How can you leverage mindset to change behaviour?
Principal, The International Ethics Standards Board for Accountants
In today’s complex work environment, what is ethical is not always straightforward. Professional accountants often must learn to navigate their way through a myriad of complicated issues to reach an ethical solution that serves the public interest. The International Ethics Standards Board for Accountants (IESBA), recognizing the increasing challenge to act ethically, recently released changes to its International Code of Ethics for Professional Accountants that reinforce the importance of having the right mindset that encapsulates certain behavioural characteristics expected of professional accountants.
An inquiring mind is one key component of a mindset that drives ethical behaviour. The IESBA’s Role and Mindset revisions introduce this concept as a new requirement for all professional accountants and underlines two key elements: consider the source, relevance and sufficiency of information obtained; and be open and alert to a need for further investigation or other types of action.
Having an inquiring mind means having a sense of curiosity and not simply taking circumstances and information at face value. It will also guide a person to ask the right questions and obtain the necessary information to make decisions that are evidence-based and defensible.
The Role and Mindset revisions also emphasize the risk of bias (internal factor) and organizational culture (external factor) as factors that may influence a professional accountant’s ability to make ethical decisions. Conscious or unconscious bias affects a person’s ability to be objective, creates pre-conceived ideas about people or situations, and causes misjudgement of the relevance and value of information. The revisions highlighted eight common examples of types of biases, such as confirmation bias, anchoring bias and groupthink. Another example included is “automation bias,” which is particularly relevant considering the increasing role of technology in the profession. The revisions also highlight the influence a positive organizational culture has on the professional accountants’ ability to have the right mindset. In this regard, the revisions particularly recognize the role of leaders and tone at the top in setting the right organizational culture.
Doing the right thing is not always easy and may come with adverse consequences. For an individual to behave ethically, having the right mindset must go hand in hand with determination, courage and character. Recognizing this, the revisions emphasize the importance of having the strength of character to act appropriately by standing one’s ground and by challenging others in a manner that is appropriate to the circumstances.
“An inquiring mind is one key component of a mindset that drives ethical behaviour.”
Director, Compliance, Hong Kong Institute of CPAs
Superhero fans celebrate Professor Xavier’s mind-control power. But successful executives know mindset can be just as powerful. Simply put, mindset guides behaviour. Whether we seek to change the tone at the top, enhance professional scepticism or improve decision making, mindset is a central feature leading to those changes.
Each individual has a range of different mindsets. Using the right mindset at the right time is important. For auditors, both deliberate and implemental mindsets are commonly exercised during an audit engagement. A deliberate, or “open,” mindset concentrates on goal-setting and demands the highest degree of working memory resources, or “cognitive load.” At the other end of the spectrum is the implemental mindset, which is responsible for carrying out the tasks needed to achieve goals.
The quality of activities like audit planning and data analysis is highest when an open mind is employed. The mere act of considering positive and negative aspects of a hypothetical situation can arouse the deliberate mindset, allowing auditors to expand their thinking. For example, an open mind can be motivated by asking an individual to list pros and cons of accepting an international work assignment. A study by Griffith, Hammersley, Kadous, and Young reveals that a deliberate mindset yields a higher-quality audit by improving an auditor’s ability to process non-confirming evidence obtained in different audit areas.
Given the cognitive requirements of deliberate thinking, there is a high demand for working memory resources. When a deliberate mindset is required, engagement leaders should ensure adequate instruction is given and avoid scheduling activities when the auditor is tired (i.e. late night).
An implemental mindset seems to come naturally to auditors, who frequently exercise it when performing verification tasks common to many audit procedures. However, over-reliance on the implemental mindset can be fraught with problems. When motivated by a task-based, implemental mindset, an auditor may accept a client’s explanations about non-confirming information without recognizing the need to obtain corroborative evidence and incorrectly concluding the explanations are reasonable. The Griffith study warned that audit tests on complex estimates tend to be verification exercises, ignoring incidental information that may contradict management’s representations. Essentially, an implemental mindset is not conducive to critical thinking as it specializes in efficient processing of tasks without thorough consideration of the broader issues.
Mindset can be the key to a new superpower to celebrate.
“The mere act of considering positive and negative aspects of a hypothetical situation can arouse the deliberate mindset.”
Chief Executive Officer, Phoenix and Flame podcast
Have you ever heard the phrase, “Keep your head in the game?” Athletes usually hear this from coaches when wandering minds are obstructing their ability to excel. As Usain Bolt once said “No matter how far you get ahead of me, I’m gonna catch you. That’s my mentality.” Cognitive ability, or mindset, is our control centre. Everything we do begins with cognition. You may not be able to control the world, but you can control your thoughts.
There are many ways to manage your mindset. As a psychotherapist, I ask many questions as a means of understanding my client’s personality, history, and goals. During the interview, like during an audit, it is crucial to keep your mind open to whatever information may be presented. Having preconceived notions can bias perceptions and lead to incorrect conclusions.
Four obstructions to a productive mindset are: having a crippling fear of criticism, being problem-focused, lack of compartmentalization, and failing to reset when cognitively overloaded. Since criticism can be delivered with heightened emotion (anger, frustration, fear) it is helpful to differentiate content from delivery. Another person’s emotional management is outside of your control. However, you can promote a productive mindset by focusing on the content then developing a solution-oriented response. A few examples include clarifying problematic issues through further discussions, demonstrating cognitive flexibility in producing novel vantage points, or seeking opinions from experts.
At times, the ability to field criticism effectively and derive helpful solutions is hindered due to lack of compartmentalization. Relationships with colleagues can be complex – they may be family or friends – so it is beneficial to “compartmentalize” conflict-driven emotion from these relationships to keep a clear mindset. For example, you can imagine a locked airtight chest storing emotional upheaval, so that those issues are not allowed to clutter the workday mindset.
Another method of preventing cognitive overload is to have brief, intermittent moments of mindfulness throughout the day. These five-minute exercises involve detaching from the task at hand, utilizing slow, deep breathing and drawing attention to inputs from the five senses. By having a clear and focused mindset you can better focus on your tasks at hand.
“The ability to field criticism effectively and derive helpful solutions is hindered due to lack of compartmentalization.”