How can a company set up a workplace of integrity? Ideally, with the right people, there would be no need to actually set up any policies for this purpose, but we just do not live in an ideal world. One purported solution is to “set the tone at the top”. I do think that this would work, but would only be a part of the solution. With strong moral leadership at the top, it would serve to keep the rank and file in line, but what happens when leadership is corrupted or leadership changes?
I think that one has to start looking at the root of the problem. What causes unscrupulous activity to occur at a workplace? Taking it a bit more narrow: what causes people to want to fraudulently change numbers or siphon money from a company? Let’s take a look at just a few reasons that come to mind:
TO MEET WALL STREET EXPECTATIONS
Why is this so important? Because it would affect the stock price? The defining aspect of this is that it leads to short term goals, without the long view. The problem with this is two fold: analysts make these goals for the companies with IMPERFECT information, but regardless, it puts the management on edge, trying to meet them. What are some possible solutions for this?
- Stop giving stock options as a significant portion of executive compensation. Is the stock price the best measure of company health and prosperity? If it isn’t, we should stop using it as such.
- Go or stay private.
- Never bring up “Wall Street expectations” internally.
MATERIALISM
How big of a house does one need? Do we really need to drive that Bentley? How much wealth does one need to accumulate before they’re content? Some are driven to unethical behaviors because they want to become personally wealthy. They need just a little more to keep up with the Joneses, and then even more to show up the Joneses. When did our culture end up being about having the perfect life? About being happy all the time? About achieving the “American Dream”? The one fact of life, outside of “death and taxes”, is that it’s a roller coaster. Some possible solutions?
- Normalize pay throughout the company, top to bottom.
- Instill a culture revolving around relationships and not money.
FINANCIAL STRAITS
Sometimes, it isn’t how much someone wants it, but how much they need it (or at least think they need it). Your significant other lost their job, you don’t know how you’re going to make it the following week and your kid needs to eat. You’ve done everything you can, eating ramen for lunch, never going out, cancelling the usual family vacation, but still it’s difficult to make ends meet. Once your informal support network (family & friends) runs dry, what can you do? If such a person were to see an opportunity to siphon some money from their employer, would they do it? At some point, they probably will. The solution? There’s not much a normal employer can do about it, but the solution I’m contemplating would be to require personal financial statements with employment applications and ongoing personal financial consultation provided by the company. My ideal company would go a little farther than that, but I think the solution for this would be for the company to become the support network when the informal and formal (government, non-profits, religious organizations) support networks fail or maybe even in lieu of.
LACK OF PERSPECTIVE
“Financial straits” is an understandable dilemma. One that most people can relate with, even if not on a personal level. However, though “financial straits” may be an innocuous reason for committing fraud, it still shows a lack of perspective. It shows, “I need to live, so I must hurt someone else” aka selfishness. A cashier siphoning a few bucks every shift or an employee taking bribes to reward a contract hurts the company. Taking that money means less money for someone else or less money for the company to invest with to create further jobs. The real problem is the “sliding down of the slippery slope” aspect or Integrity. If one’s willing to do a small act and not get caught, it gets easier and easier to do something that could hurt people — “humanity” — even more.
Did the executives at Enron really think that hiding their bad debt in Special Purpose Entities would end up decimating thousands of their employee’s pension funds? Or did those at Lehman Brothers (and basically every other major financial institution) think that packaging sub-prime with prime loans and selling them at the highest ratings would cripple the US economy? Maybe, but I would conjecture that they did it for themselves: to “live to fight another day” or to stay competitive or to squeeze more profits out where they could. Maybe it was just at that level where they compromised their Integrity, but I’d venture to say their integrity was compromised way down the line. The solution? It would include everything mentioned above, but boiled down, I see it as culture and relationship. A strong, humble culture that cultivates discipline and encourages the development of relationships, instilling and canonizing values from the top down. Idealized, I know, but that’s why I’m writing here, to figure it all out, what that idealized workplace would be.
Figuring it all out. 