29 Jan 2008 in Corporate Culture, Ethics and Compliance Offices
Prevent Misconduct? First, understand the causes: Why do companies spend so much time and money teaching their employees about laws, regulations and company policies? Is it because executives believe that serious misconduct is the result of ignorance of the rules? Or, is it because they want evidence with which to absolve themselves when employee misconduct occurs—it’s not their fault, they told employees the rules. Why do employees break the rules, anyway?
Employees get into trouble for all sorts of misconduct, from exaggerations on their resumes or pilfering office supplies to bribing foreign officials to secure business for their employer. Most of it is not likely to make headlines or to damage the company’s reputation. Even some illegal actions, like pulling sales forward at the end of the quarter or billing a customer for more hours than were worked, might not do much discernible harm to the company and, arguably, might seem to help it in the near term, at least. But why do employees do things that they know—or should know—are wrong?
Certainly, there is not just one answer to such a question; rather, there is an array of possible answers, depending on the facts—who did what and why? Some misconduct is the result of ignorance, some is motivated by greed, some by misguided attempts to help the company.
Recently, we asked ethics and compliance officers what they thought about this (see the Research Report in the Resources section of this website). We found that, to a considerable extent, their answers depended on their background and training prior to becoming ethics and compliance officers. The most interesting contrast was between those with a legal background and those who came out of management. Corporate attorneys believe that the principal cause of misconduct is ignorance of laws, regulations and company policies. By contrast, managers are experienced in the business environment, processes and activities which may lead to, or result in, improper conduct. They believe that the fundamental causes of unethical and illegal conduct are not ignorance of the law or policies, but failures of leadership, pressures to achieve aggressive goals, and their own desire to meet expectations—their boss’s, their teammates’, their own.
Who’s right? The answer matters, because ignorance can be cured by training; personal and systemic performance pressures will require a different approach that may include identification and assessment of the organization’s operating values—not the aspirational ones, framed and hanging in corporate offices, but the real values—how we do business around here. What kinds of behaviors are recognized and rewarded? Who gets promoted and why? Management tools and processes, from strategic planning to performance evaluations, may need to be examined and possibly restructured to alter the company’s culture, to create incentives and reward systems that encourage ethical conduct.
GE
