case study of ethical values

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• 30 Apr 2024

When Managers Set Unrealistic Expectations, Employees Cut Ethical Corners

Corporate misconduct has grown in the past 30 years, with losses often totaling billions of dollars. What businesses may not realize is that misconduct often results from managers who set unrealistic expectations, leading decent people to take unethical shortcuts, says Lynn S. Paine.

• 23 Apr 2024
• Cold Call Podcast

Amazon in Seattle: The Role of Business in Causing and Solving a Housing Crisis

In 2020, Amazon partnered with a nonprofit called Mary’s Place and used some of its own resources to build a shelter for women and families experiencing homelessness on its campus in Seattle. Yet critics argued that Amazon’s apparent charity was misplaced and that the company was actually making the problem worse. Paul Healy and Debora Spar explore the role business plays in addressing unhoused communities in the case “Hitting Home: Amazon and Mary’s Place.”

• 15 Apr 2024

Struggling With a Big Management Decision? Start by Asking What Really Matters

Leaders must face hard choices, from cutting a budget to adopting a strategy to grow. To make the right call, they should start by following their own “true moral compass,” says Joseph Badaracco.

• 26 Mar 2024

How Do Great Leaders Overcome Adversity?

In the spring of 2021, Raymond Jefferson (MBA 2000) applied for a job in President Joseph Biden’s administration. Ten years earlier, false allegations were used to force him to resign from his prior US government position as assistant secretary of labor for veterans’ employment and training in the Department of Labor. Two employees had accused him of ethical violations in hiring and procurement decisions, including pressuring subordinates into extending contracts to his alleged personal associates. The Deputy Secretary of Labor gave Jefferson four hours to resign or be terminated. Jefferson filed a federal lawsuit against the US government to clear his name, which he pursued for eight years at the expense of his entire life savings. Why, after such a traumatic and debilitating experience, would Jefferson want to pursue a career in government again? Harvard Business School Senior Lecturer Anthony Mayo explores Jefferson’s personal and professional journey from upstate New York to West Point to the Obama administration, how he faced adversity at several junctures in his life, and how resilience and vulnerability shaped his leadership style in the case, "Raymond Jefferson: Trial by Fire."

• 02 Jan 2024

Should Businesses Take a Stand on Societal Issues?

Should businesses take a stand for or against particular societal issues? And how should leaders determine when and how to engage on these sensitive matters? Harvard Business School Senior Lecturer Hubert Joly, who led the electronics retailer Best Buy for almost a decade, discusses examples of corporate leaders who had to determine whether and how to engage with humanitarian crises, geopolitical conflict, racial justice, climate change, and more in the case, “Deciding When to Engage on Societal Issues.”

• 12 Dec 2023

Can Sustainability Drive Innovation at Ferrari?

When Ferrari, the Italian luxury sports car manufacturer, committed to achieving carbon neutrality and to electrifying a large part of its car fleet, investors and employees applauded the new strategy. But among the company’s suppliers, the reaction was mixed. Many were nervous about how this shift would affect their bottom lines. Professor Raffaella Sadun and Ferrari CEO Benedetto Vigna discuss how Ferrari collaborated with suppliers to work toward achieving the company’s goal. They also explore how sustainability can be a catalyst for innovation in the case, “Ferrari: Shifting to Carbon Neutrality.” This episode was recorded live December 4, 2023 in front of a remote studio audience in the Live Online Classroom at Harvard Business School.

• 11 Dec 2023
• Research & Ideas

Doing Well by Doing Good? One Industry’s Struggle to Balance Values and Profits

Few companies wrestle with their moral mission and financial goals like those in journalism. Research by Lakshmi Ramarajan explores how a disrupted industry upholds its values even as the bottom line is at stake.

• 27 Nov 2023

Voting Democrat or Republican? The Critical Childhood Influence That's Tough to Shake

Candidates might fixate on red, blue, or swing states, but the neighborhoods where voters spend their teen years play a key role in shaping their political outlook, says research by Vincent Pons. What do the findings mean for the upcoming US elections?

• 21 Nov 2023

The Beauty Industry: Products for a Healthy Glow or a Compact for Harm?

Many cosmetics and skincare companies present an image of social consciousness and transformative potential, while profiting from insecurity and excluding broad swaths of people. Geoffrey Jones examines the unsightly reality of the beauty industry.

• 09 Nov 2023

What Will It Take to Confront the Invisible Mental Health Crisis in Business?

The pressure to do more, to be more, is fueling its own silent epidemic. Lauren Cohen discusses the common misperceptions that get in the way of supporting employees' well-being, drawing on case studies about people who have been deeply affected by mental illness.

• 07 Nov 2023

How Should Meta Be Governed for the Good of Society?

Julie Owono is executive director of Internet Sans Frontières and a member of the Oversight Board, an outside entity with the authority to make binding decisions on tricky moderation questions for Meta’s companies, including Facebook and Instagram. Harvard Business School visiting professor Jesse Shapiro and Owono break down how the Board governs Meta’s social and political power to ensure that it’s used responsibly, and discuss the Board’s impact, as an alternative to government regulation, in the case, “Independent Governance of Meta’s Social Spaces: The Oversight Board.”

• 24 Oct 2023

From P.T. Barnum to Mary Kay: Lessons From 5 Leaders Who Changed the World

What do Steve Jobs and Sarah Breedlove have in common? Through a series of case studies, Robert Simons explores the unique qualities of visionary leaders and what today's managers can learn from their journeys.

• 03 Oct 2023
• Research Event

Build the Life You Want: Arthur Brooks and Oprah Winfrey Share Happiness Tips

"Happiness is not a destination. It's a direction." In this video, Arthur C. Brooks and Oprah Winfrey reflect on mistakes, emotions, and contentment, sharing lessons from their new book.

• 12 Sep 2023

Successful, But Still Feel Empty? A Happiness Scholar and Oprah Have Advice for You

So many executives spend decades reaching the pinnacles of their careers only to find themselves unfulfilled at the top. In the book Build the Life You Want, Arthur Brooks and Oprah Winfrey offer high achievers a guide to becoming better leaders—of their lives.

• 10 Jul 2023
• In Practice

The Harvard Business School Faculty Summer Reader 2023

Need a book recommendation for your summer vacation? HBS faculty members share their reading lists, which include titles that explore spirituality, design, suspense, and more.

• 01 Jun 2023

A Nike Executive Hid His Criminal Past to Turn His Life Around. What If He Didn't Have To?

Larry Miller committed murder as a teenager, but earned a college degree while serving time and set out to start a new life. Still, he had to conceal his record to get a job that would ultimately take him to the heights of sports marketing. A case study by Francesca Gino, Hise Gibson, and Frances Frei shows the barriers that formerly incarcerated Black men are up against and the potential talent they could bring to business.

• 04 Apr 2023

Two Centuries of Business Leaders Who Took a Stand on Social Issues

Executives going back to George Cadbury and J. N. Tata have been trying to improve life for their workers and communities, according to the book Deeply Responsible Business: A Global History of Values-Driven Leadership by Geoffrey Jones. He highlights three practices that deeply responsible companies share.

• 14 Mar 2023

Can AI and Machine Learning Help Park Rangers Prevent Poaching?

Globally there are too few park rangers to prevent the illegal trade of wildlife across borders, or poaching. In response, Spatial Monitoring and Reporting Tool (SMART) was created by a coalition of conservation organizations to take historical data and create geospatial mapping tools that enable more efficient deployment of rangers. SMART had demonstrated significant improvements in patrol coverage, with some observed reductions in poaching. Then a new predictive analytic tool, the Protection Assistant for Wildlife Security (PAWS), was created to use artificial intelligence (AI) and machine learning (ML) to try to predict where poachers would be likely to strike. Jonathan Palmer, Executive Director of Conservation Technology for the Wildlife Conservation Society, already had a good data analytics tool to help park rangers manage their patrols. Would adding an AI- and ML-based tool improve outcomes or introduce new problems? Harvard Business School senior lecturer Brian Trelstad discusses the importance of focusing on the use case when determining the value of adding a complex technology solution in his case, “SMART: AI and Machine Learning for Wildlife Conservation.”

• 14 Feb 2023

Does It Pay to Be a Whistleblower?

In 2013, soon after the US Securities and Exchange Commission (SEC) had started a massive whistleblowing program with the potential for large monetary rewards, two employees of a US bank’s asset management business debated whether to blow the whistle on their employer after completing an internal review that revealed undisclosed conflicts of interest. The bank’s asset management business disproportionately invested clients’ money in its own mutual funds over funds managed by other banks, letting it collect additional fees—and the bank had not disclosed this conflict of interest to clients. Both employees agreed that failing to disclose the conflict was a problem, but beyond that, they saw the situation very differently. One employee, Neel, perceived the internal review as a good-faith effort by senior management to identify and address the problem. The other, Akash, thought that the entire business model was problematic, even with a disclosure, and believed that the bank may have even broken the law. Should they escalate the issue internally or report their findings to the US Securities and Exchange Commission? Harvard Business School associate professor Jonas Heese discusses the potential risks and rewards of whistleblowing in his case, “Conflicts of Interest at Uptown Bank.”

• 17 Jan 2023

Good Companies Commit Crimes, But Great Leaders Can Prevent Them

It's time for leaders to go beyond "check the box" compliance programs. Through corporate cases involving Walmart, Wells Fargo, and others, Eugene Soltes explores the thorny legal issues executives today must navigate in his book Corporate Criminal Investigations and Prosecutions.

Values-Based Approach to Ethical Culture: A Case Study

• January 2013
• Research in Ethical Issues in Organizations 9:93-118
• In book: Ethics, Values and Civil Society (pp.93-118)

• RMIT University

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Ethics, Values and Civil Society

ISBN : 978-1-78190-768-9 , eISBN : 978-1-78190-769-6

Publication date: 22 April 2013

Ethics is an integral part of an organization's overall culture. Designing an ethical organization requires systematically analysing all aspects of the organization's culture and aligning them so that they support ethical behaviour and discourage unethical behaviour. This chapter considers issues related to establishing an ethical culture in an organization, through a case analysis of a major Australian private hospital and its approach to establishing and continuing to define an ethical culture. Key aims of the research were to identify the role of executive and senior management leadership in developing a values-based approach to ethical culture particularly regarding senior management’s own awareness, support and communication of the stated values. The chapter considers the theoretical approaches available to organizations in developing and sustaining ethical approaches in relation to organizational structures, systems and processes that inform cultural type. The paper also critically comments on the situation presented within the case analysis, providing conclusions and insights for further research initiatives related to such case-based field investigation.

• Organizational ethics
• Aspirational

Segon, M. and Booth, C. (2013), "Values-Based Approach to Ethical Culture: A Case Study", Schwartz, M. and Harris, H. (Ed.) Ethics, Values and Civil Society ( Research in Ethical Issues in Organizations, Vol. 9 ), Emerald Group Publishing Limited, Leeds, pp. 93-118. https://doi.org/10.1108/S1529-2096(2013)0000009011

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Wells Fargo Banking Scandal

• Markkula Center for Applied Ethics
• Focus Areas
• Business Ethics
• Business Ethics Resources

Why culture matters

What should business leaders take away from the disaster?

Wells Fargo Automated Tellers (AP Photo/Eric Risberg)

This case was updated in July of 2018.

Wells Fargo was the darling of the banking industry, with some of the highest returns on equity in the sector and a soaring stock price. Top management touted the company’s lead in “cross-selling”: the sale of additional products to existing customers. “Eight is great,” as in eight Wells Fargo products for every customer, was CEO John Stumpf’s mantra.

In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2 million unauthorized customer accounts.  It soon came to light that the pressure on employees to hit sales quotas was immense: hourly tracking, pressure from supervisors to engage in unethical behavior, and a compensation system based heavily on bonuses.

Wells Fargo also confirmed that it had fired over 5,300 employees over the past few years related to shady sales practices. CEO John Stumpf claimed that the scandal was the result of a few bad apples who did not honor the company’s values and that there were no incentives to commit unethical behavior. The board initially stood behind the CEO but soon after received his resignation and “clawed back” millions of dollars in his compensation.

Further reporting found more troubling information. Many employees had quit under the immense pressure to engage in unethical sales practices, and some were even fired for reporting misconduct through the company’s ethics hotline. Senior leadership was aware of these aggressive sales practices as far back as 2004, with incidents as far back as 2002 identified.

The Board of Directors commissioned an independent investigation that identified cultural, structural, and leadership issues as root causes of the improper sales practices. The report cites: the wayward sales culture and performance management system; the decentralized corporate structure that gave too much autonomy to the division’s leaders; and the unwillingness of leadership to evaluate the sales model, given its longtime success for the company.

General Discussion Questions

• What should business leaders take away from this scandal?
• What could Wells Fargo have done differently to avert this cultural meltdown?

Practice of Ethical Leadership Questions

• Modeling Character and Values:  What values did Stumpf model to Wells Fargo employees?  What impact might that have on the culture of Wells Fargo?
• Encouraging Ethical Conduct:  What behaviors can leaders model in order to encourage ethical behavior in their organization?
• Designing Ethical Systems:  Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behavior, but it didn’t work.  Why do you think that is? What steps can leaders take to design systems that encourage ethical behavior rather than unethical behavior?

Additional Reading

Lessons from Wells Fargo: 10 Key Takeaways

• Contributors

The Wells Fargo Cross-Selling Scandal

Brian Tayan  is a Researcher with the Corporate Governance Research Initiative at Stanford Graduate School of Business. This post is based on a recent  paper  by Mr. Tayan.

Recently, attention has been paid to corporate culture, “tone at the top,” and the impact that these have on organizational outcomes. While corporate leaders and outside observers contend that culture is a critical contributor to employee engagement, motivation, and performance, the nature of this relationship and the mechanisms for instilling the desired values in employee conduct is not well understood.

For example, a survey by Deloitte finds that 94 percent of executives believe that workplace culture is important to business success, and 62 percent believe that “clearly defined and communicated core values and beliefs” are important. Graham, Harvey, Popadak, and Rajgopal (2016) find evidence that governance practices and financial incentives can reinforce culture; however, they also find that incentives can work in opposition to culture, particularly when they “reward employees for achieving a metric without regard to the actions they took to achieve that metric.” According to a participant in their study, “People invariably will do what you pay them to do even when you’re saying something different.”

The tensions between corporate culture, financial incentives, and employee conduct is illustrated by the Wells Fargo cross-selling scandal.

Wells Fargo Culture, Values, and Management

Wells Fargo has long had a reputation for sound management. The company used its financial strength to purchase Wachovia during the height of the financial crisis—forming what is now the third largest bank in the country by assets—and emerged from the ensuing recession largely unscathed, with operating and stock price performance among the top of its peer group (Exhibit 1). Fortune magazine praised Wells Fargo for “a history of avoiding the rest of the industry’s dumbest mistakes.” American Banker called Wells Fargo “the big bank least tarnished by the scandals and reputational crises.” In 2013, it named Chairman and CEO John Stumpf “Banker of the Year.” Carrie Tolstedt, who ran the company’s vast retail banking division, was named the “Most Powerful Woman in Banking.” Wells Fargo ranked 7th on Barron’s 2015 list of the “Most Respected Companies.”

Wells Fargo’s success is built on a cultural and economic model that combines deep customer relations and an actively engaged sales culture. The company’s operating philosophy includes the following elements:

Vision and Values . Wells Fargo’s vision is to “satisfy our customers’ needs, and help them succeed financially.” The company emphasizes that:

Our vision has nothing to do with transactions, pushing products, or getting bigger for the sake of bigness. It’s about building lifelong relationships one customer at a time. … We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. This is more than just doing the right thing. We also have to do it in the right way.

The company takes these statements seriously. According to Stumpf, “[Our vision] is at the center of our culture, it’s important to our success, and frankly it’s been probably the most significant contributor to our long-term performance.” … “If I have any one job here, it’s keeper for the culture.”

Cross-Selling . The more products that a customer has with Wells Fargo, the more information the bank has on that customer, allowing for better decisions about credit, products, and pricing. Customers with multiple products are also significantly more profitable (Exhibit 2). According to Stumpf:

To succeed at it [cross-selling], you have to do a thousand things right. It requires long-term persistence, significant investment in systems and training, proper team member incentives and recognition, [and] taking the time to understand your customers’ financial objectives.

Conservative Stable Management . Stumpf’s senior management team consisted of 11 direct reports with an average of 27 years of experience at Wells Fargo. Decisions were made collectively. According to former CEO Richard Kovacevich, “No single person has ever run Wells Fargo and no single person probably ever will. It’s a team game here.” Although the company maintains independent risk and oversight mechanisms, all senior leaders are responsible for ensuring that proper practices are embedded in their divisions:

The most important thing that we talk about inside the company right now is that the lever that we have to manage our reputation is to stick to our vision and values. If we are doing things for our customers that are the right things, then the company is going to be in very good shape. … We always consider the reputational impact of the things that we do. There is no manager at Wells Fargo who is responsible for reputation risk. All of our business managers in all of our lines of business are responsible.

Wells Fargo has been listed among Gallup’s “Great Places to Work” for multiple years, with employee engagement scores in the top quintile of U.S. companies.

Cross-Selling Scandal

In 2013, rumors circulated that Wells Fargo employees in Southern California were engaging in aggressive tactics to meet their daily cross-selling targets. According to the Los Angeles Times, approximately 30 employees were fired for opening new accounts and issuing debit or credit cards without customer knowledge, in some cases by forging signatures. “We found a breakdown in a small number of our team members,” a Wells Fargo spokesman stated. “Our team members do have goals. And sometimes they can be blinded by a goal.” According to another representative, “This is something we take very seriously. When we find lapses, we do something about it, including firing people.”

Some outside observers alleged that the bank’s practice of setting daily sales targets put excessive pressure on employees. Branch managers were assigned quotas for the number and types of products sold. If the branch did not hit its targets, the shortfall was added to the next day’s goals. Branch employees were provided financial incentive to meet cross-sell and customer-service targets, with personal bankers receiving bonuses up to 15 to 20 percent of their salary and tellers receiving up to 3 percent.

Tim Sloan, at the time chief financial officer of Wells Fargo, refuted criticism of the company’s sales system: “I’m not aware of any overbearing sales culture.” Wells Fargo had multiple controls in place to prevent abuse. Employee handbooks explicitly stated that “splitting a customer deposit and opening multiple accounts for the purpose of increasing potential incentive compensation is considered a sales integrity violation.” The company maintained an ethics program to instruct bank employees on spotting and addressing conflicts of interest. It also maintained a whistleblower hotline to notify senior management of violations. Furthermore, the senior management incentive system had protections consistent with best practices for minimizing risk, including bonuses tied to instilling the company’s vision and values in its culture, bonuses tied to risk management, prohibitions against hedging or pledging equity awards, hold-past retirement provisions for equity awards, and numerous triggers for clawbacks and recoupment of bonuses in the cases where they were inappropriately earned (Exhibit 3). Of note, cross-sales and products-per-household were not included as specific performance metrics in senior executive bonus calculations even though they were for branch-level employees.

In the end, these protections were not sufficient to stem a problem that proved to be more systemic and intractable than senior management realized. In September 2016, Wells Fargo announced that it would pay $185 million to settle a lawsuit filed by regulators and the city and county of Los Angeles, admitting that employees had opened as many as 2 million accounts without customer authorization over a five-year period. Although large, the fine was smaller than penalties paid by other financial institutions to settle crisis-era violations. Wells Fargo stock price fell 2 percent on the news (Exhibit 4). Richard Cordray, director of the Consumer Financial Protection Bureau, criticized the bank for failing to:

… monitor its program carefully, allowing thousands of employees to game the system and inflate their sales figures to meet their sales targets and claim higher bonuses under extreme pressure. Rather than put its customers first, Wells Fargo built and sustained a cross-selling program where the bank and many of its employees served themselves instead, violating the basic ethics of a banking institution including the key norm of trust.

A Wells Fargo spokesman responded that, “We never want products, including credit lines, to be opened without a customer’s consent and understanding. In rare situations when a customer tells us they did not request a product they have, our practice is to close it and refund any associated fees.” In a release, the banks said that, “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

The bank announced a number of actions and remedies, several of which had been put in place in preceding years. The company hired an independent consulting firm to review all account openings since 2011 to identify potentially unauthorized accounts. $2.6 million was refunded to customers for fees associated with those accounts. 5,300 employees were terminated over a five-year period. Carrie Tolstedt, who led the retail banking division, retired. Wells Fargo eliminated product sales goals and reconfigured branch-level incentives to emphasize customer service rather than cross-sell metrics. The company also developed new procedures for verifying account openings and introduced additional training and control mechanisms to prevent violations.

Nevertheless, in the subsequent weeks, senior management and the board of directors struggled to find a balance between recognizing the severity of the bank’s infractions, admitting fault, and convincing the public that the problem was contained. They emphasized that the practice of opening unauthorized accounts was confined to a small number of employees: “99 percent of the people were getting it right, 1 percent of people in community banking were not. … It was people trying to meet minimum goals to hang on to their jobs.” They also asserted that these actions were not indicative of the broader culture:

I want to make very clear, that we never directed nor wanted our team members to provide products and services to customers that they did not want. That is not good for our customers and that is not good for our business. It is against everything we stand for as a company. If [employees] are not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here. I really don’t… The 1 percent that did it wrong, who we fired, terminated, in no way reflects our culture nor reflects the great work the other vast majority of the people do. That’s a false narrative.

They also pointed out that the financial impact to the customer and the bank was extremely limited. Of the 2 million potentially unauthorized accounts, only 115,000 incurred fees; those fees totaled $2.6 million, or an average of $25 per account, which the bank had refunded. Affected customers did not react negatively:

We’ve had very, very low volumes of customer reaction since that happened. … We sent 115,000 letters out to people saying that you may have a product that you didn’t want and here is the refund of any fees that you incurred as a result of it. And we got very little feedback from that as well.

The practice also did not have a material impact on the company’s overall cross-sell ratios, increasing the reported metric by a maximum of 0.02 products per household. According to one executive, “The story line is worse than the economics at this point.”

Nevertheless, although the financial impact was trivial, the reputational damage proved to be enormous. When CEO John Stumpf appeared before the U.S. Senate, the narrative of the scandal changed significantly. Senators criticized the company for perpetuating fraud on its customers, putting excessive pressure on low-level employees, and failing to hold senior management responsible. In particular, they were sharply critical that the board of directors had not clawed back significant pay from John Stumpf or former retail banking head Carrie Tolstedt, who retired earlier in the summer with a pay package valued at $124.6 million. Senator Elizabeth Warren of Massachusetts told Stumpf:

You know, here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the cash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. And when it all blew up, you kept your job, you kept your multimillion dollar bonuses and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission.

Following the hearings, the board of directors announced that it hired external counsel Shearman & Sterling to conduct an independent investigation of the matter. Stumpf was asked to forfeit $41 million and Tolstedt $19 million in outstanding, unvested equity awards. It was one of the largest clawbacks of CEO pay in history and the largest of a financial institution. The board stipulated that additional clawbacks might occur. Neither executive would receive a bonus for 2016, and Stumpf agreed to forgo a salary while the investigation was underway.

Two weeks later, Stumpf resigned without explanation. He received no severance and reiterated a commitment not to sell shares during the investigation. The company announced that it would separate the chairman and CEO roles. Tim Sloan, chief operating officer, became CEO. Lead independent director Stephen Sanger became nonexecutive chairman; and Elizabeth Duke, director and former Federal Reserve governor, filled a newly created position as vice chairman.

Independent Investigation Report

In April 2017, the board of directors released the results of its independent investigation which sharply criticized the bank’s leadership, sales culture, performance systems, and organizational structure as root causes of the cross-selling scandal.

Performance and Incentives . The report faulted the company’s practice of publishing performance scorecards for creating “pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts.” Employees “feared being penalized” for failing to meet goals, even in situations where these goals were unreasonably high:

In many instances, community bank leadership recognized that their plans were unattainable. They were commonly referred to as 50/50 plans, meaning that there was an expectation that only half the regions would be able to meet them.

The head of strategic planning for the community bank was quoted as saying that the goal-setting process is a “balancing act” and recognized that “low goals cause lower performance and high goals increase the percentage of cheating.”

The report also blamed management for, “tolerating low quality accounts as a necessary by-product of a sales-driven organization.”:

Management characterized these low quality accounts, including products later canceled or never used and products that the customer did not want or need, as “slippage” and believed a certain amount of slippage was the cost of doing business in any retail environment.

The report faulted management for failing to identify “the relationship between the goals and bad behavior [even though] that relationship is clearly seen in the data. As sales goals became more difficult to achieve, the rate of misconduct rose.” Of note, the report found that “employees who engaged in misconduct most frequently associated their behavior with sales pressure, rather than compensation incentives.”

Organizational structure . In addition, the report asserted that “corporate control functions were constrained by [a] decentralized organizational structure” and described the corporate control functions as maintaining “a culture of substantial deference to the business units.”

Group risk leaders “took the lead in assessing and addressing risk within their business units” and yet were “answerable principally to the heads of their businesses.” For example, the community bank group risk officer reported directly to the head of the community bank and only on a dotted-line basis to the central chief risk officer. As a result,

Risk management … generally took place in the lines of business, with the business people and the group risk officers and their staffs as the “first line of defense.”

John Stumpf believed that this system “better managed risk by spreading decision-making and produced better business decisions because they were made closer to the customer.”

The board report also criticized control functions for not understanding the systemic nature of sales practice violations:

Certain of the control functions often adopted a narrow “transactional” approach to issues as they arose. They focused on the specific employee complaint or individual lawsuit that was before them, missing opportunities to put them together in a way that might have revealed sales practice problems to be more significant and systemic than was appreciated.

The chief operational risk officer:

did not view sales practices or compensation issues as within her mandate, but as the responsibility of the lines of businesses and other control functions (the law department, HR, audit and investigations). She viewed sales gaming as a known problem that was well-managed, contained and small.

The legal department focused:

principally on quantifiable monetary costs—damages, fines, penalties, restitution. Confident those costs would be relatively modest, the law department did not appreciate that sales integrity issues reflected a systemic breakdown.

Human resources:

had a great deal of information recorded in its systems, [but] it had not developed the means to consolidate information on sales practices issues and to report on them.

The internal audit department:

generally found that processes and controls designed to detect, investigate and remediate sales practice violations were effective at mitigating sales practices-related risks. … As a general matter, however, audit did not attempt to determine the root cause of unethical sales practices.

The report concluded that:

while the advisability of centralization was subject to considerable disagreement within Wells Fargo, events show that a strong centralized risk function is most suited to the effective management of risk.

Leadership . Furthermore, the board report criticized CEO John Stumpf and community banking head Carrie Tolstedt for leadership failures.

According to the report, Stumpf did not appreciate the scope and scale of sales practices violations: “Stumpf’s commitment to the sales culture … led him to minimize problems with it, even when plausibly brought to his attention.” For example, he did not react negatively to learning that 1 percent of employees were terminated in 2013 for sales practices violations: “In his view, the fact that 1 percent of Wells Fargo employees were terminated meant that 99 percent of employees were doing their jobs correctly.” Consistent with this, the report found that Stumpf “was not perceived within Wells Fargo as someone who wanted to hear bad news or deal with conflict.”

The report acknowledged the contribution that Tolstedt made to the bank’s financial performance:

She was credited with the community bank’s strong financial results over the years, and was perceived as someone who ran a “tight ship” with everything “buttoned down.” Community bank employee engagement and customer satisfaction surveys reinforced the positive view of her leadership and management. Stumpf had enormous respect for Tolstedt’s intellect, work ethic, acumen and discipline, and thought she was the “most brilliant” community banker he had ever met.

At the same time, it was critical of her management style, describing her as “obsessed with control, especially of negative information about the community bank” and faulting her for maintaining “an ‘inner circle’ of staff that supported her, reinforced her views, and protected her.” She “resisted and rejected the near-unanimous view of senior regional bank leaders that the sales goals were unreasonable and led to negative outcomes and improper behavior.”

Tolstedt and certain of her inner circle were insular and defensive and did not like to be challenged or hear negative information. Even senior leaders within the Community Bank were frequently afraid of or discouraged from airing contrary views.

Stumpf “was aware of Tolstedt’s shortcomings as a leader but also viewed her as having significant strengths.” … He “was accepting of Tolstedt’s flaws in part because of her other strengths and her ability to drive results, including cross-sell.”

Board of Directors . Finally, the report evaluated the process by which the board of directors oversaw sales-practice violations and concluded that “the board was regularly engaged on the issue; however, management reports did not accurately convey the scope of the problem.” The report found that:

Tolstedt effectively challenged and resisted scrutiny from both within and outside the community bank. She and her group risk officer not only failed to escalate issues outside the community bank, but also worked to impede such escalation. … Tolstedt never voluntarily escalated sales practice issues, and when called upon specifically to do so, she and the community bank provided reports that were generalized, incomplete, and viewed by many as misleading.

Following the initial Los Angeles Times article highlighting potential violations, “sales practices” was included as a “noteworthy risk” in reports to the full board and the board’s risk committee. Beginning in 2014 and continuing thereafter, the board received reports from the community bank, the corporate risk office, and corporate human resources that “sales practice issues were receiving scrutiny and attention and, by early 2015, that the risks associated with them had decreased.”

Board members expressed the view that “they were misinformed” by a presentation made to the risk committee in May 2015 that underreported the number of employees terminated for sales-practice violations, that reports made by Tolstedt to the committee in October 2015 “minimized and understated” the problem, and that metrics in these reports suggested that potential abuses were “subsiding.”

Following the lawsuit by the Los Angeles City Attorney, the board hired a third-party consultant to investigate sales practices and conduct an analysis of potential customer harm. The board did not learn the total number of employees terminated for violations until it was included in the settlement agreement in September 2016.

Wells Fargo response . With the release of the report, Wells Fargo announced a series of steps to centralize and strengthen control functions. The board also announced that it would claw back an additional $47.3 million in outstanding stock option awards from Tolstedt and an additional $28 million in previously vested equity awards from Stumpf.

Long-Term Overhang

The board report and related actions did not put an end to shareholder and regulatory pressure. At the company’s 2017 annual meeting, 9 of the company’s 15 directors received less than 75 percent support and 4 received less than 60 percent, including board chairman Stephen Sanger (56 percent), head of the risk committee Enrique Hernandez (53 percent), head of the corporate responsibility committee Federico Peña (54 percent), and Cynthia Milligan who headed the credit committee (57 percent). The bank subsequently announced the resignations of 6 directors, including Sanger, who was replaced by Elizabeth Duke as board chair.

Wells Fargo continued its efforts to reexamine all aspects of its business. In August 2017, the company increased its estimate of the number of potentially unauthorized consumer accounts to 3.5 million and issued an additional $2.8 million in refunds. The bank also announced that it identified sales practice violations in both its auto and mortgage lending divisions. In February 2018, citing “widespread consumer abuses,” the Federal Reserve Board took the unprecedented action of placing a strict limit on the company’s asset size, forbidding the bank from growing past the $1.95 trillion in assets it had at year end until it demonstrated an improvement in corporate controls. According to Federal Reserve Board Chair Janet Yellen:

We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again. The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.

In April 2018, the bank agreed to a $1 billion settlement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency to resolve auto and mortgage lending violations. Two weeks later it agreed to pay $480 million to settle a securities class action lawsuit over cross-selling. In December 2018, the company settled with 50 state attorneys general to resolve civil claims for cross-selling, auto lending, and mortgage lending violations and agreed to pay $575 million.

Why This Matters

• The Wells Fargo compensation system emphasized cross-selling as a performance metric for awarding incentive pay to employees. The company also published scorecards that ranked individual branches on sales metrics, including cross-selling. Was the company wrong to use cross-selling as a metric in its incentive systems? Would the program have worked better if structured differently? The independent report suggests that employee pressure was a greater contributor to misconduct than financial incentives. Is this assessment correct?
• Branch-level employees were incentivized to increase products per household but the senior-executive bonus system did not include this metric. Did this disconnect contribute to a failure to recognize the problem earlier?
• Wells Fargo prides itself on its vision and values and culture. By several measures, these have been highly beneficial to the company’s performance. What factors should senior executives consider to ensure that compensation and performance systems encourage the achievement of company objectives without compromising culture?
• The dollars involved in the Wells Fargo cross-selling scandal were small (less than $6 million in direct fees) but the reputational damage to the bank was massive. How can a company prepare against problems that do not seem to be “material” in a financial sense but ultimately have a material impact on the business and its reputation?
• The independent investigation concludes that “a strong centralized risk function is most suited to the effective management of risk.” Is this conclusion correct? What steps can executives in a decentralized organization take to minimize gaps in oversight without creating unnecessary bureaucracy?
• The Wells Fargo cross-selling scandal highlights the challenge of a high-performing executive whose behavior ultimately does not align with company values. How much autonomy should high-performing executives be afforded? How can a company balance autonomy and accountability?
• The independent investigation largely exonerates the Wells Fargo board of directors. How much blame does the board deserve? What could it have done differently to prevent the cross-selling issue from snowballing?
• Wells Fargo had the elements in place of a properly functioning governance system, including risk management, audit, legal, and human resources. Furthermore, each of these groups was—at least to some degree—aware of sales practice violations in the consumer bank. And yet no one recognized the systemic nature of the problem or took the necessary steps to address it. How can a company gauge whether its governance system is effective in identifying and mitigating risk?

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Case Studies of Ethical Issues and Human Behaviour in Technology Development and Use

• First Online: 24 August 2023

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• Marion Hersh   ORCID: orcid.org/0000-0002-4610-8266 3 &
• Józef B. Lewoc 4  

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Chapter 8 applies the ethics and human behaviour framework to seven case studies from China, Germany, India, the UK and USA. Four of the case studies are related to information and communication technologies (ICT), two cover other issues, related to car testing and genome modified babies. The remaining case study on the Bhopal chemical plant disaster includes elements of ICT, but it is not the main topic. The period covered, 1984–2019, is slightly later than that in the previous chapter. The chapter therefore includes case studies related to recent advances in technology, such as (data) privacy and security issues and human genome editing. This wide geographical coverage and wide range of topics illustrates the potential of the ethics and human behaviour framework and the wide range of issues it can be applied to.

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Appendix 8.1: Ethics and Human Behaviour Analysis Framework

Ethics Framework

Process and consequences

Deontological ethics: considers duties and obligations.

Positive utilitarianism: assesses benefits against risks and costs.

Negative utilitarianism: offsetting or mitigating present or future harms.

Character, rights and principles

Virtue ethics: supports actions which build good character and considers the impact of behaviour on character.

Normative ethics: beneficence—promoting acts that benefit others and removing/preventing harm; non-maleficence—avoiding harms; justice—fairness including need for distributive justice, what is due and autonomy—define and determine needs and have them met.

Consent, relationships and consequences

The ethics of social experimentation: informed consent.

The ethics of care: full complexity of situation; sensitivity to others' wishes and interests; nurturing and preserving network of relationships; taking account of everyone's needs including your own; and response to need and showing caring.

Eco-centred ethics: connections and interactions, including long-term and indirect consequences.

Human Behaviour Framework

Habitual behaviours: the default state

The ERG theory: existence (material and physiological); relatedness (with other people); and growth (personal development, using existing abilities and new ones).

The three motivating needs: achievement (realistic, but challenging goals); authority/power (need to lead and have impact); and affiliation motivations (friendly relations and being liked).

Values and culture

Central values: stimulation, self-direction, achievement, power, security, conformity, tradition, benevolence, universalism, hedonism.

Organisational culture: prevailing perceptions of typical organisational practices and procedures that have ethical content; a number of common values.

Goals and ability to implement them

Goals: hedonic (feeling better now); gain (maintaining and improving resources); normative (acting appropriately); achievement (overcoming challenges, accomplishing things); positive change (overcoming threats and negative treatment of others, benefiting others/society or the planet)

Self-efficacy: perceived ability to carry out behaviour necessary to achieve particular types of outcomes.

External influences

Conformity: sticking to principles, ignoring/non-conformity, compliance, internalisation, integration.

Responses to fear: cover-ups, accepting or participating in bad practice, overcoming it.

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Hersh, M., Lewoc, J.B. (2023). Case Studies of Ethical Issues and Human Behaviour in Technology Development and Use. In: Ethics and Human Behaviour in ICT Development. Springer, Cham. https://doi.org/10.1007/978-3-031-25277-8_8

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Make Your Note

Case Study - 23: Personal relations vs Ethical values

• 09 Nov 2019

Pawan is pursuing MBA and shares a room with you in the private hostel. He desperately needs a job after completing his course because of educational loan and weak economic background. In his last two semesters, he couldn’t secure good grades due to serious illness. In current semester he has to secure good marks at any cost to satisfy minimum criteria for placements.

Few days before the final semester exam, he comes to you and asks for money. He is stressed and nervous. He tells you about his plan to purchase semester papers to clear the exam and convinces you for the same by giving reference to his bad health, family status and his education loan.

In such circumstances, would it be right to lend money to him?

(a) Identify the moral dilemma faced by you.

(b) Analyse your role and duties as a friend, also suggest your course of action.

The given case tests the ability of a person to stick to the right means even in difficult circumstances in life. One needs to balance his role as a true friend by making Pawan realize his mistake and simultaneously helping him in other ways.

a) Moral dilemmas faced:

• Means v/s Ends: Taking incorrect means of giving Pawan the money to buy the semester papers to attain the ends of getting good grades which would allow him to sit for placements.
• Social obligation v/s moral righteousness: Supporting one’s friend in need or adhering to one’s conscience by not giving him money.

b) Roles and duties as a friend:

• A true friend is one who shows the right path. He is one who not only tells ‘what is’ rather ‘what ought to be’. Hence, he is a true friend, philosopher and guide for lifetime.
• He shows the emotional support, empathy, trust, and mutual cooperation in the hardest of times.
• He encourages and motivates others and imbibes confidence in them so that the hidden talent and capabilities can be revived.

• As suggested by Gandhiji, we always have control over the means but not over the end. As quoted in his book ‘Hind Swaraj’, “one should not expect rose flowers by sowing the seeds of Babool.” Hence, Pawan should adhere to the correct means by not cheating for the sake of passing the exam.
• Also, one can only expect short term gains by following incorrect means. But in the long run, it is always one’s righteousness, ideal conduct, and truth which lead to a successful life.
• Hence, Pawan should be made to realize that excellence is a way of life and in his long career ahead, it will always be his ‘ethical conduct’ which would allow him to steer the path towards success.

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Core Values: How to Lead Ethically and Why It Matters

Understanding your core values and how to incorporate them into your business can improve company culture and accountability.

May 02, 2023

Illustration by: iStock/tolgart

Ethics and values are as much a part of your business as your product, operations, or customers. Stakeholders want to know where you stand on any number of issues, and employees deserve a workplace where they feel safe and respected. So how can you incorporate your ethics into your business? And how do you stay true to them, especially while leading others whose values may be different?

Two Stanford Graduate School of Business faculty members who also teach in Executive Education programs addressed these often challenging issues in a recent book. Ken Shotts, the David S. and Ann M. Barlow Professor of Political Economy, and Neil Malhotra, the Edith M. Cornell Professor of Political Economy, are the authors of “Leading With Values: Strategies for Making Ethical Decisions in Business and Life.” See their tips for testing your ethics to become a more effective leader — and some best practices for making your workplace reflective of your values — below.

Establish Your Core Values

Are you clear about what your ethical standards are? Core values are shaped by an individual’s cultural and religious traditions, personal history, experiences, and expectations. Take time to consider the standards and ethics that are important to you, such as integrity, diligence, compassion, or accountability. Then, give team members time to reflect on theirs as well.

“Importantly,” says Shotts, “don’t assume that everyone in your organization shares your own values.” More likely, there’s a mix of people whose values do and don’t align with yours. Your job isn’t to try to change their values, it’s to foster an environment that allows for differences of opinion, where people feel safe to express themselves and to civilly disagree with others.

Determine If You’re Acting Ethically

There are various methods to help you determine if your behavior is ethical. One of the most common is The New York Times Test, which asks if you would act the same way if you knew the paper of record was reporting on it. But it’s unlikely that your day-to-day activities and decisions are that newsworthy, making this an abstract and ineffective guardrail to keep you on a path that aligns with your ethics.

Quote Would you be comfortable telling your friends and family about your actions? Attribution Neil Malhotra

Malhotra suggests a better way: “Would you be comfortable telling your friends and family about your actions and decisions? Or are you withholding information because it’s inconsistent with your value structure?” The Friends and Family Test is an effective reminder of where your ethical boundaries lie. Establishing a trusted network of people who will give you honest feedback and hold you accountable makes this test even more helpful.

Handling Ethically Challenging Situations

Be proactive. If you plan ahead for situations you may encounter in your business — and think through how you’ll act if they occur — you’re more likely to stick to your values than if you’re reacting spontaneously to circumstances for which you’re not prepared.

If you do find yourself in a situation that doesn’t align with your ethics, Shotts says the best thing you can do is to temporarily remove yourself, both physically and emotionally. That gives you a chance to consider your options and realign yourself with your values before taking action.

Put Ethics to Work

Here are some best practices for making values an integral part of your company:

• Provide time and space for team members, including leaders, to reflect on and write down their values.
• Cultivate an environment of encouragement and respect so that team members feel comfortable sharing their opinions and disagreeing with others.
• Remember the Friends and Family Test. Encourage employees to build networks of colleagues who will help them stay aligned with their values.
• Ask your team to think about the types of situations they might encounter at work and how they plan to react. Role-playing potential scenarios with co-workers may help them prepare for unexpected situations.
• Let employees know that if they find themselves in an unethical situation, physically and emotionally distancing themselves temporarily will help them reestablish their ethical boundaries.

As a leader, it’s important to understand and stay true to your own values. But it’s equally important to understand that every employee has their own values shaped by their unique experiences. Fostering an environment of respect and empathy for these differences, while communicating your own values clearly, allows for greater collaboration and a more productive team.

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March 14, 2022 Leadership and Ethics: How to Communicate Your Core Values On this podcast episode, we discuss the keys to making ethical decisions in your professional and personal life.

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• Am J Public Health
• v.101(3); Mar 2011

Evidence, Ethics, and Values: A Framework for Health Promotion

S. M. Carter led development of the concepts presented and preparation of the first and subsequent drafts of the article and helped rewrite the article in response to peer reviews; she primarily contributed expertise in the role of values in public health research and practice. L. Rychetnik collaborated with S. M. Carter in leading the development of concepts presented, prepared a substantial proportion of first and subsequent drafts of the article, and helped rewrite the article in response to peer reviews; she primarily contributed expertise in the evidence and evidence-based practice. B. Lloyd, I. H. Kerridge, L. Baur, A. Bauman, and C. Hooker helped develop concepts presented and provided substantial feedback on drafts of the article, which resulted in significant development and revisions. In addition, B. Lloyd contributed expertise in health promotion practice, I. H. Kerridge contributed expertise in health ethics, L. Baur contributed expertise in obesity prevention and management, A. Bauman contributed expertise in health promotion values and practice and current approaches to obesity prevention, and C. Hooker contributed expertise in ethics and values in public health. A. Zask provided substantial feedback on drafts of the article, which resulted in significant development and revisions, and he contributed expertise in health promotion practice.

We propose a new approach to guide health promotion practice. Health promotion should draw on 2 related systems of reasoning: an evidential system and an ethical system. Further, there are concepts, values, and procedures inherent in both health promotion evidence and ethics, and these should be made explicit. We illustrate our approach with the exemplar of intervention in weight, and use a specific mass-media campaign to show the real-world dangers of intervening with insufficient attention to ethics and evidence. Both researchers and health promotion practitioners should work to build the capacities required for evidential and ethical deliberation in the health promotion profession.

We propose a framework to formalize 2 central aspects of health promotion practice—ethics and evidence—and to guide future practice. This framework is speculative, based on our professional and academic knowledge and the literature. It entails 2 iteratively related systems of reasoning: an evidence-based system and an ethics-based system. Evidence-informed practice and ethical reasoning both aim to maximize human well-being by applying explicit evaluative frameworks. 1 Evidence and ethics are implicitly related: evidence-based practice may be more ethical, and ethically sensitive practice more effective. Health promotion practice would benefit by deliberately bringing evidence and ethics together; to specify the concepts, values, and procedures inherent in each; and to achieve this integration through a detailed study of current practices in health promotion.

The definition of health promotion is contested and values driven, 2 , 3 but researchers and practitioners widely acknowledge that health promotion occurs at different levels—from standardized top-down national programs to unique grass-roots initiatives. We illustrate our arguments using a national social marketing campaign, 4 but we do not intend to imply that local programs are less worthy of examination.

The need to integrate evidence and ethics in health promotion becomes especially critical when large-scale intervention for a problem is urged, but guidance for action is limited. Body weight is a good example of this discrepancy. In recent years, “overweight and obesity” has been increasingly talked about and accepted as a global problem and threat to public health. 5 – 10 This discourse has attracted political attention, with concomitant expansion in intervention. However, limited evidence or formal ethical debate is available to guide such action. Because body weight exemplifies the problems facing health promotion professionals in relation to evidence and ethics, we use intervention for this issue to illustrate our arguments. The Australian social marketing campaign we examine closely ( How Do You Measure Up? ) is focused on weight. Next, we consider the evidence and ethics of health promotion, before examining the benefits of a more integrated approach that makes values explicit.

FINDING AN EVIDENCE BASE FOR HEALTH PROMOTION

The search for an evidence base for health promotion reflects the widespread influence of evidence-based medicine. 11 The evidence-based medicine movement advocates applying epidemiological, population-level evidence to decisions about clinical care. 12 – 14 Subsequent iterations of evidence-based practice have expanded to other aspects of health-related activity, including multilevel and complex programs targeting whole communities. 15 , 16 Researchers agree that health promotion needs evidence to set priorities, guide advocacy, and demonstrate value. 17 – 20 However, evidence-informed practice is never straightforward 21 and is considered especially problematic for health promotion, not least because it is social and political, involving contests between community, corporate, bureaucratic, and political stakeholders. 20 , 22 , 23

One practical problem for evidence-informed health promotion is an absence of evidence. There is often evidence that something should be done (e.g., needs assessment, measures of prevalence and preventability of risks and conditions), but there is rarely evidence regarding what should be done (e.g., the effectiveness of health promotion intervention) or how to do it (e.g., evaluation of the health promotion process). 16 More broadly, debates about evidence-informed health promotion hinge on the nature of evidence for health promotion, in particular the transferability of clinical epidemiology methods and “rules of evidence” to health promotion research. 22

Concerns have focused on “levels of evidence” hierarchies, which have randomized controlled trials and meta-analyses at their pinnacle. 24 Authors argue that simplistically applying such hierarchies can devalue investigation into both the human subjectivity and the social and cultural complexity that are so important for health promotion. 25 – 31 Researchers also argue that evidence hierarchies may skew the evidence base and thus evidence-informed health promotion practice. They focus on questions that can be answered via randomized controlled trials; via a self-fulfilling cycle, this leads to “evidence-based” programs that target only the individual behaviors that can be studied in such trials. 26 Expanded approaches to evaluating health promotion evidence have been proposed, but the challenges are not fully resolved and debates are ongoing. 20 , 23 , 28 , 32 – 35

Body weight exemplifies the general problems regarding evidence in health promotion. Many would argue that weight is a justified target for intervention, but even this argument is contested: some propose that fitness is more important than weight. 36 – 38 As “overweight and obesity” is a relatively recent health promotion target, intervention evidence is limited. 39 Particularly, there is little evidence for whole-of-population intervention targeting the weight of adults. 40 Multifaceted interventions that address social, economic, and community factors based on the New Public Health have been insufficiently researched, 41 for reasons that include feasibility, cost, and political acceptability. 34 Large-scale innovative social interventions, or those with controversial political and commercial implications such as the regulation of food manufacturing, marketing, and distribution, are rarely evaluated in ways that would satisfy “hierarchy of evidence” criteria. Such evidence has, however, been generated for interventions targeting behavioral risk factors (such as fruit and vegetable consumption or time spent watching television) and for education interventions in primary schools. 42 Because interventions with the “greatest potential for population health impact” have the least “certainty of effectiveness,” 43 (p407) it has been proposed that more flexible approaches should be developed that consider the uncertainty, risks, and potential benefits of promising obesity prevention programs. 43 – 45 As yet, these do not exist.

FINDING AN ETHICS BASE FOR HEALTH PROMOTION

Ethics is the study of what should be done: a prescriptive, systematic analysis of what is required for human well-being. 1 Whereas bioethics has had a significant impact on clinical medicine and medical technology since the 1960s, commentators argue that public health, and health promotion in particular, have been left behind. 1 , 46 – 49 The development of public health ethics is only just gaining momentum 50 : the first US Ethics and Public Health Model Curriculum was released in 2003, 51 the first peer-reviewed journal in the field was launched in 2008, 52 and there is only 1 formal code of ethics for public health internationally. 53 The International Union for Health Promotion and Education, which represents health promotion professionals internationally, is now considering a code of ethics for health promotion. This development suggests that explicating the ethics of practice is now recognized as an important issue by health promotion professionals. 54 The endeavor is not without its problems, however, the most fundamental being uncertainty regarding the purpose of health promotion. 2 , 47 , 55 , 56

Finding an Ethics Base for Health Promotion Regarding Body Weight

As with evidence, ethics poses problems for population intervention aimed at body weight. Body weight is an ethically charged issue for many reasons. Our identities are tightly bound up with our bodies, so messages about our bodies may seem indivisible from messages about our intrinsic worth. This problem worsens when “overweight and obesity” is constructed as a single “at risk” category, in which a body weight index (BMI; defined as weight in kilograms divided by height in meters squared) of 26 or 36 may be discussed in similar terms. Food is a symbolically and socially central aspect of human life, such that attempting to change people's food habits can be an intervention into their culture, society, and relationships. Physical activity also has different meanings for different cultural and socioeconomic groups, with implications for exercise interventions. 1 , 57 – 59

Specifying Ethically Relevant Concepts

A central problem in the ethics of health promotion is conceptual vagueness. Health promotion charters promote ethically relevant concepts such as justice, health equity, enablement, and empowerment, and health promotion professionals are undoubtedly deeply committed to these concepts and strive to turn them into sound practices. Nonetheless, many authors have noted that these charters are abstract and fail to define concepts such as justice in any detail. 48 , 60 – 62 For this reason, making progress in this area will require specification of ethically relevant concepts, including the dimensions along which they may vary, 63 based on detailed engagement with theory and with health promotion practices. We illustrate how this might work by specifying 2 concepts, coercion and stigmatization, using a social marketing campaign case study.

Coercion can be loosely defined as a form of forcible constraint. 48 , 50 Coercion as such does not appear in health promotion charters; however, defining unreasonable coercion is a central concern in public health ethics. This literature is relevant to thinking about the ethics of health promotion because achievement of population health targets is likely to require coercion of some kind, encroaching on individuals’ liberty and autonomy. The regulations often framed as enabling structural interventions (e.g., smoke-free legislation, firearm bans, or alcohol taxes) are in effect coercive. 48 , 50 These restrictions may be popular and produce health benefits, but they also coerce targeted individuals.

Let us consider coercion in relation to social marketing campaigns. Social marketing represents a fraction of health promotion activity, but its resource intensiveness and reach make it ripe for scrutiny. Social marketing is often framed as a noncoercive, informational intervention; this framing is not always accurate. The purpose of social marketing campaigns may range from educating consumers so they can make informed choices to persuading them to conform. 1 , 64 – 67 Further, coercion itself might range from “reasonable” to “unreasonable.” The ethics literature suggests that unreasonable coercion might include teaching people to perceive themselves negatively in new ways or exposing them to fear about new and previously unidentified risks, especially if they are at low risk of actual disease, suffer no apparent symptoms, and may never experience the predicted impact on health outcomes. 1 , 64 – 67

How might these ethically relevant concepts play out in a real example of a social marketing campaign targeting weight? How Do You Measure Up? is a campaign widely distributed through multiple mass-media channels in Australia; materials are available at the campaign Web site. 4 A 60-second television commercial features a male protagonist; there is no set except a giant tape measure running along the floor directly toward the viewer. The protagonist walks along the tape measure toward the camera wearing only modest white underpants. At the outset of the television commercial, he is “20-something”; later in the commercial he is “aged” and made fatter to match his position on the tape measure. The script specifies that he begins with a waist measurement of 84 centimeters (33 in) and ends with a measurement of 102 centimeters (40 in). As he walks toward the viewer he says, “You know how it is—you settle down, put on a few kilos. But I'm not worried. Then you have kids, life gets busier, you let yourself go a bit. I'm not worried. But when I first realized it was affecting my health—well, yeah, I got worried.” This script is interspersed with an unseen narrator providing technical information, including “Unhealthy eating and drinking and not enough physical activity can seriously affect your health,” “For most people, waistlines of over 94 cm for men and 80 cm for women increase the risk of some cancers, heart disease and type 2 diabetes,” and “The more you gain, the more you have to lose.” 4 The climax of the commercial revolves around the protagonist's daughter, as he first realizes overweight is affecting his health when he can't catch his daughter in a game of tag. In the following scene, his daughter runs into view beaming, but, presumably foreseeing the early death of her overweight father, rapidly assumes a serious and concerned expression; he becomes similarly stricken. This segment is followed by the campaign slogans: “The more you gain, the more you have to lose” and “How do you measure up?”

This campaign satisfies several criteria for unreasonable coercion. 1 , 64 – 67 It plays on parental guilt in an attempt to effect behavior change and is designed to teach all viewers with a BMI of more than 25 to perceive themselves negatively in new ways and to imagine their girth leading to cancer, heart disease, and type 2 diabetes. It emphasizes that small increments in waist measurement increase risk and so may create self-surveillance in low-risk individuals at stable weight and low risk of current or future disease. These problems are in part a result of applying population-level risk data to create messages targeting individuals, and of focusing on the single risk factor of body weight.

Stigmatization.

Stigmatization is a form of potential iatrogenesis in health promotion, and as such is another key concept for health promotion ethics. 48 , 49 , 66 , 68 – 70 The sociological literature about stigma can help us specify this concept. Stigma is about social unacceptability: a form of “spoiled identity.” 71 Stigma links individuals to negative stereotypes, and stigmatization can result in prejudice and discrimination. People interact differently with those who are stigmatized, which can further undermine a stigmatized person's sense of self. Unless a stigmatized person can resist the “spoiled identity” imputed to them—a difficult task at the heart of many activist movements—the negative effects of stigma can be avoided only by “passing as normal” or changing the people with whom one interacts. 71 , 72

These insights suggest dimensions of the ethically charged concept of stigma. Human characteristics are likely to vary from nonstigmatizing to highly stigmatizing. Stigmatizing characteristics are likely to be more persistently visible—thus preventing “passing as normal”— and to generate reactions that suggest the characteristic is not “normal” (e.g., eliciting staring, pointing, talking, or embarrassed looks). A person might be considered more or less responsible for the characteristic; for example, a person with a congenital condition may be stigmatized but treated kindly, whereas a person with a facial scar from a street fight may be stigmatized and feared. An intervention could increase stigmatization of a characteristic by drawing attention to it and encouraging people to react differently to it. Attributions of responsibility may color this process.

This factor is particularly relevant to media campaigns on weight. There is evidence of higher-weight people being stigmatized 72 in settings such as school playgrounds, sports and gym facilities, fashion stores, and health services. 68 This has implications for self esteem, body image, and self harm. 36 , 59 A mass-media campaign such as How Do You Measure Up? may encourage different responses to heavier people, including blaming them for their weight. 1 , 57 – 59 Further, weight is persistently visible—unlike, for example, physical inactivity, blood pressure, or diabetes—and thus easier to stigmatize. In How Do You Measure Up? this stigmatization may be worsened by a 30-second follow-up television commercial showing the same protagonist confidently stating that “from today” he is going to “turn his life around” with diet and exercise. This statement is intended to stimulate action, but may also encourage blame of those who do not simply decide to “turn their lives around” because of personal, experiential, socioeconomic, physiological, and other circumstances.

Environmental and structural approaches to preventing weight gain, such as alterations to the food supply, may be less stigmatizing than are mass-media interventions like How Do You Measure Up?. Although mass-media campaigns are targeted and evaluated at the population level, they may also have a deeply personal and emotional effect on individuals, with little capacity to reflect the needs of those individuals. A campaign focused on waist circumference cannot recognize a person's unique lifetime struggle with weight loss, be sensitive to a long-held shame felt toward one's body, or recognize that someone with a BMI of more than 25 may be fit and well. 37 , 38 At present, evaluation of such interventions does not generally attend to outcomes such as stigmatization. 68

ETHICS, EVIDENCE, AND VALUES

We have suggested a 2-fold problem for health promotion: there is insufficient, incomplete evidence to guide decision-making about population-level intervention, and although iconic ethical commitments have been made in health promotion charters, the concepts entailed have not been well specified. Engaging with the values implicit in both evidential and ethical systems of reasoning may help to resolve these problems. The values we hold signify what is important to us. In recent years, in professional fora and international journals, health promotion professionals have expressed a need for deeper examination of the values that underpin health promotion practice. 29 , 46 , 47 , 53 – 56 , 62 , 73 – 76 Values clarification of the kind being advocated in the profession could enable accountability in relation to both ethics and evidence.

The discipline of ethics contains several competing and well-articulated systems of reasoning; these include deontology, utilitarianism, virtue theory, social contract theory, the capabilities approach, and narrative ethics. 1 These systems contain clear differences in values. They might value, for example, reason, dignity, moral obligations, achievement of the best possible outcome for the greatest number of people, virtues, individual freedoms, or shared common goods. These valued concepts are often specified at great length in the ethics literature. They must sometimes be traded off against one another (individual freedom against utilitarian maximized benefit, for example). As yet, these formal systems have not made substantial inroads into public health or health promotion practice. Recently, the first model curriculum for public health ethics was published in the United States. 51 It took a casuistic approach, encouraging students to consider practical problems but providing limited opportunity to acquire the detailed conceptual tools available in the discipline of ethics. Deeper study is required to understand any of these approaches fully. 1

Values are also inherent in the generation and evaluation of evidence, although this is not always evident in the rhetoric of evidence-based practice. 46 , 53 , 55 , 76 The notion of evidence itself is now highly valued: it would be absurd to argue that health promotion should not be informed by evidence. 26 , 77 What is at issue is what counts as evidence—that is, how we specify the concept of evidence. This specification will determine which data have the status of evidence conferred upon them. 26 The criteria by which certain data come to be designated as evidence, and others scorned, is fundamentally a question of values. 28 , 29 , 78 , 79

To ask a question about something is to value it; there is little point inquiring after something that has no value. 79 , 80 Weed has made a useful distinction between scientific and extrascientific values that influence scientists’ work; these are, respectively, things valued collectively by the scientific community and things valued by individual scientists (e.g., arising from political, religious, social, or cultural commitments). 81 Both types of values are seen in the generation of evidence. Scientific values create norms for research practice; extrascientific values may contribute to a researcher's choice of research questions or study variables, as well as the interpretation of results. When a study is complete, judgments about causal inference—despite explicit criteria—are also based on values; this is shown in Weed's comparison of 2 meta-analyses on the same question, conducted only months apart, that reached contradictory conclusions. 81

Developing rules of evidence for health promotion involves values; these values can shape health promotion by determining the flow of funding. As noted, “evidence hierarchies” explicitly value evidence from randomized controlled trials over other forms of evidence. Some have suggested that this has driven health promotion toward individualistic interventions for which evidence based on randomized controlled trials can be generated; in response, those who value other modes of practicing health promotion have sought to modify the rules of evidence. This contest demonstrates the extent to which debates about evidence-based health promotion, including the way we specify the concept “evidence,” are driven by values. 29

A PROPOSED FRAMEWORK FOR THINKING ABOUT HEALTH PROMOTION

In this section, we propose a framework for thinking about health promotion that attends especially to evidence, ethics, and values, and their related concepts and tradeoffs.

The General Framework and a Practical Example

We propose 5 principles for planning and evaluating health promotion. These illuminate the good practices already occurring and draw attention to what is currently neglected. In this framework, we refer to relationships as “iterative”; by this we mean that they exist in repeated cycles with feedback of the result of each cycle into the next cycle, allowing incremental modification. Our proposed 5 principles are as follows:

• Recognize that health promotion thinking must be responsive to particular situations 83 —it cannot be universal.
• Formally recognize and implement 2 iterative systems of reasoning, an evidence-based system and an ethical system, each containing explicit values.
• Clearly specify the evidential and ethical concepts that are valued or devalued in each situation, and the dimensions along which these vary. Use both existing theory and detailed empirical study of the practice of health promotion in the situation.
• Be specific about tradeoffs occurring along the identified dimensions—consider how valued or devalued concepts interact.
• Prioritize procedural transparency: be certain that processes used for reasoning, defining, and trading off can be explained clearly.

Figure 1 presents a simple schematic of our proposed framework in its most general and flexible form. The framework makes ethics and evidence equally important and highlights their iterative relationship. For example, some evidence would be unethical to generate; other evidence will support ethical reasoning; some “effective” actions may be unethical; and ethical systems could guide action when evidence is lacking. It requires specification of the dimensions along which valued concepts vary, and probably some tradeoffs along these dimensions. Finally, it requires procedural transparency—that is, clear explication of how things were done and why. This prioritization of transparency reveals our own values, arising in part from the enlightenment-influenced, democratic society in which we live. Transparency also has pragmatic benefit, as it allows people to make informed judgments by comparing described values with their own, and the steps undertaken with their own procedural standards.

A general framework for considering health promotion.

We illustrate the potential usefulness of our general approach by applying it to the specific example of the How Do You Measure Up? campaign and its evaluation report. 83 In doing this, we do not mean to suggest that an evaluation report reveals the cognitions of its authors; rather, we suggest that the measures used in an evaluation enact shared values. On the basis of this assumption, we make these observations about what was valued (summarized in Figure 2 ), noting that there seemed to be little connection between evidence and ethics.

Applying the general framework to the How Do You Measure Up? campaign materials and evaluation report.

Note. There is limited procedural transparency in the evaluation report. This figure reflects the concepts, values, and reasoning implied in the report, highlighting the need for procedural transparency.

The campaign and evaluation implied that the following should be valued in relation to ethics:

• Individual change over community or structural change;
• Biological health over positive self-image or general well-being (e.g., the report criticized people with BMI > 25 who said their weight was “acceptable”; their general health, fitness, need to enjoy their lives, need to preserve self-esteem, or history of struggle with weight loss were not considered);
• Reducing population waist measurements more than avoiding unreasonable coercion (small increases in self-surveillance and self-criticism were reported favorably; e.g., increases in agreement with the statements “My lifestyle is increasing my risk of getting chronic disease” [up from 33% to 39%] and “I'm always trying to make changes to my lifestyle but I find they don't last” [up from 43% to 48%] 83 ); and
• Reducing waist measurements more than avoiding stigmatization or preserving the dignity of heavier people.

The campaign and evaluation implied that the following should be valued in relation to evidence:

• Reductive, repeatable, cognitive measures and outcomes rather than complex social, narrative, or environmental measures or outcomes;
• The concerns of the campaign funders more than the concerns of the campaign targets;
• Creation of evidence of targeted change more than monitoring potential harms (there was no measurement of stigmatization or other iatrogenic outcomes); and
• Production of evidence more than quality of evidence (e.g., the evaluation reported on awareness of the campaign, ability to recite public health facts, and “intention to act,” data that lack meaning as measures of real change 83 – 85 ).

Regarding this campaign, the framework creates questions about both evidence and ethics. What type of evidence is there for intervening in waist circumference? What data constitute evidence of effectiveness of such a campaign? What do communities value that might not be reflected in this evidence? What harms and benefits are relevant in this situation, and do the benefits outweigh the harms? The campaign continues to distribute material in which the protagonist and his fictional partner are explicitly critiqued; might this contribute to the stigmatization of heavier people? Why is it necessary for the characters to appear in their underwear? Might the campaign be unreasonably coercive, encouraging unjustifiable fear, self-surveillance, self-loathing, or sense of failure? Such questions encourage a closer relationship between ethical and evidential considerations; for example, how ethically unacceptable outcomes might be monitored and measured and whether, if evaluation suggested ethically problematic outcomes, the campaign might be stopped.

Contribution of Our Proposed Framework to the Existing Literature

There is currently little available literature on the relationship between ethics, evidence, and values in health promotion. Both Hamilton and Bhatti 86 and Raphael 29 have argued that evidence is underpinned by values and that these values should be made explicit. This supports our argument; we build on their work by suggesting how to make values explicit. Tannahill emphasizes that health promotion can only be informed by (rather than based on) theory and evidence. 22 He nominates “ethical principles”—including equity, respect, empowerment, participation, and openness—as prior to either evidence or theory. We believe that it is more useful to consider evidence in an iterative relationship with ethics, and that most of the principles Tannahill lists are in fact ethically relevant concepts that need further specification as outlined in our framework. The Nuffield Council's Stewardship Framework for public health ethics 57 is perhaps the most substantial contribution to date. Like our work, this framework engages with concrete cases, acknowledges the centrality of evidence, explicitly frames health as something valued, and seeks to “develop an ethical framework that identifies the most important values to guide public policy in this area.” 57 (p13) It uses political philosophy to propose a “stewardship model” for governments. 52 Detailed consideration of several case studies in the Nuffield report provides an excellent example of the kind of specificity that we have argued for; however, the report does attempt to achieve greater universality than we consider possible. We believe our framework would encourage more deliberate exposition of implicit concepts such as vulnerability, equality, and nonintrusiveness, and perhaps a more formal movement between ethics and evidence in reasoning.

CONCLUSIONS

Transparency in the domains of evidence, ethics, values, and procedures is relevant for all kinds of health promotion. Such transparency may foster greater accountability to the communities we serve, and decades of research suggests that this transparency should increase the effectiveness of risk communication. 87 We do not intend to suggest that health promotion professionals are unconcerned with evidence, ethics, and values, but rather to integrate existing work and provide additional “thinking tools.” 88 We emphasize that Figures 1 and ​ and2 2 are summaries, and details of each relevant concept would need to be specified, as we did for stigma and coercion. Some ethically relevant concepts have been extensively specified in the literature, “equity” providing an excellent example. 89 , 90 Prioritization, or trading off, of various ethically relevant concepts has also been addressed to some degree. For example, paternalism, 91 social justice, and a relational form of autonomy 92 and responsibility 93 have all been proposed as preeminent values in this journal alone.

We note that our proposed approach provides questions but cannot supply all of the answers, as these can be worked out only in particular situations. Detailed empirical study of health promotion practice is required to clarify the values and concepts entailed in health promotion; these will vary from situation to situation, and will need to be considered in relation to both evidence and ethics in those situations. The concepts relevant, for example, to an intervention in weight in Australia are likely to differ from those relevant to an intervention in smoking in China, housing in Brazil, or parenting in a disadvantaged community in the United States. Concepts and values are also likely to differ for national versus local levels of intervention. These differences can be identified only through empirical study, and we believe that more health promotion research should be oriented toward this end.

Acknowledgments

This work was funded by Australian National Health and Medical Research Council (grant 632679).

Human Participant Protection

No protocol approval was needed for the development of this article as it did not involve human participants.

• Open access
• Published: 29 September 2021

Defining ethical challenge(s) in healthcare research: a rapid review

• Guy Schofield   ORCID: orcid.org/0000-0002-9055-292X 1 , 3 ,
• Mariana Dittborn   ORCID: orcid.org/0000-0003-2903-6480 2 ,
• Lucy Ellen Selman   ORCID: orcid.org/0000-0001-5747-2699 3 &
• Richard Huxtable   ORCID: orcid.org/0000-0002-5802-1870 1  

BMC Medical Ethics volume  22 , Article number:  135 ( 2021 ) Cite this article

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Despite its ubiquity in academic research, the phrase ‘ethical challenge(s)’ appears to lack an agreed definition. A lack of a definition risks introducing confusion or avoidable bias. Conceptual clarity is a key component of research, both theoretical and empirical. Using a rapid review methodology, we sought to review definitions of ‘ethical challenge(s)’ and closely related terms as used in current healthcare research literature.

Rapid review to identify peer-reviewed reports examining ‘ethical challenge(s)’ in any context, extracting data on definitions of ‘ethical challenge(s)’ in use, and synonymous use of closely related terms in the general manuscript text. Data were analysed using content analysis. Four databases (MEDLINE, Philosopher’s Index, EMBASE, CINAHL) were searched from April 2016 to April 2021.

393 records were screened, with 72 studies eligible and included: 53 empirical studies, 17 structured reviews and 2 review protocols. 12/72 (17%) contained an explicit definition of ‘ethical challenge(s), two of which were shared, resulting in 11 unique definitions. Within these 11 definitions, four approaches were identified: definition through concepts; reference to moral conflict, moral uncertainty or difficult choices; definition by participants; and challenges linked to emotional or moral distress. Each definition contained one or more of these approaches, but none contained all four. 68/72 (94%) included studies used terms closely related to synonymously refer to ‘ethical challenge(s)’ within their manuscript text, with 32 different terms identified and between one and eight different terms mentioned per study.

Conclusions

Only 12/72 studies contained an explicit definition of ‘ethical challenge(s)’, with significant variety in scope and complexity. This variation risks confusion and biasing data analysis and results, reducing confidence in research findings. Further work on establishing acceptable definitional content is needed to inform future bioethics research.

Peer Review reports

Methodological rigour within research is a cornerstone in the production of high-quality findings and recommendations. Across the range of empirical methodologies, a broad collection of protocol development tools, methodology guidelines, and reporting guidelines have been developed and evidence of their use is increasingly required by journals [ 1 , 2 , 3 , 4 , 5 , 6 ]. Within both empirical bioethics and descriptive ethics, there has been an accompanying increase in the acknowledgment of the importance of methodological rigour in the empirical elements, including within the recent consensus statement on quality standards in empirical bioethics research by Ives et al. [ 7 , 8 , 9 ]. Aligned with this aim for rigour, definitional clarity of key terms used within a research project is a component of research quality [ 10 , 11 ]. Improving the quality of empirical bioethics is also itself an ethical imperative [ 9 ].

We recently conducted a systematic review examining ‘ethical challenges’ as reported by specialist palliative care practitioners [ 12 ]. Our review, alongside our initial scoping search findings and reading of the literature, suggested that, although many authors use the term ‘ethical challenge(s)’ in empirical ethics research, there appeared to be no commonly described or accepted definition. Furthermore, papers retrieved rarely defined ‘ethical challenge(s)’ explicitly , which has also been noted by other researchers examining other topic areas [ 13 , 14 , 15 ]. Our review further suggested that authors frequently use terms closely related to ‘ethical challenge(s)’—such as ‘moral dilemmas’ or ‘ethical issues’—interchangeably with ‘ethical challenge(s)’ throughout manuscripts, rather than staying with the original term. Research shows that non-philosophers may understand these related terms in heterogeneous ways which may additionally affect understanding of texts across different readerships [ 16 , 17 ].

Without a clear definition of an ethical challenge, each researcher must use individual judgement to ascertain whether they have identified an instance of one within their dataset. This potentially generates an unnecessary source of bias, particularly if multiple researchers are involved in data collection, extraction, or analysis. This risks generating misleading ethical analyses, evaluations, or recommendations. Additionally, and more broadly, if primary studies do not define the term, then work based on these—such as systematic reviews of individual studies or those undertaking secondary data analysis—may unknowingly compare different phenomena without a mechanism for mitigating the effects this introduces.

In the hope of prompting a debate on this topic, we therefore undertook a rapid review, which aimed to explore existing definitions of “ethical challenge(s)” and the use of other closely related terms within recent empirical healthcare ethics literature.

We conducted a rapid review examining the usage of the term ‘ethical challenge(s)’ over the last 5 years in published research articles, in order to identify and summarise if, and how, the term was defined. As a secondary aim, we examined authors’ uses of closely related alternative terms within the included article texts separate to their use within any explicit definitions that may be present.

Rapid reviews use abridged systematic review methodology to understand the evidence base on a particular topic in a time and resource efficient manner [ 18 , 19 , 20 , 21 , 22 ]. Comparative reviews of topics in which both a rapid review and a systematic review had been undertaken demonstrated that the overall conclusions were similar, although rapid reviews were less likely to contain social and economic data, and systematic reviews contained more detailed recommendations [ 18 , 19 , 20 , 23 , 24 ]. The Cochrane Rapid Review Methods Group has recently released interim methodological guidelines for undertaking rapid reviews [ 6 ], advising authors to describe where their protocol deviates from a systematic review and detail any biases that these deviations may introduce [ 18 , 19 , 21 ]. We have followed the Cochrane recommended methodology [ 6 ]. A rapid review reporting guideline is currently under development [ 25 ] and this review is therefore reported based on the PRISMA 2020 statement for systematic reviews, with justifications provided where our approach deviated [ 26 ].

Prospective review protocol registration on the PROSPERO database is the current gold standard, but, at the time of writing, PROSPERO does not accept records for rapid reviews [ 27 ]. The protocol was therefore not published in advance.

Eligibility criteria

The inclusion and exclusion criteria are summarised in Table 1 . We used Strech et al.’s Methodology, Issues, Participants (MIP) structure for our eligibility criteria, which is recommended for systematic reviews in ‘empirical bioethics’ [ 28 ]. The criteria reflect three assumptions. First, that the inclusion of ‘ethical challenge(s)’ in the title would increase the likelihood that this was the authors’ preferred term for the concept under investigation, and therefore increase the probability of a definition being provided. Second, that studies aiming to describe empirical data and identify ethical challenges in real-world contexts are most likely to contain a definition to guide researchers in identifying these challenges as they collect and analyse data. Third, that structured reviews of studies of ethical challenges are likely to include a definition to allow researchers to reliably recognise an ethical challenge in retrieved records. We used a 5-year timeframe as a date restriction. This reflected a balance between adequately covering recent use of the term and time and resource restrictions of the rapid review.

Information sources

The search strategy was as follows:

‘ethical challenge’.ti OR ‘ethical challenges’.ti.

We searched Medline (Ovid interface), Philosopher’s Index (OVID interface), EMBASE (OVID interface), and CINAHL (Cumulative Index to Nursing and Allied Health Literature, EBSCO interface) for studies indexed over a five-year period between April 2016 and April 2021. These resources cover the breadth of healthcare research. Including Philosopher’s Index increased coverage of the bioethics literature. We did not search the grey literature [ 6 ]. The search strategy was tested by successfully retrieving three sentinel studies known to the research team.

Study selection

Retrieved studies were imported into Endnote X9.2 [ 29 ]. Records unavailable through institutional subscriptions were requested from corresponding authors. If unavailable 14 days after the request, the record was excluded. A random sample of 20% of records were dual screened at the title/abstract level by GS/MD. After discussion, the remainder were screened by GS. At full-text screening, a further 20% were dual screened by GS/MD and, again after discussion, the remaining studies were screened by GS.

Data extraction and analysis

Data extraction was undertaken using a pre-piloted form, with the first 5 records dually extracted by GS and MD. Data from the remaining included studies was then extracted by GS, with correctness and completeness checked by MD. We collected data on date of publication, authors, journal, country (for primary studies), methodology, definition of ‘ethical challenge(s)’ (present (yes/no)) and (where offered) the definition provided, and any closely related terms used, with counts of all terms used in each article. For closely related terms, data was extracted from the authors’ text, but not from direct quotations from qualitative research. Where definitions of ‘ethical challenge(s)’ were offered and/or related terms were identified, these were categorised and counted following the principles of summative content analysis [ 30 ]. Summative content analysis combines both the quantitative counting of specific content or words/terms with latent content analysis to identify and categorise their meanings. We identified keywords (‘ethical challenge(s)’ and closely related terms) deployed by the authors of the included papers, both prior to and during data analysis, and analysed the retrieved definitions. This approach allowed for exploration of both the content of definitions and development of insights into the use of related terms.

Risk of bias assessment

The focus of the rapid review was the definition of the term ‘ethical challenge(s)’ within retrieved records. We therefore did not undertake quality assessment for the included studies and reviews.

831 records were retrieved, reduced to 393 after de-duplication. 238 records were excluded after reviewing the title and/or abstract. 157 records were identified for full text screening, with 3 unavailable [ 31 , 32 , 33 ]. 82 records were excluded at full text stage and 72 records were included for analysis. See Fig.  1 for the PRISMA flowchart.

PRISMA flow diagram of record identification

Record characteristics

Of the 72 included records, 53 were empirical studies [ 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83 , 84 , 85 , 86 ], 10 non-systematic reviews [ 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96 ], 7 systematic reviews [ 12 , 13 , 14 , 97 , 98 , 99 , 100 ], 1 systematic review protocol [ 101 ], and 1 non-systematic review protocol [ 102 ]. Of the 53 empirical studies, 42 (79%) were qualitative studies [ 34 , 35 , 36 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 47 , 48 , 50 , 51 , 52 , 54 , 55 , 56 , 57 , 58 , 60 , 62 , 63 , 64 , 65 , 66 , 67 , 69 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 79 , 80 , 81 , 83 , 84 , 85 , 86 ], 6 (12%) used a mixed methods approach [ 45 , 46 , 53 , 59 , 61 , 68 ], and 5 (10%) were quantitative [ 37 , 49 , 70 , 78 , 82 ]. 7/56 empirical studies, all qualitative interview studies, recruited participants internationally with no specific location stated [ 40 , 54 , 55 , 58 , 60 , 63 , 73 ]. Of the remaining studies, all but one were single-country studies: Botswana [ 75 ], Canada [ 41 , 65 ], China [ 57 ], Denmark [ 39 , 43 ], Dominican Republic [ 44 ], Germany [ 51 , 84 ], India [ 61 ], Iran [ 38 , 46 , 49 , 68 , 70 , 71 , 72 , 78 , 82 , 98 ], Italy [ 45 ], Mexico [ 87 ], the Netherlands [ 76 ], New Zealand [ 47 ], Norway [ 42 , 52 , 56 , 64 , 80 , 81 , 83 ], Saudi Arabia [ 34 , 35 , 36 , 37 ], Tanzania [ 69 , 74 ], Uganda [ 67 ], UK [ 86 ], and USA [ 50 , 53 , 59 , 62 , 66 , 77 , 79 , 85 , 85 ]. The remaining study was undertaken in both Sierra Leone and the UK [ 48 ]. See Table 2 for a summary.

12/72 (17%) of retrieved studies offered an explicit definition for ‘ethical challenge(s)’ [ 12 , 13 , 14 , 48 , 50 , 56 , 57 , 66 , 69 , 81 , 98 , 101 ]. Definitions were more likely to be found in more recent publications, with 4/12 included studies published in 2016–2018 [ 14 , 48 , 56 , 81 ], and 8/12 published in 2019–2021 [ 12 , 13 , 50 , 57 , 66 , 69 , 98 , 101 ]. The included study locations were evenly distributed, matching the overall pattern of retrieved studies, with studies from high- [ 48 , 50 , 56 , 66 , 81 ], middle- [ 57 , 98 ], and low-income settings [ 48 , 69 ]. The identified studies included eight qualitative studies [ 48 , 50 , 56 , 57 , 66 , 69 , 81 , 98 ], 3 systematic reviews [ 12 , 13 , 14 ], and 1 systematic review protocol [ 101 ]. Two of these records were the systematic review protocol and the report from our group, which accordingly contained the same definition [ 12 , 101 ], leaving 11 unique definitions. Definitions of ‘ethical challenge(s)’ identified in included studies are provided in Table 3 . Additionally, 68/72 (94%) reports used closely related terms synonymously in place of ‘ethical challenge(s)’ throughout their manuscript text, with between 1 and 8 different terms used within each report, and 32 different terms were identified. This occurred in both those reports that contained a definition and those that did not. See Table 4 for terms and frequencies.

Those records that offered explicit definitions used four approaches: (1) definition through concepts [ 12 , 57 , 66 ]; (2) reference to moral conflict, moral uncertainty or difficult choices [ 13 , 14 , 48 , 57 , 69 , 98 ]; (3) definition by study participants [ 12 , 48 , 50 , 56 ]; or (4) challenges as linked to their ability to generate emotional or moral distress within healthcare practitioners [ 14 , 14 , 66 , 81 ]. Each definition was associated with one or more of the identified elements, although none covered all four approaches. We describe these approaches below.

Approach 1: definition through concepts

This approach involves primarily defining ‘ethical challenge(s)’ in terms of related concepts. All three definitions using this approach defined ‘ethical challenge(s)’ as a summative collection of related concepts, including ‘ethical dilemmas’, ‘moral dilemmas’, ‘moral challenges’, ‘ethical issues’, and ‘ethical conflicts’ [ 12 , 57 , 66 ], for example:

‘The expression “ethical challenges” mainly refers to ethical dilemmas and ethical conflicts as well as other scenarios where difficult choices have to be made’ [ 57 ] p34

Only one went on to define the other concepts they utilised, ‘ethical dilemmas’ and ‘ethical conflicts’:

‘Ethical dilemmas are described as situations that cannot be solved; decisions made between two options may be morally plausible but are equally problematic due to the circumstances. Ethical conflicts, on the contrary, arise when one is aware of the necessity of proper actions but he or she may have trouble exercising these actions because of certain internal or external factors.’ [ 57 ] p34

Approach 2: moral conflict, moral uncertainty or difficult choices

This approach anchors an ethical challenge to the requirement for an agent to make a (difficult) choice in a situation where moral principles conflict, or there is moral uncertainty as to the ‘right’ way forward.

‘In this context, ethical challenge refers to the situation whereby every alternative is morally wrong and still one has to make a choice’ [ 69 ] p676 ‘An ethical challenge occurs when one does not know how to behave and act in the best way…’ [ 14 ] p93

Approach 3: definition by study participants

Four of the definitions involved research participants themselves defining something as an ‘ethical challenge’ [ 12 , 48 , 50 , 56 ], with three studies explicitly stating that participants would lead this definitional work [ 48 , 50 , 56 ]. Draper & Jenkins offer a starting definition, adopted from Schwartz et al. [ 103 ] with which to prime participants, while Forbes and Phillips [ 50 ] and Jakobsen and Sørlie [ 56 ] left the definition fully with their participants (Table 3 ). Finally, Schofield et al. proposed a very broad definition (Table 3 ), alongside the specific statement that either participants or researchers could nominate something as an ‘ethical challenge’ [ 12 ].

Approach 4: emotional or moral distress

This final approach was to tie ethical challenges to situations where participants feel ‘discomfort’, emotional distress or more specifically moral distress or moral residue [ 14 , 66 , 81 ]. Larkin et al. are clear that this distress must be tied to moral causes, but Hem et al. and Storaker et al. also refer more broadly to ‘discomfort’ [ 14 ] and ‘emotional stress’ [ 81 ] respectively. For example:

‘In this article, ethical challenges refer to values that entail emotional and moral stress in healthcare personnel.’ [ 81 ] p557

To the authors’ knowledge, this is the first rapid review to examine the use of the term ‘ethical challenge(s)’ in empirical healthcare research literature. Notably, only 12/72 (17%) of included studies published in the last 5 years contained a definition for ‘ethical challenge(s)’, despite this being the focus of the research being reported. The definitions identified were found in qualitative studies and systematic reviews and were evenly distributed geographically across high-, middle- and low-income settings. Definitions contained one or more of the identified approaches, although none contained elements from all four. Taken together, these findings suggest that a clear definition of ‘ethical challenge(s)’, and consistent use thereof, is currently lacking.

The four approaches indicate the diverse approaches to understanding ‘ethical challenge(s)’. Approaches 1 and 2 explore the concept from opposite viewpoints, with approach 1 looking from the conceptual perspective, through terms such as ‘dilemmas’ and ‘conflict’, and approach 2 from a participant perspective, specifically in those situations in which someone is trying to make a decision in circumstances where the preferred option is not possible or when they perceive there to be clash in values they feel are important. Within the concept-led definitions (approach 1), the use of a plurality of terms highlights a potential risk of bias, as different readers may interpret these differently. For example, some terms, such as ‘moral dilemma’, have relatively well understood specific meanings for some readers, particularly those with philosophical training [ 104 , 105 , 106 ]. The presence in the literature of specific and multiple meanings for some related terms highlights the importance of empirical studies providing a definition of these additional terms alongside their primary definition for ‘ethical challenge(s)’. This is more likely to be relevant where an a priori definition is used, but may be relevant to any prompting text for studies using a participant-led process, as in the study by Draper and Jenkins [ 48 ]. This clarity is important for both readers and future researchers who may undertake a secondary analysis of the data.

Approach 3 involves facilitating participants to nominate something as an ethical challenge [ 12 , 48 , 50 , 56 ]. This speaks to an important question about who, in a research context, is permitted to define or describe the object of interest, in this case ‘ethical challenge(s)’. Restricting the identification of ‘ethical challenge(s)’ to researchers alone may introduce bias by excluding input from those without bioethical ‘expertise’, but with important lived experience of the context under investigation. There is evidence that although clinicians can be sensitive to major ethical dilemmas, they can be less sensitive to small everyday ethical elements in clinical practice, and that ethical awareness varies between individuals [ 107 , 108 ]. Additionally, there is evidence in healthcare ethics research that patients and carers identify ethical challenges in situations that healthcare workers do not [ 109 ]. Therefore, relying entirely on a particular stakeholders’ perspectives (such as clinicians’) may risk missing important ethical challenges present in a scenario (assuming, of course, that we can settle what counts as an ‘ethical challenge(s)’).

In Approach 4, ethical challenges were linked to situations in which participants felt discomfort [ 14 ], emotional stress [ 81 ], moral distress or moral residue [ 66 ]. These concepts are themselves defined in quite varied ways (see, for example, definitions of ‘moral distress’ in a systematic review by Morley et al. [ 110 ]), potentially leading to additional conceptual confusion. Identifying triggers for moral distress is important, as high levels of moral distress are known to have negative impacts on work environments and lead to increased levels of compassion fatigue, increased staff turnover rates and poorer patient outcomes [ 110 , 111 , 112 ]. However, it is also possible that the requirement that, to be identified as an ethical challenge, the situation must invoke stress or distress might result in the under-identification of ethical challenges. We anticipate that many practitioners will daily manage multiple low-level ethical challenges, many of which will not generate moral distress or leave a moral residue. As such, the presence of moral distress may not be sufficient or even necessary in order to label a moral event an ‘ethical challenge’. However, the relationship between ‘ethical challenge(s)’ and moral distress is complex, and some might argue that the latter has an important relationship to the former. For example, moral distress, as conceived by Jameton and others [ 110 , 113 , 114 ], is linked to the after-effects of having to handle ethical challenge(s), so some researchers might view the generation of moral distress as relevant to identifying ethical challenges.

Although our review revealed these four approaches, the wider literature indicates there may be alternative approaches available. For example, other potential approaches would define ethical challenges as events that interact with moral principles, such as autonomy, beneficence, non-maleficence or justice, as proposed by Beauchamp and Childress [ 115 ], or as events in which those principles clash, for example as used by Klingler et al. in their research focusing on ethical issues in health surveillance [ 116 ]. However, these approaches were not seen amongst our included papers.

Returning to our included papers, the high rates of use of closely related terms within included manuscript texts may add to difficulties in understanding the exact object of interest if these terms are being used as synonyms for ‘ethical challenge(s)’. This may be particularly the case if terms used include those such as ‘moral dilemma’, which (as shown above) will have specific meanings for some readers. Interchangeable, undefined usage of these terms by study authors within study texts risks further exacerbating the problems caused by a lack of definitional clarity.

Strengths and limitations

This rapid review is the first systematic attempt to describe the definitions of ‘ethical challenge(s)’ available within the recent published literature.

There are, however, five limitations to note. First, the review only includes results from the past 5 years, which inevitably means that older publications, which may have contained further definitions of ‘ethical challenge(s)’, were excluded. The focus on the previous 5 years does, however, allow for an assessment of the term’s use(s) within a reasonable period of time and was felt to be appropriate given the aims and resources available to this project.

Second, our three assumptions listed in the methodology section may have excluded some records that contained a relevant definition. However, these assumptions, and the resulting focus on two search terms, allowed for a balance between retrieved record numbers and team resources.

Third, the four databases searched were chosen for their focus on the healthcare ethics literature; we may therefore may have missed relevant usage in other fields or disciplines. Similarly, we did not search the grey literature, which might have excluded relevant research.

Fourth, for resource reasons, the assessment as to whether a related term was being used interchangeably in the text was undertaken by a single researcher (GS). This subjective assessment risks miscalculating both the number of interchangeable terms identified and the frequency counts.

Finally, we did not review the theoretical literature for conceptual definitions of ‘ethical challenge(s)’, hence the definitions we identified might not match completely conceptual understandings of the term. However, our review shows how the term is currently being used in the research literature. Indeed, if there are strong conceptual definitions within the theoretical literature, then it is clear that they are currently not reaching the researchers whose work was identified by our review.

This review is the first, to our knowledge, to identify and describe definitions (and uses) of the widely-utilised concept of ‘ethical challenge(s)’ within healthcare research. Only 17% (12/72) of retrieved papers presented an explicit definition of ‘ethical challenge(s)’ before beginning to investigate this concept in context. The definitions found contained one or more of four identified approaches, with significant cross-reference to related terms and concepts which themselves have variation in their accepted meanings. We recommend that researchers define the phenomenon of interest—in this case, ‘ethical challenge(s)’—to help ensure clarity. This should either be a priori, or, if using an approach that includes participant participation in the generation of the definition, reporting their final working definition a posteriori. The choice of definition should be justified, including the decision as to whether to include participants in this process. Additionally, if a definition references other conceptual terms, then consideration should be given to defining these as well.

The results of this rapid review suggest that a common conceptual understanding of the term ‘ethical challenge(s)’ is lacking within empirical bioethical research and that there is a need for researchers in this area to consider what conceptual formulations might be most useful. Again, failure to use definitions of crucial research concepts within empirical bioethics research potentially generates confusion and avoidable bias within research outputs, risking misleading ethical analyses, evaluations, and resulting recommendations. We therefore hope this review will help stimulate debate amongst empirical bioethics researchers on possible definitional content for such a commonly used term and prompt further discussion and research. Additionally, given the central role of patient and public partnership and involvement in research, further thought should be given to who should be involved in nominating something as a challenge worthy of study.

Following on from this work, there would be value in conducting an empirical bioethical project combining a full systematic review of definitions of ‘ethical challenge(s)’ (and related terms) integrated with an exploration of the conceptual literature to generate recommendations for approaches towards the content of potential definitions, perhaps related to the identified approaches above. Such a project could also ask authors who currently use the term ‘ethical challenge(s)’ in their research how they conceptualise this. Furthermore, work to better understand the benefits of including study participants in the definition process is also important. Finally, whilst researchers should justify whatever approach they choose to take, there may be merit in examining whether anything is lost if studies lack a robust or agreed definition, or whether doing so affords a flexibility and openness that allows for a broader range of ethical challenges to be identified.

Availability of data and materials

All data is presented in this manuscript.

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GS is supported by a Wellcome Trust Research Award for Health Professionals (208129/Z/17/Z). LES is funded by a Career Development Fellowship from the National Institute for Health Research. RH is part-funded by the Wellcome Trust (209841/Z/17/Z) and the NIHR Biomedical Research Centre at University Hospitals Bristol NHS Foundation Trust and the University of Bristol. He serves on various local, regional, and national ethics committees and related groups. The views expressed in this publication are those of the authors and not necessarily those of the NHS, the National Institute for Health Research, the Department of Health, or any of the other organisations with and for whom the authors work.

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GS, MD and RH conceived of the idea for the review; LES, GS, MD and RH designed the review protocol; GS and MD conducted the literature searching, screening, data extraction and led on data interpretation but all authors were involved; GS led on drafting the manuscript; all authors critically revised the manuscript for content and approved the version to be published. All authors read and approved the final manuscript.

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Schofield, G., Dittborn, M., Selman, L.E. et al. Defining ethical challenge(s) in healthcare research: a rapid review. BMC Med Ethics 22 , 135 (2021). https://doi.org/10.1186/s12910-021-00700-9

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In the accounting and legal professions, billing methods can be as complex and nuanced as the financial advice offered. Traditionally, accountants have leaned toward hourly billing, which appears straightforward and transparent. However, this method presents an ethical dilemma that could compromise service quality. Shifting to value pricing resolves these ethical concerns and enhances client satisfaction and service effectiveness.

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Value pricing aligns the accountant’s goals with the client’s needs by focusing on outcomes rather than processes. Accountants charge based on tangible results they deliver, like significant tax savings, which transforms the relationship into a partnership aimed at achieving specific financial goals.

Understanding The ROI Method Of Value Pricing

The ROI method of value pricing is designed to align interests by focusing on comprehensive value creation and return on investment (ROI). This method considers both tangible tax savings and the value of intangibles like complexity and urgency.

Components Of The ROI Method

• Tax Savings: Direct financial gains from strategic tax planning.

• Intangible Benefits: Includes complexity handling, addressing urgency and risk management. These get a weighted average.

• Suggested Implementation Fee: Derived from the above elements, ensuring the client’s investment corresponds to the value received, with an expected ROI of at least 200% for complex engagements and potentially up to 400% for simpler ones.

Consider the transition of an accounting firm from hourly billing to value pricing:

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• Post-Value Pricing Implementation: The same firm now offers a comprehensive tax planning package for a flat fee of $9,000. This package includes not only planning but full implementation and management, yielding annual tax savings of $20,000 for the client. This substantial benefit clearly demonstrates a return on investment of over 200%.

This case study starkly illustrates the transformation from an ineffective hourly model, where clients pay $900 for uncertain benefits, to a value-driven model, where a $9,000 investment returns $20,000 annually. The switch not only dramatically increases client satisfaction but also cements the accountant’s role as a strategic partner rather than a mere service provider.

Pricing Strategy And Compliance

The ROI method develops a pricing strategy based on actual value delivered, emphasizing transparency and accountability. This method ensures compliance with ethical standards, as fees are based on anticipated value and not contingent on outcomes.

Contingent Fee Concerns

It’s crucial to differentiate the ROI method from contingent fees (which is a no-no for income tax work as part of the AICPA). While contingent fees are dependent on, and paid, from the outcome of a service (e.g., a percentage of the tax savings achieved), the ROI method sets the fee up front based on a detailed analysis of what the value proposition is. This addresses potential conflicts of interest and ensures compliance with professional standards, as the fee does not vary with the success of the tax strategies implemented.

Disclaimer And Professional Judgment

The ROI method serves as a guideline, requiring accountants to exercise professional judgment to adjust pricing strategies to the client’s individual situation, ensuring appropriateness and compliance with all regulations.

To ensure that the ROI method does not resemble or operate as a contingent fee structure:

• Predetermined And Agreed Upon: Fees calculated using the ROI method are agreed upon in advance and are not altered based on the specific outcomes of the services. They are based on a detailed analysis of expected benefits and value to the client.

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• A Focus On Comprehensive Value: The ROI method considers both tangible and intangible benefits (like tax savings, strategic advice, risk mitigation, etc.), which are often assessed before the actual work begins.

• Clear Communication: It’s crucial to clearly communicate to clients how the fees are determined and the basis for any ROI calculations. These should be presented as estimates for expected value rather than guarantees of specific financial returns.

• Documentation And Contracts: Any agreements should explicitly state that fees are not contingent on specific outcomes but are based on the scope of services provided, the complexity involved and the professional judgment applied.

The ethical dilemma of hourly billing is significant, meriting close attention within the accounting community. By adopting value pricing, such as the ROI method, accountants can eliminate conflicts of interest, enhance service quality and foster deeper, more trusting relationships with their clients. This shift not only upholds ethical standards but also significantly improves client satisfaction and trust, paving the way for a more sustainable and client-focused practice.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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IBM believes AI should make all of us better at our jobs, and that the benefits of the AI era should touch the many, not just the elite few.

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The state of AI in early 2024: Gen AI adoption spikes and starts to generate value

If 2023 was the year the world discovered generative AI (gen AI) , 2024 is the year organizations truly began using—and deriving business value from—this new technology. In the latest McKinsey Global Survey  on AI, 65 percent of respondents report that their organizations are regularly using gen AI, nearly double the percentage from our previous survey just ten months ago. Respondents’ expectations for gen AI’s impact remain as high as they were last year , with three-quarters predicting that gen AI will lead to significant or disruptive change in their industries in the years ahead.

About the authors

This article is a collaborative effort by Alex Singla , Alexander Sukharevsky , Lareina Yee , and Michael Chui , with Bryce Hall , representing views from QuantumBlack, AI by McKinsey, and McKinsey Digital.

Organizations are already seeing material benefits from gen AI use, reporting both cost decreases and revenue jumps in the business units deploying the technology. The survey also provides insights into the kinds of risks presented by gen AI—most notably, inaccuracy—as well as the emerging practices of top performers to mitigate those challenges and capture value.

AI adoption surges

Interest in generative AI has also brightened the spotlight on a broader set of AI capabilities. For the past six years, AI adoption by respondents’ organizations has hovered at about 50 percent. This year, the survey finds that adoption has jumped to 72 percent (Exhibit 1). And the interest is truly global in scope. Our 2023 survey found that AI adoption did not reach 66 percent in any region; however, this year more than two-thirds of respondents in nearly every region say their organizations are using AI. 1 Organizations based in Central and South America are the exception, with 58 percent of respondents working for organizations based in Central and South America reporting AI adoption. Looking by industry, the biggest increase in adoption can be found in professional services. 2 Includes respondents working for organizations focused on human resources, legal services, management consulting, market research, R&D, tax preparation, and training.

Also, responses suggest that companies are now using AI in more parts of the business. Half of respondents say their organizations have adopted AI in two or more business functions, up from less than a third of respondents in 2023 (Exhibit 2).

Gen AI adoption is most common in the functions where it can create the most value

Most respondents now report that their organizations—and they as individuals—are using gen AI. Sixty-five percent of respondents say their organizations are regularly using gen AI in at least one business function, up from one-third last year. The average organization using gen AI is doing so in two functions, most often in marketing and sales and in product and service development—two functions in which previous research  determined that gen AI adoption could generate the most value 3 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. —as well as in IT (Exhibit 3). The biggest increase from 2023 is found in marketing and sales, where reported adoption has more than doubled. Yet across functions, only two use cases, both within marketing and sales, are reported by 15 percent or more of respondents.

Gen AI also is weaving its way into respondents’ personal lives. Compared with 2023, respondents are much more likely to be using gen AI at work and even more likely to be using gen AI both at work and in their personal lives (Exhibit 4). The survey finds upticks in gen AI use across all regions, with the largest increases in Asia–Pacific and Greater China. Respondents at the highest seniority levels, meanwhile, show larger jumps in the use of gen Al tools for work and outside of work compared with their midlevel-management peers. Looking at specific industries, respondents working in energy and materials and in professional services report the largest increase in gen AI use.

Investments in gen AI and analytical AI are beginning to create value

The latest survey also shows how different industries are budgeting for gen AI. Responses suggest that, in many industries, organizations are about equally as likely to be investing more than 5 percent of their digital budgets in gen AI as they are in nongenerative, analytical-AI solutions (Exhibit 5). Yet in most industries, larger shares of respondents report that their organizations spend more than 20 percent on analytical AI than on gen AI. Looking ahead, most respondents—67 percent—expect their organizations to invest more in AI over the next three years.

Where are those investments paying off? For the first time, our latest survey explored the value created by gen AI use by business function. The function in which the largest share of respondents report seeing cost decreases is human resources. Respondents most commonly report meaningful revenue increases (of more than 5 percent) in supply chain and inventory management (Exhibit 6). For analytical AI, respondents most often report seeing cost benefits in service operations—in line with what we found last year —as well as meaningful revenue increases from AI use in marketing and sales.

Inaccuracy: The most recognized and experienced risk of gen AI use

As businesses begin to see the benefits of gen AI, they’re also recognizing the diverse risks associated with the technology. These can range from data management risks such as data privacy, bias, or intellectual property (IP) infringement to model management risks, which tend to focus on inaccurate output or lack of explainability. A third big risk category is security and incorrect use.

Respondents to the latest survey are more likely than they were last year to say their organizations consider inaccuracy and IP infringement to be relevant to their use of gen AI, and about half continue to view cybersecurity as a risk (Exhibit 7).

Conversely, respondents are less likely than they were last year to say their organizations consider workforce and labor displacement to be relevant risks and are not increasing efforts to mitigate them.

In fact, inaccuracy— which can affect use cases across the gen AI value chain , ranging from customer journeys and summarization to coding and creative content—is the only risk that respondents are significantly more likely than last year to say their organizations are actively working to mitigate.

Some organizations have already experienced negative consequences from the use of gen AI, with 44 percent of respondents saying their organizations have experienced at least one consequence (Exhibit 8). Respondents most often report inaccuracy as a risk that has affected their organizations, followed by cybersecurity and explainability.

Our previous research has found that there are several elements of governance that can help in scaling gen AI use responsibly, yet few respondents report having these risk-related practices in place. 4 “ Implementing generative AI with speed and safety ,” McKinsey Quarterly , March 13, 2024. For example, just 18 percent say their organizations have an enterprise-wide council or board with the authority to make decisions involving responsible AI governance, and only one-third say gen AI risk awareness and risk mitigation controls are required skill sets for technical talent.

Bringing gen AI capabilities to bear

The latest survey also sought to understand how, and how quickly, organizations are deploying these new gen AI tools. We have found three archetypes for implementing gen AI solutions : takers use off-the-shelf, publicly available solutions; shapers customize those tools with proprietary data and systems; and makers develop their own foundation models from scratch. 5 “ Technology’s generational moment with generative AI: A CIO and CTO guide ,” McKinsey, July 11, 2023. Across most industries, the survey results suggest that organizations are finding off-the-shelf offerings applicable to their business needs—though many are pursuing opportunities to customize models or even develop their own (Exhibit 9). About half of reported gen AI uses within respondents’ business functions are utilizing off-the-shelf, publicly available models or tools, with little or no customization. Respondents in energy and materials, technology, and media and telecommunications are more likely to report significant customization or tuning of publicly available models or developing their own proprietary models to address specific business needs.

Respondents most often report that their organizations required one to four months from the start of a project to put gen AI into production, though the time it takes varies by business function (Exhibit 10). It also depends upon the approach for acquiring those capabilities. Not surprisingly, reported uses of highly customized or proprietary models are 1.5 times more likely than off-the-shelf, publicly available models to take five months or more to implement.

Gen AI high performers are excelling despite facing challenges

Gen AI is a new technology, and organizations are still early in the journey of pursuing its opportunities and scaling it across functions. So it’s little surprise that only a small subset of respondents (46 out of 876) report that a meaningful share of their organizations’ EBIT can be attributed to their deployment of gen AI. Still, these gen AI leaders are worth examining closely. These, after all, are the early movers, who already attribute more than 10 percent of their organizations’ EBIT to their use of gen AI. Forty-two percent of these high performers say more than 20 percent of their EBIT is attributable to their use of nongenerative, analytical AI, and they span industries and regions—though most are at organizations with less than $1 billion in annual revenue. The AI-related practices at these organizations can offer guidance to those looking to create value from gen AI adoption at their own organizations.

To start, gen AI high performers are using gen AI in more business functions—an average of three functions, while others average two. They, like other organizations, are most likely to use gen AI in marketing and sales and product or service development, but they’re much more likely than others to use gen AI solutions in risk, legal, and compliance; in strategy and corporate finance; and in supply chain and inventory management. They’re more than three times as likely as others to be using gen AI in activities ranging from processing of accounting documents and risk assessment to R&D testing and pricing and promotions. While, overall, about half of reported gen AI applications within business functions are utilizing publicly available models or tools, gen AI high performers are less likely to use those off-the-shelf options than to either implement significantly customized versions of those tools or to develop their own proprietary foundation models.

What else are these high performers doing differently? For one thing, they are paying more attention to gen-AI-related risks. Perhaps because they are further along on their journeys, they are more likely than others to say their organizations have experienced every negative consequence from gen AI we asked about, from cybersecurity and personal privacy to explainability and IP infringement. Given that, they are more likely than others to report that their organizations consider those risks, as well as regulatory compliance, environmental impacts, and political stability, to be relevant to their gen AI use, and they say they take steps to mitigate more risks than others do.

Gen AI high performers are also much more likely to say their organizations follow a set of risk-related best practices (Exhibit 11). For example, they are nearly twice as likely as others to involve the legal function and embed risk reviews early on in the development of gen AI solutions—that is, to “ shift left .” They’re also much more likely than others to employ a wide range of other best practices, from strategy-related practices to those related to scaling.

In addition to experiencing the risks of gen AI adoption, high performers have encountered other challenges that can serve as warnings to others (Exhibit 12). Seventy percent say they have experienced difficulties with data, including defining processes for data governance, developing the ability to quickly integrate data into AI models, and an insufficient amount of training data, highlighting the essential role that data play in capturing value. High performers are also more likely than others to report experiencing challenges with their operating models, such as implementing agile ways of working and effective sprint performance management.

About the research

The online survey was in the field from February 22 to March 5, 2024, and garnered responses from 1,363 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 981 said their organizations had adopted AI in at least one business function, and 878 said their organizations were regularly using gen AI in at least one function. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.

Alex Singla and Alexander Sukharevsky  are global coleaders of QuantumBlack, AI by McKinsey, and senior partners in McKinsey’s Chicago and London offices, respectively; Lareina Yee  is a senior partner in the Bay Area office, where Michael Chui , a McKinsey Global Institute partner, is a partner; and Bryce Hall  is an associate partner in the Washington, DC, office.

They wish to thank Kaitlin Noe, Larry Kanter, Mallika Jhamb, and Shinjini Srivastava for their contributions to this work.

This article was edited by Heather Hanselman, a senior editor in McKinsey’s Atlanta office.

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Wells Fargo Fraud

Under pressure to meet steep sales goals and incentives, Wells Fargo employees created over a million fraudulent accounts in their customers’ names.

American financial institution Wells Fargo was beating the odds in a bad economy. During the financial crisis in 2008, the bank acquired Wachovia to become the third-largest bank by assets in the United States. A few years later, its growing revenue and soaring stock brought the company’s value to nearly $300 billion. But behind this success was a company culture that drove employees to open fraudulent accounts in attempt to reach lofty sales goals. Between 2011 and 2015, company employees opened more than 1.5 million bank accounts and applied for over 565,000 credit cards in customers’ names that may not have been authorized.

Many former employees reported that company sales goals were impossible to meet, and incentives for compensation and ongoing employment encouraged gaming the system. Wells Fargo pressured employees to cross-sell, offering customers with one type of product, such as checking or savings accounts, to also buy other types of products, such as credit cards and loans. One former employee described it as a “grind-house,” with co-workers “cracking under pressure.” Another former employee reported, “If you don’t meet your solutions you’re not a team player. If you’re bringing down the team then you will be fired and it will be on your permanent record.”

In mid-2014, Well Fargo attempted to curb fraudulent activity with an ethics workshop that warned employees not to create fake accounts in customers’ names. Wells Fargo also modified its compensation structure to place less emphasis on sales goals. But in the following years these efforts were not enough. The company continued to fire employees over fraudulent accounts. Wells Fargo spokesperson Mary Eshet stated, “The steps we have been taking have been effective…[and] we are continuing to do more.” Their own analysis showed a decline in fake accounts by 2015, but many were still being created.

One former employee described his brief time at Wells Fargo as “the lowest point of my life.” He encouraged an elderly woman to sign up for a credit card she did not want by telling her “it was confirmation that she stopped by to update her address.” This made him sick to his stomach. He reported, “But it was a tough economy, and I was worried, if I lost this job, I would be in a tough financial situation.” Deceptive practices such as this were widespread across the company, and many former employees reported that their managers knew about them. Jonathan Delshad, a lawyer working on behalf of former employees, said, “The better they did at sales, the more they advanced, so it got spread across the company. An entire generation of managers thrived in the culture, got rewarded for it, and are now in positions of power.” One former employee said she could not meet sales goals in any ethical way and called the Wells Fargo’s ethics hotline. She was eventually fired.

In 2016, Well Fargo was fined a combined total $185 million for fraudulent activity, and CEO John Stumpf resigned. Between 2011 and 2016, approximately 5,300 employees were fired for fraudulent sales practices. Sales quotas were eliminated effective January 1, 2017.

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Incentive Gaming

Incentive gaming, or “gaming the system,” refers to when we figure out ways to increase our rewards for performance without actually improving our performance.

Related Terms

Conflict of Interest

Conflict of Interest arises when our interest conflicts with another’s to whom we owe a duty.

Ethical Insight

Wells Fargo has a fiduciary duty to treat its customers fairly. The bank offered many different services to its customers. But the bank’s management set unrealistically high sales goals for its employees, encouraging many employees to game the system. If a customer bought one service, employees were urged to “cross-sell” several more. “Eight is great” was the company mantra. The only way that Wells Fargo employees could meet their unrealistic sales targets, and thereby keep their jobs, was to make up accounts that customers had not requested and often didn’t even know they were being charged for. Employees fabricated millions of fraudulent accounts in order to keep their bosses happy and remain employed. It was a classic conflict of interest.

Discussion Questions

1. In what ways does this case study demonstrate conflict of interest? Explain.

2. In what ways does this case study demonstrate incentive gaming? Explain.

3. What factors played the most important role in leading so many Wells Fargo employees to cheat the bank’s customers?

4. Was the problem at Wells Fargo the corporate culture or a few thousand “bad apples?” Explain.

5. In what ways did company culture and compensation at Wells Fargo encourage incentive gaming? Explain. How did incentive gaming become entangled with conflicts of interest?

6. Although Wells Fargo attempted to curb fraudulent activity with an ethics workshop and change in compensation structure, the company continued to find fraudulent accounts being opened by employees. Why do you think this continued to occur? What do you think Wells Fargo could have done to better curb fraudulent activity?

7. Are the low-level employees more to blame, or the managers? Were both in a conflict of interest situation? Explain.

8. Many employees admitted that they knew what they were doing was wrong but continued to open fraudulent accounts. Do you think their actions were in any way ethically justifiable? Why or why not? If you were in their position, what would you have done?

9. What rationalizations did employees use to justify cheating their customers?

10. Losing your job is tough. Losing sleep at night because you knowingly ripped off a customer might be tougher. How would you resolve such a conflict of interest?

11. In response to the Wells Fargo case, U.S. Treasury Secretary Jacob Lew stated, “This ought to be a moment when people stop and remember how dangerous the system is when you don’t have the proper protections in place.” He added, “This is a wake-up call. It should remind all of us and firms that culture and compensation make a difference,” continuing, “How you reward people, how you motivate people and what values you hold people to matter.” Do you agree with Lew? Why or why not? How would you suggest companies protect against such “dangerous” systems?

12. Can it be difficult for companies to strike a balance between adequately incentivizing employees and over-incentivizing them? How does a company strike the proper balance?

Bibliography

Wells Fargo Fined $185 Million for Fraudulently Opening Accounts https://www.nytimes.com/2016/09/09/business/dealbook/wells-fargo-fined-for-years-of-harm-to-customers.html

The Wells Fargo Fake Accounts Scandal Just Got a Lot Worse http://fortune.com/2017/08/31/wells-fargo-increases-fake-account-estimate/

How Wells Fargo’s Cutthroat Corporate Culture Allegedly Drove Bankers to Fraud https://www.vanityfair.com/news/2017/05/wells-fargo-corporate-culture-fraud

Former Wells Fargo Employees Describe Toxic Sales Culture, Even At HQ https://www.npr.org/2016/10/04/496508361/former-wells-fargo-employees-describe-toxic-sales-culture-even-at-hq

Wells Fargo Warned Workers Against Sham Accounts, but ‘They Needed a Paycheck’ https://www.nytimes.com/2016/09/17/business/dealbook/wells-fargo-warned-workers-against-fake-accounts-but-they-needed-a-paycheck.html

Wells Fargo’s pressure-cooker sales culture comes at a cost http://www.latimes.com/business/la-fi-wells-fargo-sale-pressure-20131222-story.html

Wells Fargo is eliminating retail sales goals after settlement over aggressive tactics http://www.latimes.com/business/la-fi-wells-fargo-sales-20160913-snap-story.html

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