Rewards and punishments

We have a moral obligation to take care of ourselves.

We have a moral obligation to arrive on time to a dinner with friends.

We have a moral obligation to sell as much as possible for our our company.

When we impose a penalty or offer a reward for these behaviors, they risk becoming amoral. For some people, the question is no longer “should I do these things?” The question becomes “do I want the reward or avoid the punishment?”

For business ethics professionals, this reality should give us pause when we create our incentive programs.

 

Facing reality

According to Harvard University expert Ronald Feiftez, “the role of a leader is to help people face reality and to mobilize them to make a change.”

Many business leaders fail at this because they speak of a change without an accurate description of reality.

Let’s say your organization has faced several cases of harassment. The leader stands up and says “We have seen poor behavior recently and we need to change. We need people to respect each other and communicate better. A respectful workplace is conducive to better performance, which is good for everyone.”

That’s not facing reality. Yes, there has been poor behavior. But why? That’s what needs to be discussed. The people listening to the leader know that it’s partly because of the emotional and financial pressures put on employees. New hires are not qualified, compensation is not adequate and incentivizes shortcuts, jerks are promoted, etc. So when the leader paints a beautiful picture of a harmonious workplace but doesn’t acknowledge the root cause of today’s daub, no one is inspired.

Leaders must face reality first if they want to help others do the same. That’s how change is made possible.

Whose choice is it?

When it comes to the fraud triangle, employers can choose how much opportunity and pressure they will expose their employees to.

And employees can choose how they will rationalize their behavior.

We don’t control everything but our realm of choices is still pretty vast.

Knowing this makes it clear that the next corporate scandal is entirely avoidable.

If we choose to avoid it.

Adding flexibility to rules

Organizations are complex.

To operate them efficiently, rules are helpful. When you see something that works, it helps to create a process – a rule – around it. The rule creates an algorithm that can be preserved and shared and followed.

At the same time, the rule preserves the status quo. It creates rigidity. When change inevitably comes, resistance leads to breakage.

What if we could adapt before we break?

That’s where values come in. Values are flexible. We can perform with integrity and show respect and foster trust in various ways. We can change the rules as necessary without changing our values.

Values are to adaptive performance what rules are to tactical performance.

Culture and habits

As an individual, I have found that it is easier to pick up a new habit than it is to drop an existing one.

I have also found that it is easier to abandon a bad habit when I replace it with a good one. Not an unrelated good habit but one that goes in the opposite direction.

It seems that the same must be true with corporate cultures. After all, culture is simply an outcome of our processes, of “how we really do things around here.” In other words, culture is an outcome of our habits.

I have suggested before that if we don’t like an aspect of our culture, we need to change the process associated with it. But change it how? By eliminating it? Perhaps. By adopting an unrelated process? Unlikely. My intuition tells me that the best way to replace a bad process is by adopting an opposite one.

I intend on testing this theory at my next opportunity. In the meantime, I would love to read your thoughts about this idea in the comment section below. Thank you.

Best speech ever

What if you were asked to make a speech about the value of an ethical corporate culture?

What would you say? What arguments would you make? What inspiring thoughts would you share?

Would you wish that such a speech had already been written?

Well, it’s about to be.

I created a Google document for all of us to collaborate on. Go ahead, click here and help us create the best speech ever.

Al Capone and cover-ups

The American gangster Al Capone was convicted of income tax evasion today in 1931.

One could say that it wasn’t his original crimes that put him behind bars but his attempt to cover them up.

Many employees follow this pattern. They break a rule and try to get away with it by breaking another. That cover-up usually gets them terminated.

An interesting difference between Capone and our employees (there are many, of course) is in the comparative seriousness of the original violation and of the cover-up. For Capone, it was almost comical that he was sentenced to 11 years for tax evasion rather than for life for corruption, racketeering and murder. For our employees, it is often sad that they get terminated for covering up a minor conflict of interest or mistake, one they could have easily survived had they simply admitted to it.

Our policies, training and communications should aim not only to prevent mistakes and violations but also to prevent cover-ups. Cover-ups only make things worse.

Unless you are Capone.

Life is a long game

We have all forgotten our phone or wallet in a public place before. As we hurry back in a panic and call a friend to tell her all about it, she might try to calm us by saying something like: “You wouldn’t steal someone’s phone, would you? So don’t assume yours was stolen. I’m sure it’ll be there.” It’s a hard reality to swallow at that moment but most of us don’t know anyone who would steal a phone they find at Starbucks.

The same is true of retaliation. There are times when we should speak with a colleague about a behavior they should change. But we often stay quiet for fear of retaliation, especially when that colleague is higher on the food chain. Meanwhile, if someone approached us with respect and a true desire to help, we wouldn’t retaliate, would we?

In both cases, our response is understandable because the stakes are high. Losing a wallet or a job can be a nightmare. So we forget that the odds are in our favor and play the short game.

But assuming that others are bad is a losing strategy in the long game of life.

The Weinstein effect

“This is corporate culture, and all business, all corporate culture is going to make excuses for the person who is making them a lot of money.”

– Paul Feig, movie director, commenting on the Weinstein scandal

When one of six accountants in your finance department skims $25 from the petty cash box, the decision to fire him is fairly easy.

When your top salesman adds a false $25 lunch to his expense report, not so much.

Why? Because having the courage of our convictions often reveals how much “courage” we have and the strength of our “convictions”.

Decisions should not be based on how difficult it will be to implement them. Virtue requires that we separate the two elements. First, we decide what the right thing to do is. Then, we figure out how to do just that. The second should not influence the first.

I believe it was Ray Dalio who said that we create principles in good times to help us make decisions in bad times. We must decide in advance if we will tolerate liars, cheaters, thieves – and sexual predators – in our midst. When we don’t decide in advance, making the right decision in the middle of a crisis is supremely difficult.

All it typically does is reveal our lack of principles.