A Business’s Silent Killer

The thrust to grow or change a business can awaken a virus that may be lurking in any enterprise—a debilitating breach of ethics.

We may be too confident that our own business will never be afflicted by a debilitating breach of ethics. Hence the astonishment when business misconduct threatened Wells Fargo, Volkswagen, and Stanford University; tainted Uber, Major League Baseball and Wal-Mart; and tarnished the personal brands of previously respected NFL club owners, entertainment icons, athletes, and business executives. And in Washington, the unethical behaviors of officials are too often rationalized in deference to winning elections (at any cost?).


How does our acceptable behavior morph into the unethical? Where does unethical behavior then mutate into the illegal?


The lines between the ethical and the unethical are not always clear. Simply put, ethics are the behaviors that characterize what’s right in our behavior and our relationships. They may vary by country and by organization, and businesses that have not clarified their own “code of ethics” risk leaving the line drawing to each employee. In the extreme, the boundaries that divide the unethical from the illegal also may not be clear enough, as we witness that attorneys go to jail too.


For any organization, leaving ethical definitions to each employee will not absolve an employer of accountability. I don’t remember the name of the coach who accepted a payment to get a celebrity’s daughter into Stanford, but I do remember that it was Stanford.


Getting to the point – put your house in order. Draw clear, succinct, and enforceable boundaries.


Consider a simple test: How would you react to the disclosure of details of your business conduct to your customers, suppliers, or employees? How would those details play in the press?


Employees know that you expect results, but do they know how you expect they’ll be achieved? Assure that your employees understand ethical behavior and the boundaries that apply to everyone. You’ll need to communicate and discuss expectations (and consequences). But it’s also how your own behavior is seen that will affirm or nullify the rules. And you’ll always have an audience.


Applying the “golden rule” may help, but there are conflicts that may compromise best intentions. Your employees don’t set out to be unethical but with unclear boundaries, any employee might adversely impact your company if he or she:

  • Does what’s easy, versus what’s right

  • Fails to disclose a personal or business miscue

  • Slips from the telling of white lies into the making of incremental compromises that eventually cross the line

  • Overreaches for financial gain (theirs or the company’s)

  • Focuses solely on hitting performance metrics

  • Follows any questionable example of superiors

And please remember that your own brand can also be impacted by those outsiders with whom you do business. For example, legitimate financial advisors were devastated by the good faith investment of their clients’ funds with Bernard Madoff.


At a point that you can recognize greed or arrogance in an employee or business partner, the virus has progressed. Initial damage has already been done, and the time for rehabilitation may be passing. Save your reputation and your business. Sever the infectious relationship quickly. Left unchecked, misconduct will spread – within your business and to your industry. We can look at how ethical lapses can lead to unwelcome intervention (e.g., Sarbanes-Oxley), born of public disdain for the questionable practices of just a few in an industry.


Company brands are established by offerings, quality, service, ease of doing business – and trust. So, as you focus on the numbers, don’t lose sight of the rest. Principled customers, suppliers and employees will not stick around to risk their own brand being tarnished by association with yours. They’re all free agents and they all have options.


Business competitiveness and our national culture saddle us with a conflict between economic Darwinism and our Puritan roots. Most companies have found an ethical balance.

 

Stan Davis is the Founding Principal of Standish Executive Search, a New England-based firm that advises business owners, executives and boards who are positioning their companies for accelerated growth, change or succession.

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