Featured Author: Matt Kelly, CEO, Radical Compliance
The striking point about all the recent scandals is that the companies involved did nothing “wrong” in the strict, contractual sense of the word. But that didn’t matter.
In my last post about organizational trust, we looked at lessons learned about trust from one of the largest organizations of all: the U.S. military. The main concept was that in large organizations, senior executives should focus on strong culture and broad objectives; while junior executives have more freedom to achieve objectives within those broad standards of culture and conduct.
Boy, was that timely.
Within the last month, we’ve seen front-page tales of employees accused of sexual harassment and major consumer businesses with reputation crises on their hands from videos shared across social media. Earlier this year we saw Uber’s CEO forced to quit a presidential advisory board, when customers and employees denounced the supposed endorsement of administration policies that the CEO’s participation implied.
Read More: Lessons on Culture and Trust from Military Strategy
On the surface, stories like these are lessons for the marketing department about the risks of doing business in the social media age. Dig deeper. A more profound shift in corporate conduct is happening—one that should concern corporate ethics & compliance officers very much.
A crucial skill in this new world, then, becomes exercise of good judgment on the first try
The striking point about all the recent scandals is that the companies involved did nothing “wrong” in the strict, contractual sense of the word. But that didn’t matter. In every big scandal we’ve seen this year, the company was technically right but substantively wrong—and paid a heavy price for it.
What’s really happening here? Various stakeholder groups—sometimes customers or the public; sometimes employees; sometimes an alliance of both—are exerting new types of pressure on corporations to adhere to certain values or priorities, even if that means the company must abandon a pre-established policy or reverse decisions already made.
Welcome to the New Age of Citizen Enforced Transparency
I call this trend “weaponized transparency” because it wouldn’t exist without the immense power of social media and digital communication. Everyone can see everything about a company, including its motives and actions. Questionable decisions get questioned more often, and more ruthlessly. Forgiveness becomes more rare. Stakeholders use visibility into a company’s operations against it, with ferocious and fickle appetite.
Read More: External Perception of Your Internal Culture Is a Big Deal: What Uber’s Problems Have Taught Us about Reputation
A crucial skill in this new world, then, becomes exercise of good judgment on the first try, because companies might not have opportunity to correct a mistake later—not without great cost at least.
That has big implications for worker training and policy management. Judgment, after all, is about deciding whether or not to do something—like whether to follow policies to the letter, or to the intent.
Judgment is about knowing when to depart from standard policy in the moment, to uphold a core value or pursue a priority in the company’s long-term interests.
So how does an ethics and compliance officer manage that?
Three Steps for Corporate Gracefulness in the Era of Transparency
- Assess the priorities of your company and your stakeholders. In the age of weaponized transparency, articulating your own values and priorities isn’t enough. Companies must also understand how those concerns compare to those of your important stakeholder groups. Only then can the business start to anticipate how the company’s conduct might stumble into a much worse reputational risk meltdown.
- Empower employees on the right issues. Clearly employees cannot deviate from every policy when they sense some larger priority. For example, a pharmaceutical team can’t devise its own manufacturing process without management approval, simply because the process runs more efficiently and “innovation” is a core value.
Employees do, however, need to know where they can act in the company’s best interests—and good conduct priorities almost always fall into that category.
Once you train them on those priorities (“always place the customer’s satisfaction first,” or “don’t put the company in an ethically compromising position”), give them the tools and authority to put those priorities first. Then trust that they will.
- Don’t just document compliance; document priorities in action. Fulfilling compliance requirements is about being right; upholding ethical priorities is about doing right—and in our age of weaponized transparency, where organizational trust is so valuable yet so easily lost, companies need to show stakeholder groups that they are doing the latter.
That might take the form of an annual ethics & compliance report (Walmart just published its 2017 statement), call-outs in an employee newsletter, or plainspoken, persistent demonstrations of ethical priorities from the CEO. The point is that the company must provide real proof that it puts its core values into action.
Read More: The Difference Between Being Right and Doing Right
After all, if the company doesn’t provide evidence that it practices the ethical values it preaches, others might go fishing for evidence of the company’s conduct on their own. Good luck with that risk.