People act in their own best interests; not necessarily because they believe they are doing the right thing or because they may be punished or rewarded for doing so. And if a company wants to promote and assure ethical standards are followed then transparency, trust and developing an ethical culture based on guiding principles is critical. My client, Penn Mutual, is a shining example of what to do right.
We can talk ethics all day long but, if leadership does not follow the stated company principles, trust does not exist.
[tweetthis twitter_handles=”@RichardMBowen”]If leadership does not follow the stated company principles, trust does not exist.[/tweetthis]
So it is no surprise that four years after receiving more bailout money than any of the other too-big-to-fail banks Citigroup admitted to breaking FHA rules, certifying thousands of unqualified mortgages for FHA insurance and continuing to take risks with taxpayer money, as told in the Kellogg School of Management’s white paper. Some of this story is chronicled in my earlier post.
And my experience at Citigroup has put me on a quest to discover what ethical leadership is and is not.
Adam Waytz, an Assistant professor of Management and Organizations at the Kellogg School, the author of a recent award winning business case on Sherry Hunt’s (and my) whistleblowing story has also investigated some of the tough questions about ethical leadership. He asks how could Citi have prevented this chain of events from happening? One red flag goes up for me immediately, when Sherry Hunt and I were yelling loud and clear, no one listened. No-one cared to. Yet the CitiMortgage CEO claims not knowing?! He said, “Did you ask her (in reference to FHA investigation) if she (Sherry) spoke to me?”
Are there steps that can be taken to assure fraud is a moot point? Can whistleblowing be stopped before it is needed? Yes, if an organization truly believes values matter, then transparency is key. Ethical leadership is assuring open discussion, no grey areas, no hiding behind numbers and making sales at all costs. Leadership must be clear in communicating with employees at all levels, especially at the C- level, that THIS is how we operate- honestly, transparently, not just rules and regulations but a full blown adherence to corporate social responsibility. Not just a written code on a shelf, but one that is followed, talked about, expected and rewarded. A respect for human dignity, human rights, sustainability and justice.
[tweetthis twitter_handles=”@RichardMBowen”]Can whistleblowing be stopped before it is needed?[/tweetthis]
Creating a culture that works welcomes open honest dissent, and discussion. Employees who see wrongdoing are not put in a corner and all their responsibilities and direct reports taken away as happened with both Sherry and me — but listened to and the problem explored. Everyone is engaged in ethical issues. Each employee knows they are accountable for fulfilling the Mission and following the guiding principles.
Interesting the companies who follow guiding principles and welcome open discussion, show open, honest corporate responsibility are also those who get and keep the best employees and, surprise, make a profit. If Citigroup had promoted a commitment to ethical leadership, well that’s another story isn’t it?
As Whole Foods says, “Values Matter”.