A matter of `comeuppance’?
By Herb Drill
"In the world at large, we cannot lead if our leaders mislead"
-- President Jimmy Carter
A recent Newswise agency report told of a study co-authored by University of Alabama/Birmingham (UAB) forensic accounting expert Dr. Tommie Singleton, published in the Journal of Corporate Accounting & Finance. Dr. Singleton examines companies with and without clear ethics compliance policies, and the study discovered firms without some formal ethics policy were no more likely to experience fraud than firms with policies in place.
It was a surprise that ethics activities didn’t seem to lead to less fraud.
Jacksonville psychologist Gerald Reynolds believes we all like to see the mighty fall, "get their comeuppance." As for the domestic diva, Reynolds says "mixed feelings” lose out to many folks who believe she's a “rich witch who tried to beat the system."
`Reynolds’ says it seems Ms. Stewart had “a sense of entitlement” in that she may have thought “because I’m Martha Stewart I can do anything I want. If she had come clean, if Bill Clinton had come clean,” it wouldn’t have been so bad, “with millions of dollars in legal fees and jail time.” There would have been a “different result. In both cases, “the lies afterward” hurt both people the most – “the penalty is seen by the public as a leveler. She was in error and has to pay.”
As for corporate or personal ethics, Reynolds believes “policies are just that; laws are just that.” The conviction to avoid fraudulent behavior “has to be deeply personal.” In Jacksonville, he sees “a difference here. It’s a large city,” but it has a “small town mentality, more intimate. People here are more likely to know you, know your family, than in a city say the size of Chicago.”
Meanwhile, Dr. Singleton believes it’s possible ethics compliance activities led to a higher awareness, and more reports. Another explanation: there is a correlation between ethics activities and firm size. Larger firms were much more likely to implement ethics activities but are more susceptible to instances of fraud.
Then, there was the Associated Press story out of West Windsor, NJ, about a man hired five years ago by Tyco International who received an employee handbook but little other formal training in business ethics.
Today, employees at a company that made headlines for its former CEO's lavish spending must take an interactive, online class that covers everything from insider trading to sexual harassment. There's also a column on business ethics in the company's newsletter and a new ombudsman to address employee concerns about the issue.
"The programs have helped define what is appropriate behavior in real-world situations. A lot of it is common sense, but some of it you may not know," said Tyco's vice president of strategic marketing. "You have to define ethics because, if you don't, people will do it themselves."
Many of the biggest U.S. companies, including MCI and Boeing Co., are expanding their training and hiring ethics officers and ombudsmen. Critics say many efforts are public relations moves, and that real promotion of ethics requires more than online programs or seminars. They note many of the recent corporate scandals occurred at companies that already had programs.
"They knew they were taking a risk, and it's because of greed," said David Silverstein, president and CEO of Breakthrough Management Group, a consulting group. "No training is going to change that."
One way is the Sarbanes-Oxley Act, a landmark corporate governance bill passed in 2002, requires public companies to establish a confidential system for employees to report wrongdoing and create an ethics code for senior financial officers. At the same time, the U.S. Sentencing Guidelines, which help determine penalties for corporate wrongdoing, are being rewritten to require companies to "promote an organizational culture that encourages ethical conduct."
Experts say a successful ethics program integrates its principles into the workplace. That means everything from staff meetings to discuss online training to providing employees with wallet-sized cards that reiterate company values. Ethics can even figure into an employee's paycheck via performance evaluations. "That's where employees' bread is buttered. If ethics isn’t part of the evaluation process, I don't think ethics will be taken as seriously as it needs to be," said W. Michael Hoffman, executive director of the center for business ethics at Bentley College in Waltham, MA. "This is part of getting people to talk about ethics."
It might be good advice to remember President Bill Clinton’s observation, after la affaire Lewinsky: “Strength and wisdom aren’t opposing values."