Business Ethics at Work – IBE Ethics and Work Survey – Comments by Chuck Gallagher Business Ethics Expert

December 9, 2012

First I reported on the KPMG survey from India and now the Institute of Business Ethics published their “at work survey” which shows similar results.  Lack of workplace ethics is rising due to the pressures from our worldwide current economic situation.  There’s nothing like a good recession to bring out the worst in folks!  By the way the full report on the IBE’s survey is found HERE.

According to the British Guardian:

right-wrongThe IBE’s ethics at work survey, which was last carried out in 2008, asks employees about their attitudes to ethical issues in the workplace, their perceptions regarding ethical practices in their organizations and what formal assistance on ethical matters their organizations provide for them.

Encouragingly, the majority of British (84%) and mainland European (77%) employees say that honesty is practiced “always or frequently” in their organization.

Although the proportion of British full-time workers who say they have felt pressure to compromise their organization’s ethical standards remains similar to 2008 (9% and 11% respectively), as does the prevalence of an unethical culture (18%), British employees seem to be significantly more likely to experience certain types of pressure to behave unethically than in previous years. The most common of these include meeting unrealistic business objectives or targets (19%) and being asked to take short cuts (14%).

Wanting to help their organization survive was mentioned for the first time as a source of pressure (7%), an indication that the recession is taking its toll on ethical standards.

Of the fifth of British employees who have been aware of misconduct in their organization in the last year, only half of these (51%) say they have reported it. Similarly, of the quarter (28%) of mainland European employees who said they had been aware of misconduct, only half raised their concerns.

As the head of the Ethics Resource Group – an organization that provides ethics training, presentations and consulting to companies worldwide, the statement above that “meeting unrealistic business objectives” creates a significant pressure is true.  Logically when business is booming the NEED to meet an unrealistic objective is reduced.  However, especially during periods of weak economic performance, the NEED increases and pressure seems to mount from all sides.  The most significant part of this problem is if the “unrealistic business pressure” is supported from the top where the discipline for ethics must originate.

To deter unethical and potentially illegal behavior, three things must be present: (1) Delivering swift and consistent justice for unethical actions; (2) Identify the weak areas within your organization and target them for ethical training and attention; and (3) develop ways to foster ethical behavior among leaders and monitor management integrity.  This is the three legged stool from which a company creates a foundation for positive ethical behavior.

Lapses in Business ethics are not just caused by one person!

The report in the Guardian is quite telling:

In business ethics, there are no lone gunmen – the theory that integrity failures are caused by just one person behaving badly. UBS was fined £29.7m last month by the FSA for failures in its systems and controls that allowed former employee Kweku Adoboli to conduct Britain’s biggest bank fraud. Integrity crises are usually the result of a gradual erosion in behavior over time, which develop into an unethical culture, rather than one person acting on their own while everyone else stands by, powerless.

While we celebrate that the majority feel their workplace is one where honesty is practiced, this is undermined by the statistic that a third of those in managerial or supervisory roles in British organizations perceive “petty fiddling” as inevitable.

But why fret about a few biros and A4 pads missing from the stationery cupboard when there are bigger risks like bribery and corruption and health and safety to mitigate against?

Consider the broken windows theory: a building is vandalised with a few broken windows. If the windows are not repaired, the vandals break a few more; eventually the building is broken into and squatters move in. The theory is that petty crimes, if unaddressed, create a culture which leads to larger ones.

New York’s Mayor, Rudy Giuliani, put this theory to practical use in his zero-tolerance of petty crimes such as vandalism in New York. The result was turning around a city that once seemed ungovernable, particularly when it came to crime. Overall crime rates dropped by 44% to their lowest in more than a generation, and the city’s murder rate went down by 70%. Petty fiddling at work is a little like those broken windows.

New research by Dr Muel Kaptein of the Rotterdam School Of Management into why good people do bad things may give cause for concern. Kaptein cites “acceptance of small theft” as something which may indicate a culture susceptible to integrity failure. If small thefts of highlighter pens are ignored, then so are slightly larger ones, like over-claiming expenses or accepting unauthorized business gifts. It doesn’t take long for people to begin pushing those limits, and before long you have a large scale integrity failure on your hands.

A major multinational corporation unnamed states the following in their Code of Business Conduct:  “At XXXXXX assets should be used for legitimate business purposes, incidental and occasional personal use of XXXXXX assets such as computers, telephones and supplies is permitted.”  It is interesting here that Sr. Management recognizes that there is no way to completely control the petty actions by employees so they have defined those actions and made them tolerable.  Yet, there is a challenge that is found in the written policy, namely what is “incidental and occasional personal use?”

The ethics at work survey found that just under half of the UK’s full-time workforce thinks it’s acceptable to take pencils and pens (41%) and make personal phone calls (45%) from work and about a third (30%) said it was OK to post personal mail from work. A quarter think it is acceptable to use the internet in work time and a fifth of British employees feel it is acceptable to “take a sicky”. The survey also showed that there is little difference in attitudes between employees and managers.

If the tone is set by managers that these small ethical breaches are unacceptable, then perhaps the tone and culture will follow. Most people do not start out to be malicious, or to harm the organization or defraud it – they are just trying to do their job.

The challenge so aptly presented in this report is where is the line and perhaps, more importantly, should we tighten the reigns when the NEED increases or is the presentation of acceptable ethical tolerance levels best when dealing with the mundane at work?

Credit is given to: Simon Webley is research director at the Institute of Business Ethics. The Employee Views of Ethics at Work: 2012 British Survey and Employee Views of Ethics at Work: 2012 Continental Europe Survey are both available as free downloads from http://www.ibe.org.uk

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KPMG India Fraud Survey – Patterns of Crime – Comments by Business Ethics and Fraud Prevention Expert Chuck Gallagher

December 9, 2012
KPMG India

White Collar Crime up?  Is that any surprise considering the vast changes in the world economy over the past four years?  With high profile cases like Bernie Madoff and a host of others, I have been asked multiple times if we reached a point where “White Collar Crime” may be on the decline.  My response is “heaven’s no!”  In fact, there are three components of an ethical lapse and the proliferation of “White Collar Crime” and NEED is at the top of the list!

When the Economy stinks NEED IS HIGH…

To my left is a graph from a KPMG India Fraud Survey – the entire report is found HERE.    In their report KPMG states that “White-collar crime in corporate India has witnessed a ‘substantial increase’ over the last two years.”

The graph shows the areas where respondents indicated that fraud had taken place.  Interestingly enough, according to the report the incidents of fraud had increased by 10% from 2010 to the same survey in 2012.

According to the KPMG Survey:

Cracking down on fraud is critical for a country that needs investment.

“India is a fast-growing economy. The problem is a level of low confidence in international investors, which stems from corruption,” Rohit Mahajan, partner and co-head, forensic services, KPMG India, said at a press briefing in New Delhi. “Besides international investors, this has also impacted entrepreneurial spirit in India.”

The infringements are of various kinds, with bribery and corruption making up 83% of cases. A large part of the frauds also relate to cyber crime (71%) and diversion of assets (65%). The sectors most affected are financial services (33%) and information and entertainment (17%), according to the survey.

Most frauds (85%) are investigated internally and very little of the money is actually recovered, the survey said. The most effective methods for detecting frauds are whistleblowers, internal audits and data analytics.

The challenge represented by this report is not limited to India.  Other data suggests that similar patterns of fraud and white collar crime exist in all developed economies especially those whose development has been spurned by rapid economic growth.  India and China for example.  The challenge becomes how to stop the proliferation of white collar crime?  Policies alone will not be the most significant deterrent. We must stem the gap between ethical policies and practical behavior.

Often misconduct either never gets reported or when reported is somehow never escalated beyond direct managers.  This silo of data prohibits effective solutions when combating white collar crime.  For purposes of this post however the primary value is to observe the patterns of white collar crime so organizations will have an intelligent methodology to target abuse and curb unethical and potentially illegal practices.

YOUR COMMENTS ARE WELCOME!

As the founder of the Ethics Resource Group, I work with Companies, Associations and Universities bring awareness of Ethical Choices and how to help Employee and Members stay within the ethical boundaries.  For more information contact me at chuck@chuckgallagher.com or visit chuckgallagher.com


Don’t Play the Game Penn State… A reprinted blog by Randy Gage!

November 12, 2011

Randy Gage is a dynamic speaker and excellent thought leader.  He posted a blog that deserves repeating.  To give him credit here’s the link:  http://www.randygage.com/blog/shut-it-down-now-penn-state/   or otherwise you can read it in it’s entirety below.  The thoughts are his and for that he is given credit, but I agree with his conclusion and thought it worth sharing!  Your comments are welcome

Okay we don’t talk sports or even news much in this space.  We’re usually looking at principles of success and prosperity.  But this Penn State scandal is so teeming with lack consciousness, I feel compelled to say something about it.

True prosperity is always a value-for-value proposition.  And what that comes down to is doing the right thing. 

And for Penn State to blithely go about playing their big football game against Nebraska this weekend is so far beyond adding insult to injury it’s a travesty.

Let’s look at the facts from the grand jury we know so far…

In March of 2002, assistant coach Mike McQueary then 28, entered the locker room to pick up some recruiting tapes.  He heard “rhythmic, slapping sounds.”  He went to the shower and saw a naked 10-year-old boy, “With his hands up against the wall, being subjected to anal intercourse by a naked Sandusky.”

He doesn’t intervene.  Doesn’t call police.  He’s so shocked and confused, he simply leaves.  He went home and called his father.  The next day he tells coach Joe Paterno.  Coach Paterno waits a day, and then tells the Athletic Director.

What happens next?

The witnessed rape of a defenseless boy recruited from a program for disadvantaged youth somehow gets classified as “horseplay.”  The university tells Sandusky not to bring boys on campus.  No one attempts to find or treat the boy.  That’s it!

We now learn that there was another incident with Sandusky in 1998.  A campus detective was ordered to close the case by his boss.  Then in 2000, a janitor witnessed Sandusky performing oral sex on a boy in the shower.  It wasn’t reported…

Penn State University has exhibited the most grievous, flagrant and criminal behavior of a university in modern history.  They let (at least) eight boys continue to be subjected to predatory abuse from a pedophile for 15 years.

And Sandusky is behind bars now, not because of any help from Penn State.  It was a wrestling coach and assistant principal at a High School who finally caught Sandusky with a boy in the weight room and immediately called police.

And it could be getting much, much worse…

Zac Wassink, who’s a Penn State alum I believe, is reporting on his Yahoo blog that Pittsburgh radio host Mark Madden dropped an ever bigger bombshell on a program today…

Madden said that two columnists are investigating a rumor that Sandusky’s Foundation was “pimping out young boys to rich (Penn State) donors.”  He also said Sandusky was told by Penn State he had to retire after allegations made in 1998 that he was guilty of “improper conduct with an underage male.”  It’s important to note that these are rumors at this point.   But Madden has been correct with other information on this scandal up to now.  And it just shows how much smoke there was before this fire, that Penn State completely ignored.

Now the facts get out, beloved “Coach JoPa” is fired and Penn State students start a riot in protest.  Are these kids the most naïve, clueless, and ignorant students in the world?  This is the higher education Penn State is supplying them?

Now those same kids are fired up and want revenge by crushing Nebraska in their big rivalry football game this weekend…

Think of the worst sports scandal you can ever think of:  Recruiting bribery, fixed football matches, crooked jai alai players, the Chicago “Black Sox.”  They wouldn’t even rate a footnote on this.

What we are seeing unveiled here is the worst sports scandal in history.  Because we’re not talking about throwing games, making bets, or enriching bank accounts.  We’re talking about evil, horrific abuse of defenseless children.  And one of the most powerful institutions of higher learning in the land, turning a blind eye to their anguished cries for help – so as not to risk their cash-generating, powerhouse football program, with lucrative television rights deals.  It is absolutely sickening, the disgusting demonstration of lack-centered, anti-humanity and thus anti-prosperity consciousness I can conceive of.

Except this…

Now the student body wants to rush into the stadium this weekend, trot out the mascot, scream with the cheerleaders, and sing the fight song with the marching band, as the coaches scheme the passing routes to try and beat Nebraska.

Do the right thing Penn State:  Forfeit the game. 

Cancel the rest of the season perhaps.  Help locate those kids and get them some help.  Raise awareness for the issues of sexual predators.  Maybe schedule some extra classes and start teaching your students about principles like doing the right thing, and looking out for those that can’t take care of themselves, instead rioting to protest your coach losing his contract.

A scoutmaster once molested me when I was young.  And I have to tell you that the man who was my unofficial step-father at the time, kind of brushed it off.  I didn’t go on any more camping trips and was never left alone with him, and quit soon after.

In this case it was a sick man fondling a prepubescent boy one time.  I moved on, and it didn’t scar me for life.  But that man should have been stopped and I shudder to think how many other boys he continued to prey on.

I come from a pretty simple family and we didn’t know how to deal with issues like that, just as it’s likely the families of these eight boys didn’t know how to deal with this.

But we need to hold Penn State to a high standard here.  This was wanton, systemic neglect of kids from an institution charged with safeguarding them.  Those kids were sacrificed on the altar of multi-million-dollar television contracts.

Pomp and circumstance, cheerleaders and marching bands – a football game this weekend?  Is that the message you really want to send?  The kids – all of them – deserve better.

Do the right thing Penn Sate.  Shut it down.  Now.

-RG


Frankly I’m Stunned! Do Convicted Rod Blagojevich’s comments reflect on his state of mind?

July 4, 2011

A federal jury convicted Rod Blagojevich of sweeping corruption, ending the  political drama that brought another popular politician!  Blagojevich’s response, “Frankly, I’m stunned!”  Blagojevich then stated, “There’s not much left to say other than we want to get home to our little girls and talk to them and explain things to them and try to sort things out.”

In its 10th day of deliberations, the jury convicted Blagojevich of several shakedown attempts, including allegations that he brazenly tried to sellPresidentBarack Obama’s oldU.S. Senate seat.  The decisive verdict came less than a year after the first jury to hear the case found him guilty of one criminal charge but deadlocked on the rest.  It appears the prosecution learned from the first trial as they concluded with a prosecution win on the second.

Facing a lengthy prison term, Blagojevich will now have to face reality in a new world.  But, what do you make of his comment, “Frankly, I’m stunned?”  How can one be so caught up in the illusion of innocence when the facts or guilt seem so obvious?

A news report stated: “Likewise, there was an oddly schizophrenic nature to the Blagojevich defense, both the one he waged in court and the one he waged with vocal and strident indignation in the media. Almost in the same breath, the Blagojevich narrative portrayed him as a paragon of ethics and a wheeling-dealing practitioner of politics as usual in a system he frequently decried as corrupt.”

Is it possible that Blagojevich lacked the capacity to understand ethics?  Is it possible that, in a twisted way, Blagojevich felt, like many, that business as usual was ethical and quite acceptable?

The Media report went on to say related to the sentence as it was read:

He eventually mouthed the words “I love you” toward his wife, who was in the first row crying and leaning on her brother. Moments after the jury left the room, Blagojevich embraced her and cradled her head, telling her it would be all right.

The trial exhibited multiple Blagojevich personalities, the manic and almost desperate-sounding schemer heard on wiretaps; the strident and outraged everyman fighting the system that came out in multiple media appearances following his arrest; and the humble, polite and modest presence on the witness stand before jurors.

WHAT DO YOU THINK OF THE BLAGOJEVICH TRIAL AND VERDICT?