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
February 27, 2015 — MarkYou 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
February 21, 2015 — MarkIn 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
February 14, 2015 — MarkThe 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
February 7, 2015 — MarkAs 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.
The Ethics Strategy #5
January 31, 2015 — MarkAs part of a long-term research project, I identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. I have been sharing these strategies through a series of posts. Here is the final strategy in this series.
I once worked with a CEO who temporarily suspended all of his company’s significant operations in Mexico because he couldn’t find a way for his managers to uphold the company’s ethics while doing business there. This is an extreme example of an important practice, which is looking at business opportunities in terms of their ethical implications. While this is especially important internationally, there are also business opportunities domestically that are hard to pursue ethically. For example, it is particularly difficult to pursue an ethics strategy in a market in which competition is based entirely on price. The time to exercise ethical judgment is when you are considering an opportunity as opposed to when you are in the middle of regretting it.
The Ethics Strategy #4
January 24, 2015 — MarkAs part of a long-term research project, I have identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. I will be sharing these through a series of posts. Here is the fourth strategy.
Define the value of your ethics.
If you are committed to ethics, you probably believe that the company’s ethical stance provides a benefit to its customers. It is not enough to just hope that your customers will notice this. It is up to you to define that benefit and make it apparent to your customers. For example, if you take the extra time to ensure that your products or services fit the customer’s needs, make this effort a part of what distinguishes you in the market place. Nordstrom has made a simple ethical commitment a cornerstone of its reputation. That commitment is to treat customers making a return the same as customers making a new purchase. The benefit to customers need not be something earth shaking; it just needs to be something customers will recognize.
The Ethics Strategy #3
January 20, 2015 — MarkAs part of a long-term research project, I have identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. I will be sharing these strategies through a series of posts. Here is the third strategy.
Manage the moments of truth.
Jan Carlzon, former CEO of SAS airlines, used the phrase “moments of truth” to describe those times when the employees of a company have direct contact with its customers. Carlzon’s point was that if you treat customers fairly in each moment of truth, you will win the battle for customer loyalty. And you will only win these moments of truth if each and every employee knows how you expect them to handle such moments. The same can be said for ethics. If everyone in your company treats the company’s constituents ethically each time an employee has direct contact with them, the company will earn a lasting reputation for ethics. And this will only happen if each and every employee knows your ethical expectations for them.
The Ethics Strategy #2
January 18, 2015 — MarkAs part of a long-term research project, I have identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. I will be sharing these strategies at markpastin.com and through a series of posts. Here is the second strategy.
Choose business partners carefully.
A wise adage says, “Lie down with dogs, wake up with fleas.” If you want to do business ethically, choose business partners that do business ethically. Even though your business partners are independent businesses, you assume responsibility for their actions when you choose to work with them. It did BP no good to point out that the accident that led to Gulf oil spill was due to a contractor; you cannot outsource responsibility. It is widely recognized that managing relationships with business partners is a key to competitive success today. An ethics strategy and a good business strategy converge with both requiring a careful look at business partners, although through somewhat different lenses.
The Ethics Strategy #1
January 18, 2015 — MarkAs part of a long-term research project, I have identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. Here is the first strategy.
1. Provide a sound product or service.
While this seems obvious, the customer is often the forgotten player when it comes to ethics. Talking about customers seems dull compared to talking about global warming or genetically designed food. However, unless you provide good value to your customers, ethics is not part of your strategy. You may have a great environmental record, but if you stay in business by ripping off your customers, you are not doing business ethically. GM may be an otherwise ethical company, but when it sells cars with a known a safety problem, its ethics has spoken. In ethics, it all starts with a good value proposition for customers.
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Mark Pastin 