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Volume 8 | Issue 3

Putting it in context

A message from CDC Integrated Services, LLC

Ethics from the Top Down

Ethics from the Top Down

Two months ago I began this series of articles exploring the crucial need for integrity at the most senior levels of an organization, and I followed up with a review of the challenges employees face when leaders fail to maintain their integrity. This third article concludes this series by focusing on how employees deal with many of the challenges they face when leaders fail in this fundamental aspect of their leadership responsibilities.

In the framework of most human organizations, authority and power are greatest at the top and the least at the bottom.  Yet, what is equal among all employees, regardless of their role, is the obligation to maintain and work within the boundaries defined by the three sides of a triangle; the Integrity Triangle. The points of this triangle are:

  • Integrity
  • Ethics
  • Truth

Inside businesses, the perception prevails that leaders embrace this concept and embody all three elements noted above. This is not always the case. In the previous article, I discussed a significant gap between what leaders perceive as important and what the majority of employees see as important.

This article explores how the ethics leg of the triangle, when violated at the leadership level of any group or organization, often leads to moral dilemmas among “downstream” employees. When those downstream have strong ethics of their own and recognize unethical behavior by their leaders and managers, this often puts employees in untenable situations and predicaments.

Employees are challenged every day to find a path forward when facing these dilemmas, and many employees don’t find a path forward that maintains the integrity of the triangle.  The Association of Certified Fraud Examiners (ACFE) estimates businesses globally suffer annual losses in excess of $2.9 trillion as a result of fraudulent activity.

This is a huge sum, indicating a level of unethical behavior that’s become widespread and deeply entrenched.  The sad reality is the majority of these frauds become visible far too late, and those punished often are those with the least ability to sway the outcome. An equally sad reality is that when ethics and integrity break inside an organization, that break occurs very close to the CEO’s office.

Behaviors at this level, that violate the viability of the integrity triangle, cause real harm to individuals down and across the chain of command by doing violence to widely accepted codes of conduct.

What the ACFE findings also show is that these ethics and integrity failures damage transparency hinders honesty, and creates long-term consequences that extend beyond the boundaries of that organization.

While incidents of unethical behavior may seem isolated, both in business and the public sector (including the political arena), it is more common than most realize. Look around and examples are easily found. Recent examples include:

  • A meat processing company packaging horsemeat and advertising it as beef
  • A bottled water company filling its bottles with tap water and advertising it as something else.
  • A company offering misleading sales information to attract investors
  • Leaders of a state agency participating in a Medicare scam

In these kinds of situations employees further down in the chain of command find themselves compelled to participate in these schemes. They are faced with the dilemma of saying yes or quitting. These events create powerful moral dilemmas for the employees faced with participating or not.

It is easy to say the employee should quit. Only, we all know it’s not that easy. Beyond the obvious things like keeping a roof over one’s head, and feeding a family, quitting a job in the current economic environment is a very high-risk proposition for a lot of other reasons as well.

It appears the wider the integrity gap between leadership and middle management or the line operations personnel, the greater the danger that:

  • Leadership succumbs to the temptations of power (think Wells Fargo)
  • The moral integrity of employees is challenged and pressured to acquiesce to a “new norm” or risk the destruction of the can you not worry about that please in this deal with the day the reviews me and I just use that as a benchmark the system. (think Shuttle Challenger and the Bhopal, India gas disaster)

The hard truth is that corporate ethics have been under increasing scrutiny as a result of a hypercompetitive marketplace – for the wrong reasons.

In the current environment, companies are constantly challenged to meet or exceed expectations. More than a few company leaders resort to making business decisions that require employees to take actions that, while not necessarily illegal, can be perceived as unethical.

In today’s ultra-competitive marketplace, some corporate leaders believe a strong commitment to ethical behavior unfairly limits their ability to create desired organizational results.  So, they rationalize the underlying ethos of their decisions and demand their subordinates do the same. Thus, it should surprise no one that 41% of surveyed workers reported seeing ethical misconduct in their workplaces within the previous 12 months.

INSIDE BEHAVIOR OUTSIDE CONSEQUENCE

Thanks to organizations such as ACFE and the Foundation for Government Accountability, the public, and society as a whole is starting to react and pay attention to the problems highlighted by these examples.  A wide range of groups and individuals are demanding answers, and while some companies are responding, many are not. From those who see the need to change we’ve seen.

  • Changes in leadership
  • The renewed focus of codes of conduct
  • Expanded training
  • Greater transparency

Yet, as noted above, other organizations continue to conduct themselves in an unethical manner with little regard for public concerns. In these companies, individual employees will continue to find themselves at risk.

Earlier in this article, I alluded to the risks employees face. A recent survey found that 53% of U.S. workers who reported misconduct were retaliated against! So, what can be done when a boss asks a subordinate to act in a way that they believe is unethical?

HOW TO RESPOND TO UNETHICAL REQUESTS

The word “No” has great power that most do not fully understand. The secret of the power of “No” is in the questions that must be asked first.

Whether these managerial requests are the result of a culture that tolerates such behavior or reflects a leadership personality that uses power to pressure workers to behave unethically, the individual employee/ subordinate must still deal with the effects of these requests.

Business ethicists and compliance officials usually give the benefit of the doubt to the leader/manager:  perhaps they made the unethical request unwittingly.  Similarly, they warn of the importance of making sure employees fully understand the situation surrounding their boss’s unethical request. The key is to take a defensive stand in a way that creates flexibility.

Here the employee can use the power of “No” by asking a few key questions, such as;

  • Ask for clarification regarding instructions received
  • Ask for details about the deliverable(s)
  • Ask who the key stakeholders are and what kind of feedback they need
  • Ask that anything potentially concerning be relayed in Emails with dates for feedback.
  • Ask if flexibility exists in providing alternative solutions to what is being requested.

Asking questions creates a focus on the idea that the person executing the work in a potentially unethical manner has the ability/permission to create a more ethical approach for solving the problem. If “cutting corners” to expedite an activity feels unethical, they might mutually brainstorm other ways a boss can still achieve the desired outcomes and the employee can feel comfortable with the desired actions.

One other point; demonstrating courage often helps shape a more positive outcome. It’s important to resist bullying. It is one thing to use the question technique to prevent shortcuts that may result in future harm. It is something else to succumb to direct pressure to engage in something that is clearly illegal.

When confronted directly about the difference between breaching the code of conduct and engaging in something with legal ramifications, the bully will almost always back down; especially if you have set the stage with the questions technique.

REASONS FOR ILLEGAL REQUESTS

None exist.

Leaders and managers who knowingly or unwittingly ask their subordinates to engage in activities that are illegal may still be held liable for the consequences – as will the subordinate since they complied with the illegal request. The challenge is how to protect oneself in the event of a lawsuit stemming from these illegal actions.

Every company over a certain size is required to have a formal grievance process, and that process must be laid out in detail in the material employees receive when they are hired. Often these processes are managed by outside companies with confidential Hotlines and other means of addressing a concern that is perceived to place an employee in jeopardy.

An unethical boss is the bane of an ethical employee’s existence plus it can be an environmental factor that leads to the psychological, emotional, and physical stress elements of burnout. Those currently employed at companies with unethical leadership have some important decisions to make: 

  • Is the unethical request a one-time issue, and is it potentially illegal?
  • Is it an indication of the corporate culture? 

If they stay with their employer, can they handle the emotional strain of staying in an organization whose values are misaligned with their own?  And, finally, is the risk of potential civil or criminal charges against them associated with this action?

Unethical or illegal management requests can place an employee into both types of legal jeopardy. These kinds of pressure are not isolated, and it’s important to note that prior to the 2020 epidemic, employee disengagement from their job ranged from 37% to as much as 48% across any given week, and one of the biggest contributors to this disengagement was distrust of the supervisor.

The hard truth is that when one’s employer is behaving unethically, the best thing is to leave the company. It is hard for people who depend on their paychecks and health benefits, which cannot with the employee to his next job, to go the whistleblower route.

Employees that make this difficult decision still have to protect themselves from being painted as villains after the fact. It is not enough just to resign. As a minimum, employees that choose to leave should:

  • Document their concerns keeping to the facts as much as possible
  • Where feasible, report these to a higher-up
  • Present the details of their ethical decision at their exit interview
  • Reserve the right to have any exit documents reviewed by a third party before signing

At that point, they can “fire” their former employer by telling them their conscience and values and good reputation are the top reasons for their leaving the job. What matters is that they stated their reasons clearly without descending into unprovable finger-pointing, and left with reasonable certainty they would not be embroiled after the fact.

Food for Thought: “The major dilemma is that we tend to listen to reply, while all we should do is: listen to understand and feel.” (Akilnathan Logeswaran)

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