We know that ethics can be taught, but the more important question is: “Should ethics be taught?”
The knee-jerk refrain in many companies might go something like this: “An ethics lecture? Oh sure, great idea, but first let me get to my sales projections and if I have time, I’ll show up.”
In all too many companies, the sentiment expressed above is all too common. Topics such as ethics in the workplace – and in life – are thought of as secondary objectives rather than primary. An executive in the sales department or accounting or purchasing might be on board with the idea of ethics training, but to the collective mind of the organization there may be much more important priorities.
Or are there?
In their 2012 “Report to the Nations,” The Association of Certified Fraud Examiners has issued some pretty significant statistics and even more significant warnings.
The Statistics of Failed Ethics
The effects of failed ethics within an organization can be measured. It is not a feel-good “up in the clouds” statement. Around the world, the effects of employee fraud have been measured at more than $3.5 trillion. Both small and large organizations are affected. The median amount of fraud was measured at $140,000 however, in more than one-fifth of the companies, fraud accounted for more than $1 million in losses. In cases of “old-fashioned corruption,” for example, the giving or taking of bribes or accepting gifts, or overlooking faulty goods or services not delivered the average losses amount to $250,000.
What are the kinds of organizations affected by employee fraud?
The experts have found it occurs most frequently in banking, financial services, government, public administration and manufacturing. In other words, fraud takes its toll both in the private and public sectors.
What departments within those organizations commit fraud? Cases of misplaced ethical priorities have been found in accounting, operations, sales, upper management, customer service and purchasing. Unfortunately, in the overwhelming majority of cases, it has been found that the longer a perpetrator worked for a company the higher the amount of loss associated with their fraudulent actions.
It has also been found that the higher up the ladder the higher the amount of fraud. Therefore an upper level employee will take more than a lower level employee. Therefore, simple right and wrong cannot be blamed on the “new person who doesn’t know better,” or on any particular job title or certainly on the “guys in the mail room” above a high level marketing person. Failed ethical behavior does not know a “type,” or a “level of education,” or a “length of time in service.”
The Atmosphere of Failed Ethics
An employee who is unethical neither works completely alone, nor is the discovery of that unethical employee necessarily a complete shock to the organization.
Fellow employees might suspect something is amiss but they are afraid of retaliation or censure. New employees might not want to rock the boat, or they might be tempted into complicity. In many organizations there is no way to report failed ethics.
The study by The Association of Certified Fraud Examiners revealed a shocking statistic:
In 81% of cases, the fraudster displayed one or more behavioral red flags that are often associated with fraudulent conduct.
Whether the behavior was seen and condoned, suspected or pardoned were all functions of fellow employees seeing highly questionable ethical behaviors as gray areas and not black and white, right and wrong issues. What were behaviors that may have been seen and not reported?
Living beyond means was seen in 36 percent of the cases; financial difficulties in 27 percent of the cases that may have led to certain temptations; unusually close associations with vendors or customers in 19 percent of the cases and excessive control issues in 18 percent of the companies were the most commonly observed behavioral warning signs.
Even if I didn’t know for certain that something fishy was taking place, wouldn’t I be just a bit suspicious at someone who would never let me sit in on vendor meetings, always favored the same vendor and who just bought a high-end automobile?
There is also a certain amount of unsuspected complicity here.
If I, as a mid-level employee, were to hear of a situation where my director had his living room carpeted as a favor for accepting a bid, and there was no means for me to report it, would not my company – even to the smallest extent – be somewhat complicit? I believe the answer is an unqualified “Yes,” and I also agree that by not allowing ethical employees to confidentially report fraud is also due to a lack of awareness and a lack of training programs dealing with the issue of organizational ethics.
Training Should be Mandatory
The experts on fraud agree with my point of view, and in their 2012 report, The Association of Certified Fraud Examiners concluded:
“Targeted fraud awareness training for employees and managers is a critical component of a well-rounded program for preventing and detecting fraud.”
The experienced sales executive, who deferred going to the ethics lecture due to his sales projection assignment, should have been told that training was mandatory.
There is no higher priority than ethics training. It may save an employee and it may even save a company.
One of the more serious findings of the 2012 report was that in more than 47 percent of the cases of fraud, whether large or small, nothing was ever recovered. Not a penny and not a pencil.
So Here’s the Question
What does your organizations ethics training program look like? Is Ethics in the organization a priority or a tolerated part of what HR and Compliance talks about? When you have ethics training programs are they boring or lively? Most important, do your ethics programs make a difference?
Ethics in the workplace is a serious matter, but talking about it doesn’t have to be “business as usual.” As author of this blog, I learned a lesson about ethics, choices and consequences the hard way—but now I share my experience so that others don’t have to. Let’s talk about how we can work together to put life and meaning into your ethics programs!
YOUR COMMENTS ARE WELCOME
