Monday, 4 January 2016

I'm just saying...

Recently I was listening to an analyst discuss the conduct of one of the companies that he was following.  The company had been in the news for the wrong reasons and the stock was being punished by the market...but not as much as had been expected.

The analyst, who noted that he was also a stockholder in the company, opined that the conduct of the company was unethical but then quickly added " least it was not illegal..."

WOW!  How's that for rationalization?

How does one determine that the law trumps ethics.  Aren't ethics really 'laws' that are simply not codified in the criminal code?  Most professions in Canada, indeed around the world, have a Code of Ethics to which their members are held.  A breech of this code often carries far more serious consequences than those provided under the laws of the land because it can lead to the expulsion from the profession. 

Where the law may have imposed a fine or even a jail sentence, losing one's profession means starting all over again, but with the stigma of prior misconduct attached to it.  I submit that the latter has a more far-reaching impact than the former.

And what of the employees of this company. How would you like to be introduced as a member of an unethical company.  I may be splitting hairs but an illegal act can be redeemed by contrition and better corporate governance. The offence may have been a one time act and not typical or representative of the company's normal business practices.

A lack of ethics though generally indicates a systemic situation that has likely permeated the organization over time.  Frequently starting small but then infecting the whole of the company, the matter requires far more remedial intervention than a `mea culpa` and pledge to behave better.  To change the ethics likely requires a change in leadership and a re-orientation throughout the company as to what constitutes acceptable behavior. This realignment takes time because it requires repetition in order from it to become habit.

The recent example of Volkswagen speaks to this issue. The fact that engineers thought that it would be acceptable to tamper with emission results stemmed from a failure of ethics in the first place.  It was this cultural malaise that led to the crime being committed, not vice versa.

As the leader, you have a duty of care to set the bar as high as possible.  Your example is the standard that others will see as acceptable in your company.  Have you set it high and are you communicating this expectation to others.  This must be a case of ' as I say...and do as I do...'

The public has choices with regards to whom they will support.  Increasingly they shun those who put financial results ahead of ethics.  Work hard to ensure that your company is among those whose ethics make the news for all the right reasons.