Wanted: Accountants With Hearts of Stone

Congenial people are more likely to flout rules, a study shows.
Photo illustration by Braulio Amado; Photo: Getty images

Companies—especially financial companies—depend on employees to make tough, ethical calls under pressure. So what causes people to get it wrong? Pure greed? A love of risk? Disregard for rules? Frank Hartmann, a management and accounting professor in the Netherlands, has come up with a surprising answer: congeniality.

In a lab in downtown Rotterdam earlier this year, Hartmann outfitted students in something resembling a space-age swim cap and sat them in front of a screen to view clips of faces exhibiting signs of fear, disgust, or happiness. As they watched, their brain signals were recorded and fed into a computer. A few weeks earlier, the same 30 or so test subjects had been asked to complete a questionnaire on situations they might encounter in their future careers as controllers, the accountants whose duties include preparing a company’s financial statements and ensuring tax compliance. In each scenario, they were pressured by their manager to alter the company accounts for varying reasons: so the manager wouldn’t be fired, so the team would hit its targets, and so on.

Hartmann and his Erasmus University Rotterdam colleagues, Philip Eskenazi and Wim Rietdijk, devised their study to test the correlation between an individual’s willingness to bend the rules under pressure and his emotional sensitivity. At the core of their experiment is a behavioral phenomenon called the “mirror neuron system” that causes the human brain to react in the same way when watching someone else performing an action as it would if the person had done it himself. That’s why we flinch when we see someone fall or laugh when other people chuckle, even if we missed the joke.

In the Rotterdam experiment, the more an individual mirrored the emotions she saw on screen, the more likely she was to break or bend the rules. The aloof accountant “who stays calm and controlled amidst an ocean of emotional pressures” is not just a cliché but highly desirable, write Eskenazi, Rietdijk, and Hartmann in “Why Controllers Compromise on Their Fiduciary Duties,” a peer-reviewed paper that appeared in the April 2016 edition of the journal Accounting, Organisations and Society.

The findings are striking because empathy and social reciprocity are often encouraged and even taught within businesses, says Andre Spicer, professor of organizational behavior at Cass Business School in London, who wasn’t involved in the study. “Mirroring is an important driver of social behavior, and it’s often seen as a positive as it helps smooth social interactions,” he says. “But in the long term, it can lead to oversights and even unethical actions as employees value social reciprocity over telling the truth or identifying problems.”

While Hartmann’s study may be instructive about what makes a good accountant, it could also yield insights for the rest of the financial industry. In last year’s prosecutions of bankers accused of manipulating the London interbank offered rate, defendants claimed that they were only doing what their managers asked them to do. To most people, that might sound like just a convenient excuse, but Hartmann isn’t so dismissive. “If everybody is doing something, and you feel a lot of congeniality that ‘we are doing this together,’ and then you apply rather sober rules and regulations that refer to vague [ethical] concepts, my prediction is that, in most cases, feeling and biological impulses win, because they are strong and fundamental,” he says.

One potentially counterintuitive suggestion would be to reduce the volume of rules facing bankers and accountants, says Hartmann, who’s also a consultant to companies on management issues. He says the raft of regulations the U.S. and Europe enacted in the wake of the various accounting scandals of the early 2000s are so onerous that they’re difficult to follow. Faced with hard-to-understand instructions, people are even more inclined to follow their neurobiological impulses, he says.

Spicer says that simply raising awareness of the dangers of social pressure can help break the cycle. “When people are aware of the minute forms of reciprocity that become part of their daily lives, instead of making automatic, subconscious decisions, they can actually reflect on it and say, ‘Hey, am I doing this just to make this guy comfortable?’ ”

The bottom line: An academic experiment indicates that individuals lacking in empathy may make more honest accountants.

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