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 façade 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

Winning is everything?

I think it was the UCLA Bruins coach, Red Sanders who, around 1950, is reputed to have said "Winning isn't everything: its the only thing!"

It seems that this has been taken to heart by athletes over the years - of most recent note internationally we have it in the person of Lance Armstrong and, just the other week, in the widely publicised claims by the Australian Crimes Commission relating to a range of sports in Australia. If only "the end" is important than how you get there is irrelevant. Cheating, whether by the use of drugs or any in other form, is always a case of "the end justifies the means".

But its not just in sport that we find illegal and/or immoral behaviour. In Sydney right now the Independent Commission Against Corruption (ICAC) is investigating how a then member of the New South Wales Parliament stood to gain up to $100 million in a matter of months from an investment of around $4million - it is claimed that a then Government Minister manipulated matters to ensure that his colleague benefitted. The hearing is being closely watched across the State with drama being played out every day and the final findings will be eagerly awaited whether or not corruption is held to have occurred.

There are questions in the business realm also. For years Australian consumers have been forced to pay significantly more for identical products when they are purchased in or from Australia rather than in the USA. In fact a recent enquiry showed that, for one product, it was cheaper to pay for a return airfare to the USA and purchase an item on-line there than it was to purchase the same item on-line in Australia. There is now a Federal Government enquiry being conducted into this possible price gouging and Microsoft and Apple (among others) have been summonsed to appear after they refused invitations to voluntarily appear. They are being asked to justify why identical products, both sourced from the same location and requiring no additional expenditure by the supplier, have such a huge price variance other than 'the end (profit) justifies the means'.

There is no doubt that winning is important. Equally there is no doubt that almost always (other than in some non-existent utopia) there are winners and losers in every arena of activity. This is normal and natural. However "how" you win should always be at least as important than the winning itself.

Recently I've been involved with a company that changed its "how" of doing business. Three years ago it was turning over around $55million annually for about $1million profit. Last year, without reducing staff levels, remuneration, or any employee benefits and while remaining a local manufacturing and distribution business they had revenues of around $70million for a profit of around $11million. Three years ago they saw themselves as losers. Today they know they are winners - all because they took a different approach to "how" and concentrated on a new form of leadership.

What happens in your organisation? Where is the emphasis - on the "what", the "how" or both?

Winning is important. But its not the only thing.

What do you think? Please add your comments below.

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