How the Tipping Point on Personal Misconduct Actually Tipped

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So Corporate America is firing a lot more senior executives and superstar employees over misconduct lately. You may have noticed.

All these firings — why are they happening now? Why not sometime in the past, or in the future?

Many of these departures are due to personal behavior that is not consistent with companies’ core ethics and values. One point ethics and compliance officers should ponder: All these firings — why are they happening now? Why not sometime in the past, or in the future? And what does the answer to that question mean for ethics and compliance programs moving into the future?

The standard response is to say that corporations have a stronger speak-up culture now, and in the broadest sense, that’s true. According to the 2018 Hotline & Incident Management Benchmark Report, the median number of reports per 100 employees rose from 0.9 in 2010 to 1.4 in 2017.

Yet I’m not sure how relevant that fact is. First, the portion of complaints about HR, diversity, and workplace misconduct has fluctuated right around 70 percent for years: 69 percent in 2012, 71 percent in 2015, and 72 percent in 2017.

Second, when these scandals happen, inevitably they’re accompanied by news that the perpetrator had a long history of misconduct, or that the company made a raft of payoffs with non-disclosure agreements, and so forth.

The typical response was to hush up the accuser rather than to hold executives accountable.

Well, that implies that people were speaking up; companies knew about the troublesome employee, and took measures to resolve the problem. But the typical response was to hush up the accuser rather than to hold executives accountable.

So we’re back to my original question: Why now? What’s changed?

A Shifting Definition of “Best Interests”

What has changed is how we define “protecting the company.”

Historically, companies would reduce their legal liability and preserve the corporate reputation by paying off accusers. Harmed employees were somehow made whole, with financial compensation or work new assignments or some similar gesture — all, of course, conditional on them signing a non-disclosure agreement.

We can dispute the merits of that approach today, and many harmed employees never felt like they were made whole. On the contrary, they had to suffer humiliation, career disruptions they never wanted, and in the worst cases, physical assault. Far too many didn’t even get those cursory gestures; they were pressured until they left their organizations with nothing at all.

That all seems disgraceful today. But from the faceless, impersonal perspective of “the company,” for many years that strategy worked. It allowed those prized executives to continue working for the business, and that was the priority.


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Now that’s all gone out the window. “Protecting the company” is defined as demonstrating the organization’s commitment to ethical values to constituencies both inside and outside the business — even if that hampers the company’s ability to operate in the short term.

That’s why the strategy of payoffs and NDAs no longer works. The strategy no longer achieves the objective the business wants — to protect the organization’s standing with its stakeholders — because stakeholders’ standards have changed.

So Why Have Stakeholders’ Standards Changed?

The standard response here is to say that our tolerance for personal misconduct has changed — and again, I’m not sure how accurate that statement is.

Go back to those payoffs and non-disclosure agreements companies made in the past. That tells us that even then, people knew the misconduct was wrong; they were trying to keep it secret. They didn’t cover up misconduct because they saw no problem with the behavior; they covered it up because they could.

Conversely, the victims of harassment didn’t stay totally silent; they used “whisper networks” and other means to protect themselves and each other as best as possible. But that was the limit of their ability to speak up. They never rose up with the ferocity we see today because they couldn’t.

In other words, our desire as individuals to rebuke abusers has always been there; but only now have forces aligned to tip the scales in favor of expressing that indignation.

Partly those factors are demographic: a larger number of educated women entering the workforce than ever before. Technology plays a part, too: As digital transformation sweeps through one business process after another, and as social media swallows the world, every action becomes much more visible.

Hence corporations are ready to enforce tough accountability against executives for personal misconduct. Because at an individual level, we all know harassing behavior deserves it — and now that moral sense can network together into a voice louder than the typical corporate desire to buy silence and move on.

Corporate America may not grasp the full implications of that shift yet. In due course we can talk about specific responses to it, such as better training, better hiring, savvy whistleblower programs, clear Codes of Conduct, and so forth.


Download & Print: Definitive Guide to Your Code of Conduct


And repulsion of harassers is only the low-hanging fruit of ethics and compliance. Next corporations will be pulled into battles over much less clear moral and political issues. We’re already seeing that today. Hardly anyone has pondered questions about redemption after an executive is held accountable, either.

Still, this is where we are in corporate ethics and compliance. When will this heightened attention recede? Never.


What do you have to say? Share your thoughts in the comments below or join a discussion group on Compliance Next.


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