[MUSIC] Welcome to the second part of the first video of week four of our course on unethical decision making. In the last video we discussed simple heuristics that people can and do use when making decisions. We have seen that these heuristics allow people to make decisions very efficiently in the sense that they can ignore a lot of information out there and still make good decisions. In the present video we will discuss another aspect of efficiency, one that comes into play if people make similar decisions repeatedly. So we basically add a temporal dimension to decision making. And we will talk about routines. In this session you will learn what routines are, what functions they have, and why they can be dangerous when it comes to ethics. How many decisions do you make per day on average? What do you think? And how many decisions do you make per year? Now, I haven't done this yet, but I suspect if I ask the first question per day to one group of people and the second, per year, to another group, the ratio between the error to responses will not be 1 to 365. Why not? With a question, I communicate in a very subtle way what I mean with decision. If someone answers like, hundred or even thousand per day, I would not find this strange. At the same time, I would not find it strange if someone answered, well last year, I made three decisions. We make big decisions like whom to marry, whether to accept a certain job offer, or even where to spend vacations. These are decisions which require some cognitive effort and involvement, some deliberation. And then we make many, many small decisions like how to get to the workplace in the morning or which bread to buy in the bakery or in the supermarket. Or where to place the key after having entered the apartment in the evening. The same is true for companies or organizations. Some decisions are big, strategic. You may also call them basic in the sense that they build the basis for much else that follows, and that is built on these big decisions. They are usually carefully prepared, usually by many people and over long period of time. For example, should a company invest in the research and development of a certain new product? Should it outsource some important activities? Should a city council or a parliament pass a certain law for the community? And then there are many, many small decisions that we often may not even perceive as decisions like filling out forms, ordering new papers for the printer, redistributing work after a colleague called in the morning and informed the team that he is sick, and so on. These are routine decisions. What is a routine? It comes from the French la route. The direction, the way to go. Here's a more formal definition. A routine is a set of customary or unchanging and often mechanically performed activities or procedures. Or on the level of organizations, routines are repetitive patterns of interdependent actions in the organization. To illustrate, let's maybe go back to the origin of the word, and consider a wide open space during wintertime. There's been snowing overnight and in the morning everything is white. The first person comes, she wants to cross from one side to the other and she has to make a decision which way to go. Imagine a second person's coming, which path do you think will the second person take? Probably the same. It requires less effort, snow is already stepped down and it is easier. One does not need to spend any effort on making decisions. One simply copies what others did. That is, the second person will imitate. And you can, of course, also imitate yourself. You do what you did yesterday in the same way. Whenever we move into a new environment, new apartment, new working place, have a new spouse, we have to make decisions. And usually people deliberate about these decisions. For instance, the decision how to get to the working place. By bus, car, bike, foot. So we collect information. We compare options. We try out something. We evaluate, we learn, we adapt. And at some point the whole thing stabilizes and we can switch on autopilot. And we take the same way every morning. Likewise, we will develop some repetitive interaction patterns with our neighbors or colleagues. We will go to the same places to buy the same products, and so on. So, routines are recurrent patterns of behavior or, when considering groups or organizations, recurrent patterns of interactions. How are routines related to rules or standard operating procedures? Rules and standard operating procedures are more formal, official, and they are often written down somewhere. Sometimes routines emerge bottom up. Someone starts somewhere and something and this leads ultimately to routines through processes such as imitation, variation, evaluation, adaptation. Maybe, and quite late in the process, someone writes it down as a standard operating procedure. But many routines are not put in writing. And then there are also rules that start in written form. As orders that are formulated at some level in the hierarchical organization with the purpose of regulating behavior at lower levels, as a top down process. Such written rules will then be read, interpreted, and executed by the members of an organization, which is another source of routines. What are the functions and effects of routines, in particular in organizations? First, they economize on our cognitive resources. Deliberate decisions require cognitive effort. Once we have invested this effort, we no longer need to invest it when we are in a similar situation. We just imitate our own past behavior, and this can be done via semi-conscious mechanisms, which in turn frees up cognitive resources for other tasks that may require our attention and awareness. Second, routines ensure stability and they reduce uncertainty. Sometimes we can predict the decision of others, but sometimes not. If I know, however, that you do not deliberate at the moment, but simply imitate what you deserve or what other did in the past, you are predictable. Sometimes it is not good to be predictable. But if we work within the same organization, and if goals are aligned, then it is usually good to know what the others are doing. This gives us planning security, and it facilitates coordination, which in turn can increase efficiency. A third aspect of routines is that they help groups of people to stabilize their relationships. That is, to create micro political stability that strikes a balance between the interests and the participants in the routines. They can be seen as results of many, many little negotiations. I give you this, you give me that. And these solutions are repeatedly implemented. Another aspect that we want to mention here is that they store knowledge. They can be seen as an important part of the memory of an organization. Routines bind knowledge, including tacit knowledge. Individuals and organizations constantly get feedback. They learn and they adjust their behavior. Different behavior patterns can be seen as being in competition with each other, and the feedback plays an important role when it comes to selecting the way to go. Now, if the feedback is used to select a path and if this then becomes a routine, one can say that these routines build on the past and reflect previous experiences. This not to say that routines cannot change, but they bring some conservatism into the system, into an organization. The positive aspect is, as we already mentioned, stability, predictability, efficiency gains through the ability to coordinate. But the negative aspect, or the dangers must also be seen. Rigidity and inertia. That means routines are a starting point for, and at the same time also an obstacle to learning. Learning means changing. And in order to change something, this something has to be there in the first place. In order to change routines, you have to have some. But routines can be tricky to change, in particular if they are shared, and if many other individuals would need to change a particular routine at the same time. This would also require coordination effort. Let us now turn to ethics. Routines play an eminent role when it comes to the ethical culture of an organization. The ethical culture of an organization comprises all those aspects and elements of an organization which influence the ethical conduct of its members. It is important to understand that the ethical culture of an organization has several layers. At the heart are the shared values and assumptions of the organization. These provide the overall direction for the behavior of the organization and its members. Those core values can also be implicit, especially in smaller organizations. In order to make those core values explicit and to show how they translate into behavior in the daily business, organizations establish formal norms. These include standard operating procedures, code of conduct policies and guidelines. The members of an organization then apply those norms. And as a result, practices and routines emerge. This is the top-down process that we just discussed as one of the ways routine enter an organization. The other way was that common practices and routines emerge bottom-up through the organization members, independent of the values, norms, and the directions communicated by the leaders of the organization. The final layer of culture comprises the artifacts and symbols. These are for instance, value statements or slogan printed on its marketing material, reports about the organization's philanthropic actions, volunteer days, or speeches by the organization's executives about the ethical culture of the organization. In an earlier video, we already established that ethics is about taking others into account. It is unethical to ignore one's social environment, but instead and exclusively to follow one's own interests and maximize one's own utility. In contrast, it is ethical, according to Immanuel Kant, if we behave such that the rules underlying our behavior can be universalized. That is, if everyone would behave according to the same rules, we would not have war and fight, but peace and understanding. But to create such a world, one must be able to put oneself into the shoes of others. Something similar can be said about Bentham, according to whom we should behave such that we achieve the greatest good for the greatest number. This can also be only achieved if we consider the consequences that our behavior has on others. Keeping this in mind, let us look again at the functions of routines. One was that they allow us to save cognitive resources. We contrasted deliberate decisions and routine decisions. What do you think? What kind of decisions are more ethical? Those for which you take time and effort and look at various aspects, or those you are on cognitive autopilot? Think about it. If you ignore others in your deliberate decision, chances are that you are at least realizing that you're doing this. For routinized behavior, you may not notice. This would correspond to our concept of ethical blindness. Routines ensure stability and they reduce uncertainty. Whether this is for the good or for the bad, when it comes to ethics, depends on who you are, and for an organization, on its ethical culture. If this culture is very ethical, then stability is good. Chances are that people help each other to behave ethically, and that new people who enter an organization will be absorbed and infected by this culture. But it can of course also work in the opposite direction, if the level is low. Truce with the micro-political stability that strikes a balance between the interests of the participants in the routines to the extent that people will usually voice their interests. Chances are that the interests of the people who are involved will be considered. But note, some may be more shy than others to voice their interests. And even if all the interests are on the table, they can still be ignored by others who are more ruthless and more powerful. When it comes to knowledge and learning, the same can be said as for stability. Routines can be good or bad depending on the level of ethicality that has established in an organization. It can be protective if an organization is already on a high level. But they can also be an obstacle if the company is on a very low level when it comes to ethics, and if routines are rigid and hard to change, which they are. It is important to note the power of routines. Speeches and appeals to being more ethical may not be enough, as long as the daily routines are not changing as well. When people make decisions, they simplify all the time. We have seen this when we talked about framing. Framing simplified perceiving the world. We talked about heuristics. Heuristics simplify information processing. And also routines simplify our lives. We just follow what others did, or what we did in the past. So routines are beneficial. They help us a great deal in our daily lives, but they are a double edged sword. And you should, from time to time, step back, review your routines, and check to what extent you may behave unethically when being on autopilot, and hence when being vulnerable to ethical blindness. Thanks for watching. [MUSIC]
