The ethical mind. A conversation with psychologist Howard Gardner

Business leadership has become synonymous in the public eye with unethical behavior. Widespread scandals, massive layoffs, and inflated executive pay packages have led many to believe that corporate wrongdoing is the status quo. That's why it's more important than ever that those at the top mend relationships with customers, employees, and other stakeholders. Professor Gardner has spent many years studying the relationship between psychology and ethics at Harvard's Graduate School of Education. In this interview with HBR senior editor Bronwyn Fryer, Gardner talks about what he calls the ethical mind, which helps individuals aspire to do good work that matters to their colleagues, companies, and society in general. In an era when workers are overwhelmed by too much information and feel pressured to win at all costs, Gardner believes, it's easy to lose one's way. What's more, employees look to leaders for cues as to what's appropriate and what's not. So if you're a leader, what's the best way to stand up to ethical pressures and set a good example? First and foremost, says Gardner, you must believe that retaining an ethical compass is essential to the health of your organization. Then you must state your ethical beliefs and stick to them. You should also test yourself rigorously to make sure you're adhering to your values, take time to reflect on your beliefs, find multiple mentors who aren't afraid to speak truth to your power, and confront others' egregious behavior as soon as it arises. In the end, Gardner believes, the world hangs in the balance between right and wrong, good and bad, success and disaster. "You need to decide which side you're on:" he concludes, "and do the right thing."     

Immigration and health care reform: shared struggles

The connection between health care and immigration share overlaping key areas in policy reform. General concern, anger, and fear about immigration has been spreading nationwide. While illegal immigrants' use of expensive emergency department services does add to the cost for uncompensated care, this expenditure is not a primary cost driver but more a symptom of little or no access to preventative or primary health care. As a result of federal inaction, more state politicians are redefining how America copes with illegal residents including how or whether they have access to health care. The overlap of immigration and health care reform offers an opportunity for us to enter the next round of debate from a more informed vantage point.     

Coming through when it matters most

All teams would like to think they do their best work when the stakes are highest-when the company's future or their own rests on the outcome of their projects. But too often something else happens. In extensive studies of teams at professional service firms, Harvard Business School's Gardner has seen the same pattern emerge over and over: Teams become increasingly concerned with the risks of failure rather than the requirements of excellence. As a result, they revert to safe, standard approaches instead of delivering original solutions tailored to clients' needs. Gardner has a name for this phenomenon: the performance pressure paradox. Here's how it develops: As pressure mounts, team members start driving toward consensus in ways that shut out vital information. Without even realizing it, they give more weight to shared knowledge and dismiss specialized expertise, such as insights into the client's technologies, culture, and aspirations. The more generically inclined the team becomes, the more concerned the client grows, which turns up the pressure and pushes the team even further down the generic road. But forewarned is forearmed. By measuring each person's contribution deliberately, ruthlessly insisting that no one's contribution be marginalized, and framing new information within familiar contexts, teams can escape the performance pressure paradox and keep doing their best work when it matters most.     

Portfolio Quality and Mutual Fund Performance

This study investigates how the quality of stocks owned by mutual funds affects the performance of those funds during 2000–2009. The quality of a stock is positively related to its size, while quality is inversely related to volatility. Evidently, stocks in the lowest quality decile perform particularly poorly amidst volatile market conditions with a mean monthly Daniel, Grinblatt, Titman and Wermers (DGTW) alpha 1.93% [25.73% per annum (pa)] less than high‐quality stocks. Furthermore, funds which hold the lowest quality stocks exhibit substantial underperformance, particularly during market downturns, with funds in the lowest decile of quality incurring a mean monthly DGTW alpha 0.96% (12.14% pa) lower than their higher quality counterparts. Interestingly, we discover a trend to funds investing in higher quality stocks over time.     

Process Coordination Within a Health Care Service Supply Network

There are two manifestations of supply chains in health care. One involves the supply of equipment and materials used in health care delivery. The other supply chain involves the delivery of health care itself, wherein patients supply their physical conditions and service suppliers deliver health care services. This article considers the latter supply chain, analyzing a case study in which patients have comorbidities and thus require the services of a network of multiple health care providers. In the case study, we examine three schemes for coordination of care. In the first scheme, the patient herself is expected to manage the coordination. In the second scheme, physicians are expected to coordinate the care. In the third scheme, a third‐party coordinator manages care across network members. We examine these three possible coordination alternatives using a technique known as Process‐Chain‐Network (PCN) Analysis. PCN Analysis helps us document how coordination schemes are implemented and where they may fail. Our analysis of the case study leads us to the development of ex post theory about who should initiate coordination and how it should take place under conditions of comorbidities. Empirical data coming from the case study support the theory. We describe possible applications of the theory inside and outside of health care, and show how the PCN approach can guide process innovation.     

Dynamic stability in a model of dual exchange rates

The dynamic stability of a small open economy operating under a regime of dual exchange rates is shown to depend on residents' net foreign asset position. This result is in contrast to the economy's dynamic behavior under unified fixed-rate and flexible-rate regimes where stability is unrelated to net foreign asset position.