookout for advisors who rationalize doing little to nothing about a problem. Often the strong employees who surround and advise leadership are ironically the most likely to bury leadership when there is a serious compliance issue. Many leaders who decided not to address an issue are good people who had bad advisors, got bad advice, and made bad decisions. I understand there are a few bad leaders who are eager to go down the wrong path. But the idea that all leaders are bad and we can fix all our problems by firing leaders is a big mistake. We have to look at the process. Always blaming leadership is not only wrong in many cases, it prevents organizations from discovering and fixing real problems. When leadership discovers a serious problem, they need to recognize the signs and symptoms of rationalization in the people around them. Compliance professionals can help leadership do this. They must dig deeper into peoples’ motives to help figure out how to spot and stop rationalization.
I try to imagine what was said in the meetings that caused otherwise good people to rationalize something as tremendously stupid as not dealing with a known problem. There had to have been a meeting or two where leadership discussed the problem. Their reaction was understandably negative: “This is going to go very badly for us when it gets out.” Everyone in the meeting really wanted to avoid the pain associated with dealing with the problem. They were emotional and afraid. It prevented them from making good, balanced decisions. That’s when rationalization crept in― the enemy of otherwise pretty good people. Someone in the room stated something that would result in little to no action. Someone else added something to the lame response to the known problem. It was hard for compliance professionals to help because the meeting was filled with people who wanted an easy out. The result? A poor decision based more on emotions than facts.
The truth is that these advisors will likely lead their organization down a path that looks a lot like a cover-up. People who have nothing to do with the original offense lose their jobs and the organization suffers a PR nightmare. The road is littered with these people.
Roy’s Rule: Watch for rationalization and stop it before it infects leadership’s decisions. Remember: It’s the compliance professional’s job to have honest conversations with leadership, whether or not advisors agree.
Fighting Rationalization
The challenge is: How do you fight rationalization? To cut through the distraction of peoples’ rationalizations, I always just laid key sentences from the regulation in front of them . . . right next to the evidence of what they were doing. I tried to make the problem as simple as possible to see. I let them rant and then came back to the two documents in front of them. I wouldn’t fall down their rabbit hole of rationalization. If you do that, you will lose. Stay focused and have very specific evidence.
I also had honest conversations with leadership. I’ve always felt that telling leadership the truth in a short, simple, and direct way is the best method out of a mess. I told the people in the room that organizations had taken the deny-and-defend approach so often that it caused society and the enforcement community to get tougher on them. I shared case studies of organizations that thought they did enough, but didn’t . . . and the public later deemed their minimalist reaction to the problem was a cover-up. I said: “If you get this wrong, you are going to go from innocent to guilty overnight, and ironically you did not commit the offense that caused all this.” I told them their personal risk would go from very high to very low, but only if they responded to the offense in a strong and measured manner. I tried to have all my conversations with the whole team when possible. But if I was getting buried by others who wanted to do nothing, I would have a private conversation with the top leader.
Let me be very clear: leadership needs to understand that doing something in response to a known problem is good. Society and the enforcement community will settle for no less than all-out war on major problems. Advisors want to be able to check the “I did something” box. That’s not how this works. That’s not how any of this works. That’s not enough.
Following are some things you might say to leadership after the discovery of a problem. This is particularly helpful when others try to help leadership rationalize doing less than they should. Tell leadership that:
-
The question is not how we check the box of having responded properly.
-
The question is not how little we can do in response to this.
-
The question is not how much the perp has done for anyone.
-
This is no time to discuss your “risk appetite” with the risk manager.
-
This is no time to calculate the odds of getting caught.
-
This is not the time to mention, “Other organizations do this all the time.”
-
This is no time to discuss the odds of being able to defend the case with legal counsel.
-
The question is not: Who knew what when?
-
You found a problem and you have to have legitimate discipline and disclosure.
-
The questions is: What would an unbiased fair-minded person experienced in determining penalties do?
When I speak about taking action, I’m not necessarily just talking about more discipline. Dole out as much discipline as you think is warranted. But remember, discipline is not the only reaction you can have to show people how seriously you take a major issue in your organization. In fact discipline is rarely ever visible (nor should it be). Instead, there are many relatively harmless visible actions you can do to prevent your reaction from looking like a cover-up. You can mandate more compliance education, change or update policies, and investigate other areas that might have the problem your organization is facing. That’s what society and the enforcement community looks for in the end. Sure they want discipline and the problem to stop, but they really want to see action, contrition, and as much transparency as you can muster. Whatever you do, the net effect has to look like the leader stood at the top of the building and screamed, “I am mad as hell and I am not going to take it anymore.”
I would also consider talking to others who advise leadership. I would talk to them about the problems rationalization causes and tell them some of the same things you tell leadership. They may not all help you convince leadership to respond to the problem properly, but you might be able to take the edge off their propensity to rationalize doing less. You could add a simple line or two to your leadership compliance training about the need to make sure reactions are appropriately strong enough for the problems that arise, long before leadership faces these sorts of decisions. I would consider working in a story or two about organizations that rationalized doing too little into random conversations with informal leaders. If you talk to people who will eventually be involved in disciplinary decisions throughout the course of the year, you can build a foundation of strength. I have watched effective compliance professionals educate leadership to the point that when tough decisions are made, the compliance professional doesn’t have to say anything when rationalization rears its ugly head. Leadership already knows how to avoid it. And when that happens, it’s a beautiful thing.
Roy-ism: Rationalization is the enemy of good decision-making.