Ed. Note-today we have a guest post by that well known Code of Conduct maven, Catherine Choe.
It’s been years since I had a subscription for paper delivery of the news. I read the news either on my computer or on my phone, and I tend to skim the headlines until I see one that interests me (usually an article on the most recent compliance & ethics failure). A few weekends ago, I visited friends who still have the Sunday New York Times delivered to their home, and as I sipped coffee, leafing through their paper, I stumbled across an item I would have missed electronically: “The Whistle-Blower’s Quandary.”
The authors of this piece, found in the Opinion section, are a trio of professors who did a series of studies on why and when people blow the whistle. The article starts with an obligatory mention of Edward Snowden, and I almost moved onto the next item in the paper, but their definition of whistleblower caught my attention: “research participants… [who] witnessed unethical behavior and reported it.” This is the behavior we in C&E try to encourage among our employees, and so, intrigued, I kept reading.
In one of the studies, the participants were asked to describe a time that they witnessed an ethical failure, reported it, and why; they were also asked to describe a time that they witnessed an ethical failure, did not report it, and why. In analyzing these responses, the authors found something interesting. When the participants who reported ethical failures described their actions, they “use[d] ten times as many terms related to fairness and justice, whereas non-whistle-blowers [sic] use[d] twice as many terms related to loyalty.” The short piece concludes that if we want our employees to come forward and report the ethical failures that they witness, we need to be emphasizing fairness and justice in our Codes of Conduct, communications, and training, as those are the concepts that encourage speaking up, where emphasizing loyalty will encourage silence.
This reminded me of one of Matt Kelly’s blog posts at Compliance Week, when Kelly reported the conversations that he facilitated with a group of CCEOs on the topic of cultivating C&E leadership. One of the CCEOs at the roundtable said, “The reward for good conduct is keeping your job.” But as Kelly correctly notes, “That approach can convince an individual employee not to violate your Code of Conduct, to be sure. But it does not necessarily inspire him to call out other misconduct, when that is exactly what compliance officers desperately need.” Kelly framed his post with the concept of allegiance, that what CCEOs need are employees who are allegiant, or loyal, to our companies, “people who will act as advocates for the company’s best interests.”
In his blog post, Kelly noted that expecting this level of loyalty from our employees may be a hard sell. Modern companies exist to make money for their shareholders. This has caused a situation where we’re all focused on hitting quarterly goals so that we don’t spook Wall Street. It creates situations where companies don’t, or maybe can’t, exhibit any behaviors that would inspire the kind of loyalty we’re looking for in our employees. We operate in a business culture where companies that prioritize the satisfaction of their employees are studied and celebrated like the rarities they are, but then we don’t emulate them.
Does the piece in the Times mean that we can stop worrying about loyalty and that we should instead focus on fairness and justice? Nothing in life is ever that simple.
A few years ago, the Compliance and Ethics Leadership Council did research into what the leading indicators of misconduct are, i.e., the signs that tell us in advance that we’re more likely to find misconduct at our companies. CELC found that that one of the top leading indicators of misconduct is when employees identify more closely with their individual work groups or departments than they do with the company as a whole. (You can see versions of this at play in many Sales departments and in one of the justifications for violating the Foreign Corrupt Practices Act: “this is how WE do business [insert relevant region here.]”) In follow up research, CELC also found that one of the primary reasons employees don’t report the misconduct that they witness is because they don’t think that the company will do anything about it. Employees don’t believe that there will be what CELC calls “organizational justice,” where wrongdoers get punished.
What all of this boils down to for me is that fairness and loyalty don’t oppose each other, as the professors posited. Loyalty reflects fairness, is an accurate measure of how fair we are. If we consistently enforce our own rules and standards of business conduct, employees will exhibit loyalty by speaking up when they see misconduct. If they see evidence that the company takes its own rules seriously, employees will exhibit loyalty by following the company’s lead and also take the rules seriously. If, however, we make exceptions in how we enforce our rules and standards of business conduct (e.g., we can’t fire John because he’s our top performer even though we know he’s unethical; we’re not going to dig deeper into why we were able to penetrate a new market so quickly because we only care about being successful and not how we were successful), employees will exhibit loyalty by keeping silent and enabling the misconduct.
If we can’t back them up with visible action, sprinkling the words “fairness” and “justice” instead of “loyalty” into our Codes and communications and training won’t inspire the kind of loyalty Kelly and his roundtable of CCEOs want. “Actions speak louder than words” is a cliché for a reason. It may be overused, but ignoring it or discounting it won’t make the underlying wisdom go away.
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