Talent Development 8 Compliance and Ethical Behavior

August 27, 2020

The topics of Compliance and Ethical Behavior are part of the ATD CPTD Certification model.

This topic involves a knowledge of laws, regulations, and ethical issues related to the access and use of information. There are numerous statutes that help to safeguard sensitive information, whether that is copyrighted information, patented technology, or personally sensitive data.

The area of ethical corporate behavior is the topic of this article. I have been involved with ethics all my life and have taught different courses on the subject at local universities. I consider ethical behavior to be a subset of trust, and it is simply about doing business the right way.

We tend to rationalize situations when there are difficult choices. We use flawed logic to make something seem right when it really is not. To guard against ethical lapses, we need organizations to build cultures of trust and psychological safety.

The ability to speak up when you see something that does not seem right is at the core of ethical behavior. Unfortunately, in many organizations, the leaders find ways to punish rather than reward whistle blowers.

Leaders who have built up a high degree of trust based on the knowledge that it is a good thing to speak up when something does not seem right have the advantage of many eyes and ears to view each action. If a leader gets off the straight and narrow through some form of rationalization, the individuals will point that out. It is up to the leaders to reinforce this candor by making the whistle blower glad he brought up the problem.

In Rochester New York, we have a group that has been seeking to raise the level of ethics in our extended community by celebrating organizations that are doing great things with respect to ethics.

We call the effort “Elevate Rochester” because by openly celebrating highly ethical organizations we raise the level of awareness for ethics. Our vision is to eventually become the “Gold Standard” in terms of an ethical community.

We have a long way to go, but our program is strong and vital. It involves an annual contest to uncover highly ethical organizations (except 2020 due to COVID-19). The contest starts early in the year by a series of breakfast meetings to encourage organizations to apply for an award we call the “ETHIE.”
Groups then fill out a brief application form that asks for content and examples in the following four areas.

1. Ethical Leadership – we ask the organization to identify the importance of values, ethical standards and moral conduct in all stakeholder relations.
2. Organizational Excellence – to establish and maintain ethical standards and operational processes that are well deployed throughout the organization.
3. Ethical Challenges – this is a description of how the organization deals with ethical issues when they come up either internally or externally.
4. Corporate Citizenship – how the organization gives back to the community and supports the well-being of society.

For 2021, we will be adding a fifth section that deals with how well the organization practices inclusion and equity principles in their work.

Organizations fill out the application, and an independent panel of judges decides which organizations meet the criteria and pass on to the next level of activity, which involves a site visit to witness the degree of deployment of the above areas.

Finally, in the Fall, there is a celebration that mimics the Oscar Awards, thus celebrating the best ethical organizations in our region.

Participating organizations tell us that the organized process is the valuable part of the contest. Getting a glass statue for the trophy case is the icing on the cake, but the real benefit is bringing ethical behavior front and center within the organization on a daily basis.


Robert Whipple is also the author of The TRUST Factor: Advanced Leadership for Professionals, Leading with Trust is like Sailing Downwind, and Trust in Transition: Navigating Organizational Change. Bob consults and speaks on these and other leadership topics. He is CEO of Leadergrow Inc., a company dedicated to growing leaders.



Trading Off Long and Short Term

August 25, 2013

360 DegreeA conundrum for most leaders is the issue of long term versus short term results. Most western cultures reward executives based on the short term result. Eastern cultures tend to have a longer view of performance, but even there, patience for short term problems wears thin.

It is easy to say, “Well, you need to do both,” which is a kind of cop out statement. Of course both are needed. If you fail to do right by the long term there is no future for the entity, but if you fail in the short term, there may be no future for you.

Compensation plans for most senior leaders have tended to favor the short term focus. Ethical or legal problems crop up when the pressure for quarterly numbers becomes too great. There are hundreds of stories where companies have pulled material from inventory and called them “sales.” This is an example of an unethical behavior that ultimately causes a crash. Reason: When accounts are juggled in an effort to maximize the short term, the organization is already on a slippery slope. The difference has to be made up sometime, so the long term is in jeopardy.

When you recognize the temptation to “shade” earnings to look most favorable is like a drug, it is easy to see how large corporations get caught in a whirlpool that eventually pulls them under. The Sarbanes Oxley Act was one attempt to make it more difficult to cheat on short term results. In fact, SOX worked! It is more difficult to cheat, but it is also much more expensive to operate, and cheating is still possible. It simply requires more creativity. We should not depend on legislative band-aids to save our corporations.

There is ample evidence that doing business in an ethical manner with a balance of emphasis between long and short term goals is not only more comfortable, it is much more profitable. The Conscious Capitalism Movement is one example of how organizations are finding ways to become more secure, more profitable, and more ethical at the same time. By working to satisfy the needs of all stakeholders rather than just the shareholders, a kind of self-balancing situation arises that is clearly good for business both short term and long term.

John Mackey and Raj Sisodia wrote a book entitled Conscious Capitalism that has started an entire movement. They stress the balance of having all decisions work to satisfy all six stakeholders: 1) Stockholders, 2) Customers, 3) Employees, 4) Suppliers, 5) Community, and 6) Environment. Balancing the needs of all stakeholders gives a better chance at making rational decisions that balance the short and long term benefits to not only the corporation but to society as a whole.

The entire Conscious Capitalism model includes much more than just considering the six stakeholders in decision making. The full model includes:

1. Developing core values and a higher purpose
2. Instilling higher leadership
3. Integrating the needs of all stakeholders
4. Developing a conscious culture of management

The Conscious Capitalism Model is a great way to view business, and I recommend the book to any leader who feels habitually caught between the long term and short term decisions that drive them crazy. It is a very good read that makes a convincing case that doing things the right way from the start is not only less stressful, but far more profitable and sustainable.