To audiences unfamiliar with the topic of business ethics and corporate social responsibility, as a business ethics speaker, business ethics consultant and book author, I ask the audience to think about a pebble thrown into a lake.
Business ethical dilemmas and how the dilemma impacts stakeholders are concepts all too often ignored by those committing the fraud. Who are stakeholders? It is everyone directly or indirectly affected by the wrongdoing of the organization. The stakeholders include shareholders – and the organizations making markets for the stock, as well as the organizations with whom they bank; employees and their families; the vendors, contract labor and remote workers; in-person and virtual communities and, of course, the customer base.
The ripples may also extend to outside auditors and accountants; governmental agencies and indeed, can extend to trade associations, competition and the entire industry in which the corporation operates.
Business ethical dilemmas and how it impacts stakeholders
At some point, no matter the size or sophistication of the organization, there is a decision made to be ethical or unethical. It needn’t come “from the top,” but anyone in a position of influence. Surprisingly, and as a business ethics speaker, consultant and book author, every one of these decisions is based on three factors: a lack of oversite, a need and rationalization.
Let me briefly relate three examples:
- Pharma industry bribe. A few years back, the director of sales of a major pharmaceutical company, through an intermediary, made a significant bribe to an overseas medical center. It was figured that because no one was paying attention, they would get away with it. It did result in a huge sale. For awhile the director was the heir-apparent superstar until the CEO – and the competition found up. It resulted in a massive scandal complete with terminations, major fines and a loss of reputation.
- Car manufacturer fraud. A major European automobile manufacturer with a need to push out a faulty diesel motor forced underling workers to “fudge” emissions data. The EPA eventually discovered the decision to deceive the public. This resulted in huge fines, terminations, jail sentences and a drop in stock price.
- Bank opens fake accounts. A publicly-traded, U.S. – based bank forced its branch employees to open fake accounts with the ultimate goals of charging extra fees and obviously, making the organization appear even larger than it is. They minimized and rationalized their behavior and if managers didn’t comply, they could face termination. The strategy boomeranged, the corporation’s reputation was (for a while) shot, numerous accounts were closed and top executives were fired.
As a business ethics consultant and business ethics motivational speaker, I can say with confidence that in the moment, those who are deciding to commit fraud know exactly that they are about to engage in is an unethical act. In numerous confidential consultations, everyone “admitted” that they knew they were in the wrong.
What most unethical individuals don’t consider is the ripple effect I referred to earlier. Those affected can fall way outside of the close-knit corporate group. In the case of the car manufacturer, I cited above, everyone from dealerships to advertising agencies to shipping companies were affected. Clearly innocent and unknowing employees lost their jobs; shareholders lost valuation in their portfolios and the industry itself was under greater scrutiny.
Ethical training helps stop ethical dilemmas
Ethical training is far too often seen as being the domain of middle management and lower. In fact, it must go from the top down. And, the same set of expectations must be in play for everyone in the organization. It is why I feel that third-party ethical trainers are much more impactful than in-house trainers. While I am respectful and empowering of everyone “in the room,” I am also not intimidated by executive leaders who feel as though “ethics are for the little people.”
In this age of corporate social responsibility, industry watch-dogs and “green” expectations, there are no little or big people in an ethical sense. Everyone is in it together.
LEAVE YOUR COMMENTS!
