Chapter 1: Overview of Compliance and Ethics Practice

Ethics at Every Level: Safeguarding Your Organization from Misconduct

There may come a time when you read a news headline related to misconduct in your industry. It seems like no industry has been immune to ethical scandals. We’ve experienced ethical scandals in business, government, sports, non-profits, and even religious organizations. The misconduct may lead to catastrophic financial loss for thousands of people or a complete company collapse. Some scandals have resulted in prison sentences for executives. Others have caused innocent people to die. Here are some examples:

  • “SEC Charges Kenneth L. Lay, Enron’s Former Chairman and Chief Executive Officer, with Fraud and Insider Trading,” SEC press release (July 8, 2004)[2]

  • “Skilling Gets 24 Years for Fraud at Enron,” The Washington Post (October 24, 2006)[3]

  • “FBI Arrests Volkswagen Executive on Conspiracy Charge in Emissions Scandal,” The New York Times (January 9, 2017)[4]

  • “Wells Fargo Fined $185 Million for Fraudulently Opening Accounts,” The New York Times (September 8, 2016)[5]

  • “OxyContin maker to plead guilty to federal criminal charges, pay $8 billion, and will close the company,” CNN (October 21, 2020)[6]

  • “Messages Show Boeing Employees Knew in 2016 of Problems That Turned Deadly on the 737 Max,” The Washington Post (October 18, 2019)[7]

  • “Boeing Charged with 737 MAX Fraud Conspiracy and Agrees to Pay over $2.5 Billion,” U.S. Department of Justice press release (January 7, 2021)[8]

Your reaction to such headlines might be like mine years ago, when I read headlines related to my industry. I assumed ethical misconduct like that would never happen in my workplace. After all, I know the people I work with, and I trust them. We share a similar set of values; they’re honest, trustworthy, and have integrity—that’s part of the reason I get along with and respect my coworkers. You probably have the same feelings about your workplace. But unless you understand how organizational culture can shift and learn to recognize the red-flag warnings of shifting workplace culture, it can happen in your workplace.

Not everyone aspires to be a workplace hero. But if you could prevent a coworker from walking off a cliff, wouldn’t you want to? If that proverbial cliff is unethical conduct that may result in a coworker being terminated, going to prison, or results in the collapse of your entire company, or results in the death(s) of innocent people, wouldn’t you want to be prepared to prevent that crisis? And yet, preventing that crisis doesn’t necessarily require a whistleblower. Sometimes it’s merely voicing a question at the right time: Are we doing the right thing?

Recognizing a change in organizational culture can be tricky because often, the change occurs slowly. It’s the proverbial frog in the pot of boiling water. The urban myth says if you put a frog in a pot of boiling water, it will immediately jump out. But if the frog is placed in water at a comfortable temperature that is gradually heated to boiling, the frog is unable to detect the gradual increase in temperature until it’s too late. A shift in your organizational ethical climate can be like the water temperature as it gradually heats to boiling.

A culture change may spawn in the lower levels of an organization or may be driven from the executive level. Changes that occur at lower levels of the organization can often do so because executive leadership is ethically neutral. The executive level or managerial level is not communicating any message(s) about ethics; they are not setting any ethical standards or using any rewards or punishments to ensure ethical standards are adhered to. Therefore, even though an ethical crisis may originate at lower levels of the organization, the executive and managerial levels are also culpable if they have been, at best, ethically neutral or worse, morally mute.

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