Hawaiian cardinal

Light’s effect on integrity and honesty

Following an earlier post about how clean smells were corre­lated with more ethically minded decision making is this HBR post about good lighting encour­aging the same thing:

In one laboratory exper­iment, we placed partic­i­pants in a dimly or well-lit room and asked them to complete 20 math problems under time pressure. The partic­i­pants received a cash bonus for every correct answer. Since we were inter­ested in whether darkness affects cheating rates, we left it up to the partic­i­pants to score their own work and to pay themselves from a supply of money they had received at the beginning of the study. While there was no difference in actual perfor­mance on the math problems, almost 61 percent of the partic­i­pants in the slightly dim room cheated while “only” 24 percent of those in a well-lit room did. Eight additional fluorescent lights in the room where the study took place reduced dishonesty by about 37 percent.

They also performed the test based on the perception of lighting levels using sunglasses, and had similar results.

I anxiously await the results of a combi­nation of smell and lighting!

But why stop there? What else in the sensory-ethics world can we adjust and test? Sounds? Tastes? Should we all be chewing mint gum every day and listening to waves crashing onto the shore?

The question is: could this be taken too far? How brutally honest do we want our co-workers to be with us? At least in the interests of getting along, perhaps some things are better left in the dark.

Museum station

Canada’s government announces Start-Up Visa Program

Canada’s federal government recently announced a Start-Up Visa Program aimed at attracting inter­na­tional entre­pre­neurs to the country.

Overall it is sending the right message to global entre­pre­neurs, that Canada welcomes them and their ideas in the hopes of creating jobs in here in an area of growth.

I hope it won’t create an uneven playing field against homegrown entre­pre­neurs, but my contacts in the industry think it’ll be a net positive. Deal flow will increase in Canada, which will benefit existing start-ups and innovators. The rising tide of more money sloshing around this part of the economy will lift all the boats, as it were.

Existing companies stand to benefit from at least one of the explicit goals of the Program, which is to bring in motivated individuals from around the world, deepening the talent pool for all companies.

What do you think?

Stone

Hunger strikes and supporting documentation

One of the bigger news stories in Canada of late is the ongoing hunger strike of a First Nations chief, osten­sibly being carried out to force a meeting with the Prime Minister to discuss condi­tions on the remote northern Ontario Attawapiskat reservation.

The legacy of the “discovery” and settlement of North America by Europeans and their subse­quent relationship with natives is a topic far too complex for this blog, but the story took on an element of particular interest with the “leak” of a Deloitte audit report on the admin­is­tration of the community.

That report has been posted online in its entirety.

Deloitte sampled 400 trans­ac­tions from the G/L across the 6⅔ years in scope. Sixty per year and 40 for the eight month period ending November 30, 2011. Slightly less than 20% of the 400 had no issues. No supporting documen­tation was available for just over 60% of the sample, and the other 20% was either incom­plete or the occur­rence of the under­lying event was questionable. It should be noted though that in the most recent 20 months reviewed, only for 31 of the 100 samples was there no supporting documentation.

What the audit didn’t do (and wasn’t designed to) was determine whether $104M over that time period is adequate for the population on the reserve. It’d be an inter­esting analysis to look at the number of house­holds, average people per household, repairs and mainte­nance funding per household and per person, and figure out whether there is enough funding to support their needs or not. That’s the heart of the issue.

Short-term focus of management ain’t due to accounting

CFO.com had a provoca­tively titled article this morning that just shouted out for a retort: “Is Accounting Blocking R&D Invest­ments?

Now how could accounting be doing that? Why, because senior management is preoc­cupied with meeting short-term quarterly earnings targets, and are cutting back on longer-term focused R&D investments!

I thought this was just an overzealous headline writer, out to get clicks (mission accom­plished!) and perhaps the article itself would walk back the ridiculous premise, but instead it doubled down:

The accounting treatment of R&D as a period expense and the overem­phasis many public-company execu­tives place on EPS. Many execu­tives pay lip service to the long term benefits of R&D. But in reality they base the size of their companies’ R&D budgets primarily on a single period’s EPS dilution. Thus, they are only looking at a tiny fraction of the value equation.

It’s gotta be up to management to teach the market how to appro­pri­ately value their company, and it’s gotta be management that shares a long-term vision of sustainable profitability to share­holders. This short-termism simply has to stop.

It isn’t the accoun­tants who are pushing for quarterly earnings reports. I’m sure accoun­tants would love to spread out the reporting, it would make their lives a lot easier not to have to calculate myriad accruals on a quarterly basis only to reverse them after.

Value, real lasting value, not just for share­holders but employees and commu­nities, is built over the long haul.

Slow down for better ethics

Inter­esting tidbit (and relevant for internal audit) from an article in the latest Economist on how taking time to make decisions results in getting the ethics right:

Slowing down makes us more ethical. When confronted with a clear choice between right and wrong, people are five times more likely to do the right thing if they have time to think about it than if they are forced to make a snap decision. Organi­za­tions with a “fast pulse” (such as banks) are more likely to suffer from ethical problems than those that move more slowly… The authors suggest that companies should make greater use of “cooling-off periods” or introduce several levels of approval for important decisions.

Several levels of approval for important decisions sounds like a fantastic idea to me. What I find is that too many decisions are made or approvals given orally in meetings, with scant evidence to support their existence later, in case of an audit. Surely intro­ducing more rigor around this aspect of approvals would further improve ethical behaviour!

Delay even works in fields where time might seem to be of the essence. Doctors and pilots can profit from following a checklist, even when doing things they have done many times before. A list slows them down and makes them more methodical, as Atul Gawande describes in “The Checklist Manifesto”.

Now you’re beginning to see why this article prompted me to write a blog post for the first time in umpteen weeks! Not just levels of approval, but check­lists too? Be still my beating heart!

Auditors have been employing check­lists to improve quality for eons. It’s great to see articles like this extolling their virtues to all people and for all tasks.