Tuesday, February 18, 2014

The Issue of Corruption

At the end of 2013, on the completion of a very “hands-on” workshop on values, ethics and competitive advantage, a senior level manager working outside of Australia came up to me and commented that, until working through this program, he had never believed that you could be totally ethical and also competitively successful.

I was shocked. This person came from a European country that has a reputation for highly ethical behaviour yet, as on-going discussion then ascertained, he had discovered that hidden behind this national fa├žade of respectability lay some degree of a “whatever it takes” mentality and practices.
Over the days of this workshop we had explored media reports of unethical (and probably corrupt) behaviour by Australian and other companies operating internationally and, using a framework of duties and consequences, had explored both the legal and ethical issues involved in running successful international operations – especially the matter of using professional advisors to find “acceptable” ways of circumnavigating national and international laws on bribery and corruption. 

One of the biggest learnings was the reminder that it always “takes two to tango”. In other words unethical and corrupt behaviour exists because both parties see it as an acceptable way (and cost) of doing business: both parties have at least an implicit (and sometimes explicit) understanding that the end justifies the means.

Throughout the workshop, participants had explored what happens in their own company and this lead to considering how the mindset of “the end justifies the means” had come about. Their conclusions were:

  1. The Board and top management give confusing signals. On the one hand they speak of the need to behave ethically and appropriately but on the other hand they encourage a “pushing of the boundaries” in order to achieve desired results and, unless some negative consequence (such as bad publicity or some third party investigation) follows questionable behaviour, generally a “blind eye” is turned. In addition, at a very senior level, much time and money is spent on seeking legal ways for complying with what is considered to be “the way of doing business” in some countries.
  2. The value statement of the company is seen as a “feel good” set of ideals rather than the drivers of behaviour. They are couched in such broad terms that anyone with a reasonable level of debating skills can use them to justify almost any behaviour.
  3. An excessive focus on short-term results such as quarterly reports and employee bonus schemes rather than a more balanced short-term – long-term emphasis.

Right now a high-level team has been established so that these conclusions are being addressed across the company. It will be interesting to see what changes emerge in the coming months.

In the February 12, 2014 edition of “Knowledge at Wharton” (a publication of Wharton Business School in Pennsylvania, USA) there was an interesting article that reflected the fact that questionable behaviour exists not only in the organisation with which I was working, but can be found across the board (http://knowledge.wharton.upenn.edu/article/managerial-myopia-ceos-pump-earnings-gain/) – even when the desired results of such behaviour never eventuate!

How is the probability of unethical and/or corrupt behaviour in your organisation minimised? I'd love to know. Please use the comment section below to let us all know.

More information about Doug Long at http://www.dglong.com