In June, First Round found itself at PEI’s Responsible Investment Forum in London, where it met some lovely people doing some wonderful things to boost the industry’s ethical credentials. It didn’t have the heart to tell them that according to two US academics, they’re probably wasting their time.
According to new research by Maryam Kouchaki at Harvard University and Kristin Smith-Crowe of the University of Utah – and they did four separate studies – people are far more likely to lie or make unethical decisions when they’ve been primed beforehand with money-related words and images.
In other words, even the slightest suggestion of money is enough to make us nastier people. And since private equity managers necessarily tend to think about money rather a lot, that doesn’t bode well for their chances of becoming ethical paragons.
The theory is, apparently, that the suggestion of money triggers the adoption of a more business-like mind-set – whereby we start making decisions purely on the basis of what’s in it for us, rather than being tied by normal social constraints.
So assuming you don’t want your workplace to turn into a den of iniquity, what’s the answer? Well, in an interview with Quartz, Smith-Crowe says that trying to impose formal ethics standards is a waste of time; instead, you’re better off trying to create the sort of environment and informal cues that will encourage people to do the right thing.
So basically, don’t waste your time writing formal policies; just switch Bloomberg over to the Discovery Channel and cancel your subscription to the FT.