As a professor of business ethics, I'm often asked by executives: What are the warning signs of a poor ethical culture? These leaders want to know how to avoid an ethical disaster of national-headline roportions. Lately my answer has been simple: Do just the opposite of what the current administration in Washington does.
The Clinton administration exemplifies the five principles I teach my students as signs of an ethically hallenged organization. Follow these principles, and you're sure to have ethical lapses of the sort that lead to resignation of the CEO or a precipitous drop in your company's stock:
Surround yourself with subordinates who are young, inexperienced, enthralled with power and deep in debt. The best subordinates here are a full generation younger. Apart from their willingness to scratch and claw their way to the top, they carry the additional benefits of their lack of wisdom and their financial dependency, which keeps them from challenging their superiors.
Shower the youngsters with salaries and perks, and they'll heel. Charles Keating had his now-imprisoned youthful minions, and Kidder Peabody had Joseph Jett, now facing civil charges for allegedly manufacturing false profits. Bringing in the youngsters to do your bidding allows you the unfettered latitude of even illegal conduct should you so desire.
Send a clear message that you expect results at any cost. At Leslie Fay and Bausch & Lomb, managers, who were expected only to make the quarter, engaged in creative accounting to meet this goal. Leslie Fay went into bankruptcy after reported stellar earnings turned out to be a $13.7 million loss. Bausch &
Lomb acknowledged in May that its 1993 earnings were materially overstated and that the Securities and Exchange Commission is investigating.
In the White House, boxes have been carted away from offices under investigation, "I don't remember" testimony is the order of the day, and competent government employees with unblemished careers have been fired en masse with no twinge of conscience.
Protecting the Clintons and getting "our people in" were the only results that mattered. Susan Thomas's, Bernard Nussbaum and William Kennedy are among those who took falls in pursuit of Clinton goals.
Be certain the CEO and chairman are tyrannical and prone to anger. When he was CEO of MiniScribe, Q.T. Wiles fired two controllers as they stood in a management meeting. "That's just to show everyone I'm in control of the company," Mr. Wiles said. MiniScribe executives later broke into outside auditors' trunks to alter records, and MiniScribe ultimately went bankrupt. There's nothing like fear to force employees into ethical minefields.
From the Clintons' Inauguration Day shouting match just outside Blair House to the president's red-faced outbursts at press conferences, its clear the White House isn't Mr. Rogers' neighborhood. Former White House staffer David Watkins wrote of his fear of Mrs. Clinton's impatience in the event the Travel Office purge was not completed.
A health-care plan that will go down with the Elders in the annals of disaster managed to wind its way through thousands of professionals without so much as a peep about its sheer absurdity, cost or weight. Put a tyrant in charge, and free thought and speech disappear. No one asks Questions, and things are bound to go terribly wrong.
When an employee's public statements bring criticism of the company, cut the employee loose. Roger Boisjoly, a Morton Thiokol engineer, was demoted after he revealed publicly that he'd had reservations about launching the space shuttle Challenger in cold weather and that his superiors had told him to "take off his engineering hat and put on his management hat.
Similarly, President Clinton abandoned Justice Department nominee Lani Guinier and former Surgeon General Joycelyn Elders when their public statements drew controversy.
The administration then continued to pursue these women's goals -- racial quotas and lackadaisical drug policies -- with vigor, but with accompanying denial.
When an ethical lapse is discovered, never admit anything. Conceal, spin and gloss. Indignation and arrogance are your friends. In 1986 Charles Locke, CEO of Morton Thiokol, said dismissively, "This shuttle thing will cost us this year 10 cents a share." Following the Exxon Valdez oil spill, CEO Lawrence Rawl scoffed at the environmental damage caused by the spill:
There were 30 million birds that went through the sound last summer, and only 30,000 carcasses have been recovered." Donald Kennedy, once president of Stanford, said in response to questions about using federal research funds for a yacht and other luxuries, "The items currently questioned, taken together, have an insignificant impact.
Likewise, Mr. Clinton dismisses every new revelation of scandal as "politics." When questions are raised about his wife's conduct, he says he wishes everyone in America had her integrity. When all else fails, the president and his aides characterize ethical breaches as "bureaucratic snafus" or much ado about nothing.
Employees take their cues from the top. Leaders who act with honesty and fairness set a similar tone for the corporate culture. A company does not venture into the treacherous territory of ethical minefields without a guide, who sets the speed and approach. The guide must also correct the course when it becomes clear the organization is on dangerous ground -- something the Clinton administration shows no signs of doing.
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