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Thursday, July 28, 2011

The Sad Impact of Unethical Conduct

(I happen to live in Atlanta, GA, but the reader could easily substitute a variety of unethical events occurring all over America for the one I reference from my backyard. It’s a truly sad state of affairs. I hope by writing about it and generating some awareness and discussions we can come together to influence a change in organizational attitudes and behaviors.)

As the Atlanta Public School System prepares to open their 2011-2012 school year, the Metro Area is sadly dealing with an ethical scandal.   According to the Governor’s Investigative Report, it appears that at every level of the bureaucracy, staff members shamelessly planned and executed repeated behaviors that allegedly resulted in lying, cheating, stealing and ultimately hurting thousands of innocent children who, in some cases, did not get the educational benefit of attending school. The point I want to make is that these behaviors, and the ugly culture where they existed, appear to have resulted from: unrealistic organizational goals, a culture of retaliation and an unrealistic demand for performance results (at any cost), and a craving for public praise.

Ethics is often defined as “a philosophy principle concerned with opinions about appropriate and inappropriate moral conduct or behaviors by an individual or social group. Defined more broadly, corporate ethics can include legal compliance, ethical conduct and corporate social responsibility, all of which affect business sustainability.”

Just as the nation was learning about the details of the unbelievable activities of the Atlanta Public School System leadership, we also heard of the exposure of unethical reporting methodologies employed by the Murdoch News Corporation. Not only did this news bring embarrassment and reputation damage to Mr. Murdoch and his family, it also brought pain and suffering to the families impacted by these unethical practices and embarrassment to and questioning of political leaders in Europe. In both cases, the Superintendent of Schools Beverly Hall and the Chief Executive Rupert Murdoch refused to be accountable for the behaviors and decisions made under their leadership, offering instead weak excuses and apologies.

How would your organization rate on the ethics-o-meter? Do you feel confident that the culture your policies intend is being practiced? Are you sure people are being treated fairly and in compliance with employment regulations and practices? Can you affirm, without hesitation, that the organization’s values and philosophies are being carried out by your leaders, as well as staff members? If you can, congratulations! Especially in hard times, performing in an ethical manner can be challenging. If you hesitated, read on; I’m including some action steps to consider.

Conduct an Ethics Checkup

A 2007 article by Barbara Ley Toffler, still very relevant today, describes specific actions to create and sustain a culture of integrity that values ethical performance. She suggests:
  • Since the word "ethics" is overused, change the vocabulary. Try substituting "decency" and "responsibility" for "ethics."
  • Enron used words like "honesty" and "commitment" – and we know the end of that story. How about having staff (including you) write an essay defining what each value means to them, along with real-life examples of organizational practices that support and contradict those values? This could lead to some very interesting conversations, result in important changes, and demonstrate the organization’s commitment to ensuring ethical performance.
  • Face the music – welcome the not-so-good news as well as the good news. Accept a new mantra: There is nothing I don’t want to know.
  • Investigate potential areas of risk and plan steps to mitigate them. Follow up by attending your ethics training and ensuring it addresses these latest issues.
If you’re looking to add or update your audit process, the Society for Human Resource Management (SHRM) has the following suggestions:
  • Add the ethics audit to an existing financial/compliance audit, minimizing disruptions.
  • Be as descriptive and specific as you can about what ethics looks and sounds like. The ethics audit should be focused on a comparison between actual employee behaviors and the guidance provided in policies and procedures.
  • Tie ethics metrics to the performance review process and compensation.
  • Use a cross-functional team to assist with the ethics audit; include an HR professional, compliance manager and internal auditors or someone from legal.
  • Be on the look out for areas where improvements can be made to close gaps.
  • Be consistent in disciplining ethics violations and use the issues as a "lessons learned" opportunity for communications and training.
However you structure your audit, be clear about the distinction between ethics and compliance.

So What’s Next?

The National Business Ethics Survey published in 2010 concludes with:
  • We are experiencing an ethics bubble, which is most likely temporary. When times are tough, ethics improve. When business thrives, ethics erode.
  • Executives who don’t elevate culture to a priority, risk long-term business problems.
Ethical culture is the single biggest factor determining the amount of misconduct that will take place in a business. Individuals, groups, or organizations not adhering to ethics standards usually only get away with unethical behaviors for so long. Sooner or later something happens that brings it all to light. And when it does, leaders more than likely end up going to jail, companies are often devastated, employees and customers are usually injured in some fashion and become more skeptical, and overall, society suffers.

As our global economies expand and intertwine, we will also be faced with the practices of countries where regulations and laws guiding ethical practices don’t exist – so it’s an "anything goes" environment. Will your ethical practices be strong enough to navigate those unchartered waters?

How damaging for your company’s reputation and business success would an ethics violation reported on the evening news be? Studying a few of the many examples of unethical behavior reported in the past few months, the amazing thread to me is that so many involve more than one person – and these people, motivated by greed, or fear of retaliation, or whatever, go along with what’s being done, even though they know it’s wrong. In the case of the Atlanta Public School System, whistleblowers were threatened. Simply having an 800-number managed by a third-party would have taken that opportunity out of the hands of the unethical staff.

Here’s my assignment for you – share one idea that you have about ethical cultures and what can be done to enforce a message of "we’re serious about ethics!" Please share your thoughts and ideas on this very important topic below.

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