When it comes to doing the right thing, many business people suffer from cognitive dissonance. Take for example Novartis the pharmaceutical giant. CEO Joe Jimenez recently stressed the group’s commitment to compliance but he also added
We don’t want to do anything that puts us at a competitive advantage.” 
Here is cognitive dissonance in action. The Novartis choice seems to be either pursue compliance or keep up with presumably unethical competitors. There is an inherent conflict that must be resolved.
Based on that quote from the CEO which seems most likely to win out?
Cognitive dissonance (CD) occurs when we hold conflicting beliefs, attitudes or try to pursue behaviours that contradict each other.
For example, we want to slim yet find ourselves eating Crunchy Nut cornflakes at 4 am in the morning. 
Psychologists say CD happens to us all occasionally. We deal with the unpleasant and uncomfortable feelings it causes by choosing one of the two incompatible ideas or behaviours.
People go to extraordinary lengths to reduce the inner tension arising from cognitive dissonance. They will do so often without accepting that they might, in fact, be wrong. For instance, they will grab almost any form of relief, rather than admit to being at fault, or mistaken.
Our brains hate holding contradictory ideas at the same time, and we are programmed to seek some kind of resolution. So mostly we dump one of the contradictory ideas or behaviours and get on with the rest of our lives.
Cognitive dissonance is readily apparent in the world of banks and financial services. Despite a widespread commitment to compliance and all that goes with it, stories abound of organisations behaving unethically. These are the result of choices, conscious or otherwise.
Senior managers often deal with the unpleasantness of cognitive dissonance by turning a blind eye to unethical practices in favour of the hunt for profits. For example, a week ago, Switzerland’s competition commission WEKO opened yet another investigation, this time into several Swiss, British and US banks over potential collusion to manipulate foreign exchange rates. Did the managers really not know what was going on, or did they deal with the dissonance in a predictable way?
The Ford Pinto saga from the last century is one of the classic tales of unethical corporate behaviour involving a form of cognitive dissonance. On the one hand Ford managers knew they were making and selling the Pinto motor with a faulty gas tank which caused dreadful fatalities. On the other hand there was great pressure to hold down costs and avoid a costly recall.
Instead of doing the right thing Ford executives solved the cognitive dissonance puzzle by adopting a spurious cost benefit approach to show it was cheaper to do nothing and just pay legal damages when they arose.
America’s largest motor company GM is now accused of almost the identical unethical action. It failed to replace a defective ignition switch, when it was first detected. It would have cost less than $1 a car to do so. The consequences have been violent and unnecessary deaths.
We learn from history that people never seem to learn from history. This appears to be entirely true as far as GM is concerned. The company had a “culture of cover up,” claimed a Missouri Democrat, recently at a congressional hearing featuring embattled GM CEO Mary Barra.
The similarity between the unethical behaviour of Ford and the GM employees is striking. In both cases senior people behaved with breath-taking irresponsibility, refusing to face up to the human consequences of their actions. Their cognitive dissonance played out in both cases in making the wrong decision for the wrong reason.
As with Ford, the true cost to GM of failing to tackle the faulty part will now run into many millions. Had action been taken when the problem arose it would have cost about $400,000 for tooling, or 90 cents per car.
Essentially cognitive dissonance means we tell lies to ourselves. How we stop this happening in an organisation is an important issue for all business leaders. The main evidence from research suggests;
1) Culture: invest is building a corporate environment that supports people facing ethical dilemmas.
2) Acknowledge: find ways to bring to the surface the existence of conflicting pressures, contradictory ideas and apparently irreconcilable choices.
3) Accept: make it a norm that “in this organisation people constantly face ethical dilemmas” and do not try to deny the dissonance these create
4) Promote: encourage a regular dialogue between employees and their managers who may be facing tricky choices so pressures from the mental conflicts can be reduced or eliminated.
5) Reward: find ways to reward those who refuse to rationalise away information which we ‘don’t want to hear’.
- Work with you to clarify what business ethics mean for your particular organisation
- Coach you to understand what it means in practical ways to be an ethical leader
- Run internal programmes to identify and develop core values–affecting company culture
- Assist leaders to learn to establish and communicate leadership tone–inspiring people to act responsibly
- Develop managers’ and leaders’ to talk about and promote business ethics with enthusiasm and confidence
- Advise on generating employee ethical engagement –where people go beyond the basic rules of compliance
- Develop new, creative ways to encourage people to speak up about ethical issues
- Strengthen HR Team and their ethical role
- Run forum theatre sessions to communicate about ethics in a highly interactive way
Write an article or feature for you on ethical leadership for your publication
- Be a keynote speaker about ethical leadership at your next company or public event
 A. Ward and P Waldmeir, Big Pharma fights back from China Scandal, FT, April 3 2014
 Leon Festinger, A Theory of Cognitive Dissonance, Stanford University, Stanford, Calif., 1957.