In an Ethics Crisis Consider the Impact on Your Employees

A big risk in an ethics crisis is that your own employees will conclude that unethical conduct is the norm in the organization or at its highest levels, and adjust their behavior accordingly. In an ethics crisis, employees often learn about the crisis from the media. Organizations tend not to communicate openly with their employees about such matters, leaving employees to believe what others are saying. You risk an unplanned change in corporate culture unless you credibly communicate the organization’s position to its employees.

Hurdles for Compliance Officers

You may enjoy the attached article from the Report on Medicare Compliance on some of the practical issues that compliance officers face.


In a Crisis Investigate Quickly, Objectively and Thoroughly

In an ethics crisis, you need to know what happened, who did what and who knew about it. An investigation into an ethics crisis cannot follow the usual internal investigation protocol since those running the investigation may be implicated in the crisis or in covering it up. You need an independent investigation. Even if you conduct the investigation under legal privilege, anticipate that the investigation may become public and that you may eventually be required to share the investigation with regulatory or enforcement authorities.

Recognize the Crisis

The biggest mistake made in an ethics crisis is not recognizing that it is an ethics crisis. Executives tend to overestimate the protection offered by the organization’s reputation and its legal defenses. And they often reason that the organization will not be held accountable for what someone did contrary to the organization’s direction or policy. This is untrue. The sooner you own any crisis, the less newsworthy it is. Early acknowledgement of an ethics crisis is particularly effective in showing that the wrong action is not characteristic of the organization.

How to Survive an Ethics Crisis

As a life-long ethics consultant, I have been in the middle of many ethics crises. You don’t hire an ethics consultant if everything is hunky dory. I have learned that ethics crises are different, and often more severe, than other corporate crises. An ethics crisis is about who you are as an organization and not just about specific actions that have gone wrong.

An ethics crisis is a crisis in which an organization is judged to have done something wrong due to poor ethics. Many business crises – whether it is the BP oil spill or the GM ignition switch – escalate into ethics crises. An initial unwillingness to accept responsibility is what turns a business crisis into an ethics crisis. The public will judge this unwillingness to accept responsibility as a sign of poor ethics. Most organizations eventually figure out that they won’t escape responsibility by denying it. But by then their credibility is shot.

Ethics crises are almost unavoidable for the simple reason that organizations are made up of people. Some of them will do unethical things in the organization’s name. If these actions have a significant impact, you have an ethics crisis. But even if ethics crises are not completely avoidable, there are things you can do to survive them. I will provide a series of tips on surviving ethics crises in coming posts.