Class Takeaways — Leading with Values

Ken Shotts: Hi. I’m Ken Shotts. I’m a professor of political economy at the Stanford GSB.

Neil Malhotra: My name is Neil Malhotra. I’m also a professor of political economy at the Stanford GSB. And Ken and I would like to share some key class takeaways from the course we teach, Leading With Values, which is also the title of our forthcoming book.

When people disagree about ethical issues in the workplace or in their organizations, sometimes these disagreements are about facts and sometimes they’re about values. Now, when we disagree over facts, these are not easy things to resolve, but they can be addressed if people can bring evidence to the table.

This is not the case with values. No amount of evidence is going to convince people that their values are right or wrong. So where do these values come from? Well, psychologists have shown that they come from deep-seated moral intuitions that lie in our gut, and they often have a cultural basis.

What does this mean for leading with values? Well, when people disagree about ethical issues in the workplace, it’s not because some people are moral and some are immoral. It’s that they’re bringing different core values-based considerations to the table.

People around you, specifically those who are critical of you and your company, oftentimes are motivated by key moral intuitions. So it’s not helpful to just dismiss their concerns out of hand by saying that they’re self-interested or motivated by money. It’s oftentimes important to respect the fact that they have moral intuitions even if they’re different from your own.

We like to oftentimes think of ourselves as very rational and everybody else as driven by emotion, but this isn’t the case. Even when we’re making very rigorous, highly structured, analytical arguments, the roots of those arguments are in our gut intuitions. And that self-awareness is important to be reflective and to be skeptical of yourself.

If you want to communicate with others, persuade them and manage disagreements in your organization, it’s oftentimes important not to use your own moral intuitions as the basis of framing your argument but to be empathetic and to see what are other people’s moral intuitions, and construct you arguments about how they see the world, not necessarily just how you see the world.

Ken Shotts: Our students talk a lot about their sense of purpose and their personal values and their personal ethical commitments. We also see leaders of companies talking about how they want all of their employees to do the right thing and to behave in ways that are aligned with the company’s values. And at a societal level, we see many companies, especially nowadays, talking about their commitments to improving society in a whole lot of different ways.

All of these good intentions are wonderful. However, as wonderful as good intentions are, good institutions are even better. So what do we mean by “good institutions”? We mean setting up incentives, rules, and norms that promote good behavior. So this is most obvious within a company. When a leader of a company says, “We expect our employees to do the right thing. Here’s our values as a company,” that’s good intentions.

Good institutions is setting up incentives and rules and norms within the company so that people are rewarded for doing things that are in line with that good behavior and are not rewarded for doing things that are out of step with those values.

And if we want companies to do the right thing for society when push comes to shove, we need to have government regulations, rules, and laws that incentivize companies to do those things that are good for society rather than giving them perverse incentives to do things that might be bad for society. That set of government rules, laws and institutions, that’s really what’s crucial for unleashing the amazingly productive and innovative capacities of capitalism in ways that are good for society as a whole.

Ken Shotts: I have a 13-year-old daughter, and I think she’s entirely unimpressed. So I think from her perspective I don’t know anything about anything.

Neil Malhotra: I think my daughter and my parents would have the same reaction, which is: My wife is the real scientist, and I’m the so-so scientist.