WHEN ETHICS GO UNSEEN
In 2023, a leading global consultancy came under international scrutiny over its role in enabling questionable practices when senior partners misused confidential Australian government tax information.
This case is often cited as an example of ethical blindness, where profit motives and internal pressures overshadow ethical judgment. Despite having internal policies and a public pledge to integrity, senior leaders overlooked—or failed to challenge—decisions that caused systemic harm. The problem wasn’t malicious intent, but something far more dangerous: ethical blindness.
This prompts a deeper question: How do ethical lapses happen in organisations that appear to be doing everything “right”?
The answer is not so much about corruption but about a failure to see the ethical impacts of decisions from the start.
WHAT IS ETHICAL BLINDNESS?
Ethical blindness is a temporary, often subconscious inability to see the moral side of a decision or action. Unlike intentional misconduct, it is marked by a gap between what is intended and what happens. It is a failure to recognise the ethical importance of everyday business choices.
This isn’t an uncommon phenomenon. In complex environments where performance metrics are prioritised, values can gradually shift. Over time, a practical decision may hide moral responsibility. Ethical blindness often appears in cultures where short-term results are valued over long-term consequences or challenging authority is culturally risky.
This lack of awareness, rather than deliberate malice, renders ethical blindness such a serious concern.
PSYCHOLOGICAL UNDERPINNINGS OF ETHICAL BLINDNESS
To understand why ethical blindness happens, we must look into the psychological decision-making framework.
Several cognitive biases act as silent accomplices that dull our ethical awareness.
COGNITIVE BIASES
- Confirmation Bias
People often look for evidence supporting their beliefs while ignoring information that disputes them. This selective perception can cause decision-makers to miss warning signs that challenge their preferred story. - Framing Effects
When a choice is presented as a business or financial decision, its ethical considerations can become less noticeable. For example, reducing headcount might be seen only as a way to save costs, ignoring its human impact. - Slippery Slope Effect
Minor ethical compromises can often lead to more serious ones. If small instances of bending the rules go unchallenged, the organisation becomes desensitised, which increases the likelihood of more serious outcomes.
ORGANISATIONAL AND SOCIAL DRIVERS
Ethical blindness is rarely just a personal failure — it often stems from broader structural issues.
- Performance Pressure
High pressure to achieve targets or shareholder returns can lead to unethical shortcuts. When success is narrowly defined, ethical considerations are regarded as less important. - Toxic Organisational Culture
Cultures that normalise ambiguity, prioritise results over process, or penalise dissent foster blind spots. Ethics erode when leaders overlook how something is achieved in favour of what is achieved. - Diffusion of Responsibility
In large or siloed organisations, individuals often assume that someone else is responsible for moral oversight, which diminishes personal responsibility and accountability. - Obedience to Authority
Hierarchical structures can suppress ethical questioning. Employees may defer to their leaders’ directives, assuming alignment with broader values, even when they are not. - Groupthink and Conformity
The desire for cohesion often overrides ethical instincts. People suppress concerns, fearing isolation, social rejection, or retribution, to maintain group alignment. - Lack of Psychological Safety
Employees will remain silent when raising concerns is met with punishment or indifference. Silence becomes their only option.
EIGHT ORGANISATIONAL STRATEGIES TO PREVENT ETHICAL BLINDNESS
Ethical blindness does not disappear on its own. To build ethical resilience, businesses must implement systemic safeguards.
FOSTER A SPEAK-UP CULTURE
Companies must set up clear and confidential ways to raise ethical concerns and, more importantly, safeguard those who use them. An ethical culture flourishes when speaking up is met with listening, not punishment.
MODEL ETHICAL LEADERSHIP
Ethical leadership isn’t just about statements; it’s about actions. Leaders must embody the values they expect from others, not just selectively, but consistently. When integrity is evident at the top, it becomes believable at every level.
INTEGRATE ETHICS INTO DECISION-MAKING
Embed ethical reflection into all strategic and operational processes. Regular pause points, impact assessments, and stakeholder reviews should be routine, not just crisis response mechanisms.
SET ALIGNED AND REALISTIC GOALS
Performance targets should reward both outcomes and methods. Unrealistic KPIs can lead to ethical compromises. Aligning incentives with the organisation’s stated values ensures people do not have to choose between results and integrity.
INVEST IN ETHICS TRAINING
Beyond compliance modules, ethical training should promote moral reasoning and courage. Case-based learning, peer discussion, and scenario rehearsal (e.g., “Giving Voice to Values”) are more effective than memorising policies.
PROMOTE PSYCHOLOGICAL SAFETY
Create space for dissent. When team members can question, challenge, and disagree without fear, blind spots become visible. Both innovation and ethics depend on curiosity, not merely compliance. Ethical cultures start where curiosity outweighs fear.
Psychological safety means individuals can express themselves honestly, make mistakes, ask questions, or voice dissent without fearing punishment, humiliation, or rejection. When psychological safety exists, people feel secure enough to present their whole selves, take interpersonal risks, and engage in learning-oriented behaviours. This safety is not about comfort or avoiding challenges, but about trust. It indicates that a person’s voice is valued, even when it disrupts consensus or exposes vulnerability.
Importantly, psychological safety builds through consistency—when people repeatedly find that speaking up does not lead to negative consequences, their sense of safety grows. Encouraging empathy, recognising effort over just outcomes, and quickly addressing exclusionary behaviours are vital steps that foster a trusting environment.
EMBRACE DIVERSITY AND INCLUSION
Diverse teams break groupthink by bringing in wider experiences, values, and worldviews that challenge uniform thinking and automatic agreement. When people from different cultural, professional, or personal backgrounds work together, it becomes harder for biased or unethical assumptions to go unexamined. This mental variety encourages critical thinking, better risk awareness, and more innovative problem-solving. Therefore, inclusion is not just a moral duty—it improves decision-making by ensuring different voices are heard and respected. By creating an environment where dissent is possible and welcomed, diverse teams lead to more ethical, resilient, and effective results.
ESTABLISH INDEPENDENT OVERSIGHT
Internal ethics committees, third-party audits, and whistleblower protections are essential structural tools. They detect risks and demonstrate that ethics are a core business metric.
CASE STUDY: WELLS FARGO AND THE COST OF ETHICAL BLINDNESS
Between 2011 and 2016, Wells Fargo generated over 3.5 million unauthorised bank accounts to meet aggressive sales targets. Facing pressure to hit unrealistic quotas, employees engaged in dishonest practices, though many did not initially view their actions as unethical.
What failed?
Psychological safety was absent, and ethical framing was suppressed by performance-focused language. Leadership rewarded results without scrutinising the process, reinforcing self-serving bias and obedience to authority.
This was not just an example of a few bad apples; instead, it reflected a cultural and structural failure.
STRATEGIC IMPLICATIONS: FROM AWARENESS TO ACCOUNTABILITY
Addressing ethical blindness requires businesses to shift from reactive to proactive ethical governance. This involves embedding moral reflection into daily practices.:
- Structure: ethics committees, anonymous reporting, and oversight mechanisms.
- Culture: celebrating moral courage, not merely quarterly wins.
- Leadership: integrity as a behavioural standard, not merely a branding message.
- Measurement: Tracking not just compliance, but ethical climate indicators (e.g., trust, transparency, voice).
Ethical resilience is a competitive edge. Stakeholders—especially employees and consumers—are increasingly scrutinising authenticity. A transparent and responsive ethics framework builds loyalty, boosts reputation, and supports long-term sustainability.
STAYING AWAKE IN THE GREY
Ethical blindness is not about bad people; it is about systems that fail to foster ethical awareness. As Harvard ethicist Max Bazerman writes, “Most unethical behaviour is driven not by bad intentions, but by unconscious biases and pressures.”
To build ethical businesses, companies must expose the unseen and recognise the gradual erosion of integrity before it becomes a scandal.
This means asking better questions:
- What assumptions are we not challenging?
- Who isn’t being heard?
- What outcome are we privileging, and at what cost?
It means treating ethics as more than a compliance checkbox or a PR stunt. Ethics must develop into an operational rhythm—something practised, supported, and authentic. The real danger isn’t malevolence; it’s the ethical fog that settles when we cease to look.
In business, as in life, the most dangerous failures are the ones we do not see coming.
