Paying our taxes

Some taxes are not financial but they are still an expected consequence of, and a burden to, any activity we engage in.

Some employees will ignore the policies we write. Others will cheat on the training we offer. Some will circumvent the controls we establish. Others will lie during investigations.

Just like financial ones, these taxes should hardly surprise us. We should expect to pay them when we create our E&C program. Being mindful that they are a natural consequence of our activities, we can seek to minimize their effects. But they cannot be completely eliminated.

Knowing this, and accepting it, can go a long way in reducing the stress associated with the job of an E&C professional.

HT to Ryan Holiday’s The Daily Stoic.

A more ethical workplace is possible

Here is a famous meditation from Marcus Aurelius:

“When you first rise in the morning tell yourself: I will encounter busybodies, ingrates, egomaniacs, liars, the jealous and cranks. They are all stricken with these afflictions because they don’t know the difference between good and evil. Because I have understood the beauty of good and the ugliness of evil, I know that these wrong-doers are still akin to me… and that none can do me harm, or implicate me in ugliness – nor can I be angry at my relatives or hate them. For we are made for cooperation.”

– Meditations, 2.1

The first part of this meditation is most often quoted. Students of stoic philosophy use it to prepare themselves for the usual daily frustrations. Why get upset at someone cutting us off in traffic when we can easily expect it will happen? When it does happen, we can just say: “Of course.” For the E&C professional, we can just as easily prepare ourselves for those in our organization who will cheat, steal and lie.

The second part of the quote is most often neglected – or omitted entirely. The call for cooperation reminds us that our duty is not to disregard the wrongdoers but to respond with kindness. It would be too easy to assume that a wrongdoer cannot change. But haven’t we all been wrongdoers at some point? The ethical leader understands the growth mindset and believes that we all have the ability to become better. This belief, in turn, creates a responsibility.

Today, each day, let us assume this responsibility of making our workplaces more ethical.

Micro-behaviors

Watch out for the next big scandal to hit the news.

In the very first report of the scandal, or perhaps in the one that follows, the culture of the organization will be mentioned as the culprit. We will learn how this unbelievable behavior (sexual harassment, cheating software, fake accounts, etc.) was preordained by the existing culture.

If bad cultures lead to big scandals, micro-behaviors lead to bad cultures. A hurtful comment by a supervisor left unaddressed. Outliers removed from a quality report. A small injury not recorded. Embellishments in marketing data.

With time, these micro-behaviors become the norm. And because the brain is an organ that compares, when the behaviors become slightly worse, it’s barely noticed. Classic frog-in-boiling-water story. Classic broken-window theory.

That’s how cultures are created. That’s how scandals are made.

Sure, you can watch out for the next big scandal if you’d like.

But you’re better off watching out for micro-behaviors.

Hat tip to PwC’s Gilly Lord.

Keep out!

People have been cheating, lying and stealing from time immemorial and we can expect them to continue until the end of times.

Thus, the job of an ethics & compliance professional is not to eradicate these behaviors. It is to create a culture where they are not welcome.

Since culture is an outcome of our processes, our job is to remove from our processes any tolerance for cheating, lying and stealing. People engaging in these behaviors do not get hired, promoted or otherwise rewarded. Our processes either gets them fired or leads them to leave on their own.

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.

We get paid $8 for lunch

“Don’t cheat, don’t lie, don’t steal.”

A convenient phrase to (over)simplify an ethics program.

I often tell the employees I serve that if anyone asks them to do something that feels like cheating, lying or stealing, it’s a red flag and they should pause. Whatever they have been asked to do is likely to compromise our values of trust and integrity.

We would like to think that the obvious does not need to be stated. But what seems obvious on a blog post or in a classroom setting is not so obvious when we add the emotional and financial pressures of the workplace.

In my late teens, I worked as a helper on delivery trucks for a large corporation. It was a union job and our contract allowed us to be reimbursed for lunch. Each morning, the truck drivers/salesmen would agree on where to meet for lunch. On my first day on the job, the waitress gave everyone at the table a receipt and I completed mine. One of the drivers, a 30-year veteran, saw that I had written $5.50 on my receipt, took it, and asked the waitress to give me a new receipt. He told me “We get paid $8 for lunch. Write $8 on your receipt.” Everyone else at the table chuckled, and I complied.

Of course, we didn’t get paid $8 for lunch. We got reimbursed up to $8. I was young. I wanted to fit in. I needed the job. And so I didn’t pay attention to that feeling that I was cheating, lying and stealing. Because of the pressures at play, within seconds I rationalized my behavior and thought “Well, the union negotiated for $8, so it must be OK.”

Perhaps things would have been different if the company had an ethics program, if it had a confidential hotline, if it communicated its values and the importance of accurate books and records, or being a good steward of the shareholders’ money.

It’s hard to tell, 30 years later. The world has changed.

But I do remember the pressures that I felt at that moment. And those pressures haven’t changed much today.

Bad apple or bad culture?

A low-level employee

Opens fake bank accounts
Forcibly removes and injures an airline passenger
Installs a cheating device in a car
Pays a bribe to a hospital administrator
Disregards sexual harassment from a top performer

and everyone turns to the CEO for a reaction.

What follows reveals whether the organization is dealing with a rotten apple or a rotten culture.

Locks are for honest people

I remember being startled the first time I heard the expression that “locks are for honest people.”

My whole life, especially as a kid, I had assumed that the locks on my house or my parents’ car were there to stop burglars and thieves.

Now I get it.

In the E&C world, we could equally say that internal controls are for compliant people. Those who lie, cheat, and steal will find a way around the controls.

As a kid, my parents, my teachers, and my clergy all taught me the importance of trust, respect, honesty and integrity. So, if I spotted a new shed in the yard of that old couple, and my boyish impulses to discover the treasures inside were frustrated by a lock on the door, I naturally walked away, disappointed. Never in a million years would I have even considered the possibility of trying to defeat that lock.

That is the power of values and culture.

And that is why, when one of our employees defeats a control, we need to do more than increase our controls. We need to ask “What is it about our culture that this employee felt the need to behave this way? Why are our values of honesty and integrity not espoused?”

Locks are for compliant people. And culture is the road to compliance.

If you think integrity is hard, try dishonesty

An organization of “ands” is an organization that requires its employees to make the numbers and to do it safely and to do it ethically. It’s not one or the other.

Contrary to popular belief, working in an organization of “ands” is not more difficult. It’s actually way easier. We don’t have to struggle with compromises. We either do it the right way or we don’t. We never have to figure out how to lie, steal, or cheat without getting caught. If something cannot be done ethically, we move on to the next opportunity.

If you think integrity is hard, try dishonesty for a few years and let’s reconvene then. One of us is going to be in a much easier spot.

Stoic patience

“The only thing that isn’t worthless: to live this life out truthfully and rightly. And be patient with those who don’t.” – Marcus Aurelius

For ethics & compliance officers, what does it mean to “be patient with those who don’t?”

Does it mean that we should accept defeat when competitors cheat to win a contract? Or allow clients not to pay what is owed to us? Or look the other way when suppliers lie about their ability to deliver?

What about wrongdoing committed by those within our organization? Should we be patient when our own employees or agents violate our values?

This stoic directive simply means that we should not be shocked or upset when others breach our trust. We can hardly expect to go through life without someone wanting to take advantage of us. So why be surprised with it happens?

A stoic attitude is helpful to the ethics professional. It allows us to look at – and accept – the facts as they are, to calmly reach a decision that is just, and to administer justice in a respectful way. We can use our empathy to understand why others behave the way they do. That is an exercise in patience.

Our job is difficult enough without the additional burden of impatience, in its many forms.