by Gael O’Brien

“Why do so many good people do bad things?” asked federal Judge Alvin K. Hellerstein of the U.S. District Court in Manhattan,  while sentencing a former managing director of Credit Suisse’s Investment Banking division. Kareem Serageldin, who joined Credit Suisse after college and worked his way up into senior management, received 30 months in prison for inflating the value of mortgage bonds as the housing market collapsed.

Judge Hellerstein’s question gets to the heart of a mystery that’s persisted since the beginning of time, and especially prevalent in the recent financial crisis.

Understandably, a lot of attention has been paid to symptoms. In this column we’ve looked at issues like self-sabotage, emotional intelligence shortfall, self-deceptionconsuming self-interestinappropriate behavior, and error blindness.  Other symptoms include traders being “on the lookout for an ‘edge;’”  research indicating more unethical behavior in  those who have  insecure “attachment orientation” (people uncertain their needs will be met); and the pitfalls of perfectionism, insecurity and “airbrushing over mistakes.”

The list of excuses for ethical derailment could stretch across several continents. While increasing self-awareness, self-regulation, and empathy – all inherent in people with a well-developed emotional intelligence quotient (EQ) – would go a long way toward reducing why good people do bad things, there is another intelligence we discount and leave undeveloped at our peril.  Among our multiple intelligences, I think it has the potential for the most impact. It’s usually referred to as spiritual intelligence (SQ), and unlike IQ (analytic intelligence) or EQ, it is harder to measure, easier to misunderstand and often dismissed as something more suitable for a yoga studio than a board room.

Yet when developed, SQ is at the heart of what makes an effective leader. SQ engages our moral sense, focuses our ability to discriminate, provides the impetus to raise the questions that lead us to search for deeper meaning and connect with values, accesses wisdom and compassion, maintains personal equilibrium, releases intuition, fuels the experience of awe, transforms, and — according to some researchers — integrates our other intelligences, which thus impacts the quality of our decision making. SQ moves us from the “I” to the “We,” conscious of our impact on others; what Container Store CEO Kip Tindell calls our “wake.

Stories of CEOs focused on developing their own and their organizations’ SQ don’t make the headlines; it shows up instead in job satisfaction, well-being (rather than high stress), enhanced creativity and innovation, and highly engaged work cultures. Nearly 15-years ago, Peter Senge  described SQ as “the space, freedom and safety to bring your whole self to work.” For those for whom SQ isn’t yet on the radar, ongoing extra vigilance is required to ensure that rules and regulations – compliance requirements – are followed and ethical standards met, issues far less notable when SQ is intentionally and consciously developed and acted upon.

As for Mr. Serageldin, Judge Hellerstein asked his lawyer to explain why his client broke the law and acted unethically; the lawyer replied that under pressure in the credit crisis his clien,t confronted with failure for the first time, made a mistake. Serageldin has been quoted as saying that while he very much regrets what he did, he took those actions “to preserve my reputation in the bank at a time when there was great financial turmoil in the market place.” 

No one enjoys failing, but if we take our humanity to work, we realize that it isn’t just about us; it is also about our impact on others. We can’t always be right and when we aren’t, learning how to face up to and deal with our mistakes involves integrity, and gives us greater insight into humility, character and compassion: aspects of spiritual intelligence we learn the hard way if we haven’t already paid attention to deepening our SQ development more organically. These are lessons bosses who lead by example can help reinforce if the culture hasn’t set expectations and rewards for success so high that it tacitly has the effect of encouraging covering up mistakes.

Given the season, Dickens’ Christmas Carol is an apt illustration of the transforming impact of spiritual intelligence: Ebenezer Scrooge awakens from his dreams (visitations from former business partner Marley and the ghosts of Christmas past, present and future). Forced to acknowledge and understand his past mistakes and fearing for his life, he shifts his world view from greedy self-absorption to wanting to have a positive impact on all those with whom he works. A cautionary tale for all of us.

Gael O’Brien, a Business Ethics Magazine columnist, is a consultant, executive coach, and presenter focused on building leadership, trust, and reputation. She publishes the The Week in Ethics and is The Ethics Coach columnist for Entrepreneur Magazine.

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