What the LIBOR scandal can teach us about employee wellbeing

“We know that we’re not posting um, an honest LIBOR, and yet we are doing it, because, um, if we didn’t do it, it draws, um, unwanted attention on ourselves.”

This quote from a Barclays employee in 2008 perfectly captures the important role played by a basic human instinct in propagating the rigging of LIBOR: The drive to fit in.

The desire for acceptance in the workplace is an extremely powerful determinant of employee behaviour. And this has important implications for your employee wellbeing strategy.

You already know that having healthier, happier employees is the key to unlocking the full potential of your business. The question is, how do you achieve it?

We believe the best way is to help your employees to embed healthier eat, move, and sleep behaviours. By making healthier behaviours the normal behaviours, you can make it easier for people who want to change and nudge everyone else in the right direction.

Virtually everyone conforms to social norms (to some degree)

The need to belong is hardwired into the human brain. We do what we think is expected of us based on widely accepted – but mostly unwritten and unspoken – social norms. In psychology, this is called social conformity.

It served us well from an evolutionary perspective. Social cohesion was crucial for group (and therefore individual) success. And going against the group could be very costly in terms of survival and reproduction. Fitting in is a deeply wired human need.

There are several explanations for why we conform to social norms:

  • We believe it must be a good thing to do if everyone is doing it
  • We fear being subject to social sanctions for not doing it
  • We want to self-categorise with the group regardless of value or sanctions

And be under no illusion here – virtually everyone conforms. Just to differing degrees.

LIBOR rigging was propagated by social conformity

The first suspicions of LIBOR fraud came to light in April 2008. Over the following few years, the enormity of the scandal would emerge. Banks were fined, traders were fired, and a few key players went to prison.

Nefarious intent certainly played a part. There were huge incentives to manipulate LIBOR (some of the major banks made billions from it). And there were ludicrous conflicts of interest that enabled it to happen (the Foreign Exchange and Money Markets Committee – the group responsible for overseeing LIBOR setting – was made up of staff from the very banks who made a fortune from the manipulation).

But to blame the whole thing on greed is an oversimplification and misses a crucial point. Why did so many people go along with it? Why did nobody speak out?

The answer is social conformity.

Conformity allowed LIBOR manipulation to go on unchecked for years before it was exposed. It had been going on for so long it had become normal. Just part of everyday business in banks across the world.

“Everyone knew”, an anonymous trader told the Telegraph in 2012, “everyone was doing it”. In other words, manipulating LIBOR was a social norm. Everybody wanted to fit in with the group. Some assumed it must be fine since nobody was trying to hide it. Some realised it was wrong but didn’t want to go against the group. Some just wanted to self-categorise with everyone else.

When it comes to behaviour, social norms can have a more powerful influence than policies and procedures; rules and regulations; and individual beliefs and agency.

Now, think about this in the context of employee wellbeing.

The hidden hand in employee wellbeing

Imagine that it’s normal behaviour in your team to send and reply to emails late at night. As a result, your team members are unable to switch off from work, their stress levels remain elevated, and their sleep suffers.

Is having an answer to an email at 11pm more important than having an energetic, enthusiastic, and engaged team member the following day? On some days, in some scenarios, it might be. That’s fine. All part of keeping the wheels of finance turning (I worked in investment banking for 15 years – trust me, I get it). The problem comes when this sort of behaviour is normalised.

It may not matter that you have policies or programmes in place that promote better sleep. If staying electronically tethered to work 24/7 is just what people normally do, you’re likely to have sleep-deprived, stressed-out, and underperforming staff.

Here are some other scenarios to think about. Consider the impact (positive or negative) on the wellbeing and performance of your employees if it is normal behaviour to:

  • Take a break during office hours for exercise
  • Eat a quick lunch of convenience food at the desk
  • Stay in the office until all the senior staff have left
  • Be on back-to-back Zoom calls all day when working from home
  • Get up from the desk and move around the office regularly
  • Go to the pub most nights after work with colleagues
  • Come into the office later or leave earlier to take care of children
  • Get takeaway pizza in the office so people can work late most nights
  • Fly overseas the night before morning meetings rather than get the 5am flight
  • Work most Saturdays and Sundays

Make healthier behaviours the normal behaviours

What defines ‘normal’ behaviour? If most people in the team are doing it, then it’s certainly normal. But it may not be as obvious as that. The actions (and expectations) of senior leaders create norms. People also tend to conform to what their immediate peer group is doing.

The point is social norms are everywhere – often under the radar – and they are constantly pulling and pushing your employees to conform to certain behaviours and attitudes.

You can use this feature of psychology to enhance the impact of your employee wellbeing strategy. Start by identifying the social norms that influence your employees’ eat, move, and sleep behaviours. Then, where possible, take steps to make healthier behaviours the normal behaviours.

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