Monday, July 16, 2012

We, the leaders

Is business ethics an oxymoron such as "open secret,"act naturally" or "exact estimate?" Sure seems that way as the list of misdeeds grows.

The Libor scandal continues to gestate like that deadly virus from The Andromeda Strain.

(Even if you can't differentiate Libor from a Labradoodle, you should be paying attention as it affects pretty much everything in the world of commerce.)

Other recent transgressions include faked CEO resumes, bribery, and outright theft, to name a few.

While businesspeople acting badly is certainly not the norm, the lack of business ethics is not a new subject. The portrayal of businessmen (and women) as murderers, conspirators and villains is one that apparently never grows old.  The list of business-related morality-tale movies is long and notorious illustrious.

None of the business owners I coach or consult with are sociopaths, fortunately, and I think it is safe to say that more business owners are focused on doing good, as opposed to doing well. They're more likely to be Rotarians than recidivists.

In fact, my experience is that owners are more likely to be the victims of bad -- even criminal -- behavior by those they employ, than vice versa.  I've coached businesses through the aftermath of employee fraud, embezzlement and just plain bad behavior.

Whether Wall Street or Main Street, ethical lapses stem from a lack of leadership at the top of the organization.  Whether victim or perp, business misdeeds are the fault of the owner/CEO and result from a poor culture enabling poor decisions.  As the saying goes: "A fish rots from the head."

How do you ensure that you are building an ethical operation, can lead it in the right direction and keep your own head above water (maybe not the right piscatory metaphor)?  Some first principles apply:
  • It starts with you.  You must have a vision and set of values that employees understand and use as a guide for their actions.  Whether it's Wall Street banks or the mom-and-pop diner, the ethics and values of any enterprise start at the top of the house and filter down.
  • Coach your employees.  "What you permit, you promote," one of my TAB members is fond of saying.   Discuss your policies and procedures openly and often, as there are many shades of gray that involve both good judgement as well as good ethics.  Recognize and reward good decisions.
  • Be clear and demonstrative.  Warren Buffet once said: "Lose money for the firm and I will be understanding; lose reputation and I will be ruthless." You cannot let small infractions pass.  Your employees do your customers if you are cutting corners on your brand promise.  
Mr. Buffet had his own dilemma just last year when faced with an ethical breach by a top lieutenant and admitted handling it poorly.  When it comes to instilling ethical behavior, it's a job that must never be delegated and must be made part of the fabric of your business.  And that's no fish story.

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