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Classic psychological experiments show how companies can falter

In the 1950s and ’60s, social psychologists performed experiments regarding our susceptibility to social dynamics. In particular, researchers sought to learn the degree to which peoples’ behavior is influenced by authority figures and peer pressure. The results took the psychological community by surprise.

In 1951, Solomon Asch conducted an experiment in which a test subject was placed in a room full of clandestine participants coached by Asch to answer questions in a particular way. The test subject and confederates were seated together in a classroom and asked questions about the length of a line printed on cardboard posters where the answers were obvious.

In accordance with the test protocol, the confederates would occasionally all provide the wrong answer. To his astonishment, Asch found that 76 percent of the test subjects agreed with the confederates when they provided wrong answers even though the evidence that the answers were wrong was plain to see.

A decade later, Stanley Milgram, a Yale University psychologist, conducted a series of experiments aimed at testing the degree to which individuals would obey the instructions of an authority figure (an actor in a lab coat pretending to be a researcher) even if doing so would cause another person harm.

Test subjects were placed in the role of “teacher” in what they were told was an experiment to determine if punishment would improve memory. The teacher was instructed to administer electrical shocks to the “learner” every time they provided a wrong answer to a memory test question. The shocks increased in intensity with every wrong answer.

The “learner,” who was part of the experiment and seated in another room, actually received no shocks, but shouted in pain and protested loudly as the shocks increased and even complained of a heart condition. As the shocks reached 450 volts, the learner stopped responding altogether.

Milgram described the experiment to a group of 40 psychologists and asked them to predict the percentage of test subjects that would go all the way. The experts predicted that only 1 percent would do so and observed that “only sadists would engage in such sadistic behavior.”

These scientists missed the mark by a wide margin. To everyone’s astonishment, 65 percent of test subjects went all the way up to 450 volts. The vast majority of people, the “teachers,” shocked their “learner-victim” over and over again despite their increasingly desperate pleas to stop.

Most of the test subjects protested to the experimenter and expressed their reluctance to continue. But the experimenter always gave them reasons to do so, and the test subjects obeyed the experimenter’s commands—administering what they thought were painful shocks to another human being even though they did not want to.

The Milgram experiment also revealed the extreme pliability of human nature.

Milgram was able to demonstrate that compliance rates could soar to over 90 percent of people continuing the 450-volt maximum or be reduced to less than 10 percent by introducing just one crucial variable into the compliance recipe. To get maximum obedience, Milgram made the test subject a member of a “teacher team” in which the job of pulling the shock lever to punish the victim is given to another person while the subject assists with another part of the procedure. To create conditions in which participants refuse to comply, Milgram provided social models of peers who rebelled.

The results of the Milgram and Asch experiments are difficult to accept. We’d all like to think that we have the courage and strength of character to resist pressures to conform and to refuse to do what the boss tells us when we know it is wrong. But these studies, and the many that have followed since, demonstrate a universal vulnerability we all have to these powerful social dynamics. Like it or not, the majority of us will do what the boss tells us and go along to get along at work—especially when our jobs are on the line.

The power of social dynamics to induce good people to do bad things at work is on clear display in the recent Wells Fargo scandal. According to press accounts, intense management pressure on employees to “cross-sell” banking products to customers resulted in thousands of Wells Fargo employees across the country secretly creating over two million unauthorized bank and credit card accounts without customers knowing it.

Bank employees involved in this scheme went so far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services. In so doing, employees moved funds from customers’ existing accounts into newly created ones without their knowledge or consent. In addition to paying for services they never requested, customers were charged for insufficient funds or overdraft fees because there wasn’t enough money in their original accounts.

Wells Fargo did not hire thousands of “bad apples.” Instead, they put good people in “bad barrels” filled to the brim with a toxic stew composed of the following sure-fire recipe for a massive corporate scandal:

  • Add one part unrealistic sales targets to two parts management pressure to perform and three parts threats and retaliation against those who refuse to obey; and
  • Mix well in an organization led by people focused on maximizing profits rather than acting in their customers’ and employees’ best interests.

Sadly, the ubiquity of this poisonous brew and its predictable consequences, is apparent in the headlines that continue to report an unending chain of breathtaking corporate scandals not limited to the banking industry. This toxic formula has ruined thousands of promising careers and shattered the reputations of every corporation that has tasted it.

Wells Fargo appears to have learned this lesson the hard way. They have eliminated sales targets and are airing commercials touting their commitment to serving their customers’ needs. The trick is to get the companies we work for to take similar steps before scandal arrives at our doorsteps.

Jim Nortz is chief compliance officer for Carestream Health Inc. He can be reached at jimnortz@gmail.com.

12/2/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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