February 22, 2010

Principle-Based Leadership: Setting the Tone

As a member of numerous web 2.0 forums, I oftentimes listen to esoteric rants and the splitting of hairs in the Governance, Risk and Compliance world. Every so often, however, I get the opportunity to read something that is refreshingly lucid.

All of us in the compliance world struggle with moving the needle and improving the “ethical quotient” of our organizations. For the last few years, I have come to believe it isn’t the “transformation” of people that is important, it is the tone from the top and the people you hire. Setting the tone and expectation of principled integrity for your organization and interjecting the right DNA into an organization can have a greater impact than any training program. When people are faced with an ethical dilemma they often turn to the example set by leadership or their co-workers. Having well-grounded individuals in your organization that embrace the organization’s goals and know the difference between right and wrong will prove invaluable.

Recent comments by Daniel Roberts of RAAS consulting made me take notice. Dan discussed the obituary of one of the translators at the Nuremberg War Crimes Tribunal and recounted this person's recollection of the interrogation of Rudolf Höss, the former head of Auschwitz. The translator asked Höss if he had ever sought to enrich himself off the Jews he was killing. Apparently Höss replied, "What kind of man do you think I am?"

This is the verbatim quote from Dan that sparked this post: “Ethics are defined by what we believe to be right and wrong. Höss was not living in an ethical vacuum, just in a place/time in which the ethics were so distorted from our understanding of the word as to earn him a place in history as one of the most loathsome humans ever. Yet he considered himself ethical.

Start by looking at the ethical norms or leadership and you will discover the ethical norms of the organization. An ethics program by itself is noise. It is the actual behaviors of leadership that matter. If they cover up inappropriate or even criminal behavior (seen it done), or simply refuse to truly investigate it (seen it done), punish those reporting the potential abuse (seen that done too), then all the ethics handbooks and programs are meaningless.”

Thanks Dan for reminding us that inspiring principled based performance and a sense of “presence,” not the issuance of rules and requirements, is how we will change our organizations.

February 16, 2010

Government Transparency: An Oxymoron

For almost a decade, EthicsPoint has provided software and services that help organizations gather, review and resolve issues and events that impact their operations. Most of these issues and events are risk factors that can dramatically affect confidence and share value or result in a serious monetary loss. At EthicsPoint, we provide services to a multitude of organizations from a variety of industries. But if you peel back the onion, you will notice that we service only a handful of municipalities and no government agencies, I’ve often wondered why that is.

I used to believe it was because EthicsPoint delivers its services in the “cloud” as a software-as-a-service provider and doesn’t provide a premise offering that can be put behind an organization’s firewall. But lately I have come to the conclusion that transparency and government -any government - simply doesn’t exist. For all practical intents, the US government became a venture capital company in 2009 and EthicsPoint does service several financial institutions. Therefore, I don’t believe it’s the function of the organization that dictates a lack of transparency, but rather something inherent in the way our government is run. As a tax payer this is frustrating to me.

I was a history major in college and looking back I don’t know if real transparency has ever existed in our government. The reasons for this lack of transparency may be varied, but the result has been the same. For instance, in the earliest days it was a literacy void and the general public’s inability to read helped support our representative form of government. Next, it was a genuine communication failure in reaching the populous due to distance and an unreliable “yellow” journalistic press. Then it was a protectionist view – because we couldn’t let the commies know what we were doing. Today it is just the “way things are done.”

It is somewhat akin to the situation of a plumber not showing up to your house and when you express your discontent to a co-worker she immediately understands and says, “Yeah, that’s just the way those guys are.” We’ve become so accustomed to bad government that we roll our eyes and say, “Yeah, that’s just the way those guys are.”

Several months ago I blogged about “hating the word Ethics” and repeatedly expressed that I personally had difficulty drawing a definitive ethical line when dealing with certain issues or events in the compliance world. Earlier this week, Mark Meaney, the number two man at the city of Chicago’s Office of Compliance, resigned amid allegations he mishandled an intern’s 2008 sexual harassment complaint against a top official at Chicago’s 911 emergency center. I had the opportunity to work with Mark and I personally find this hard to believe. He and his boss Tony Boswell had the very unenviable and daunting task of developing and running the compliance department for the city of Chicago.

The city of Chicago has been monitoring city hiring since the 2005 scandal that found a member of Mayor Daley’s staff guilty of rigging city hiring and promotions to benefit pro-Daley political workers. However, the city’s hiring monitor and other consultants have proven inefficient and, according to the Chicago Sun-Times, have cost Chicago taxpayers $6.2 million. It has also been reported the city’s hiring monitor has been accused of falsifying allegations of misconduct by Boswell and Meaney in order to discredit them and gain total control of the city’s hiring process. This is where that ethical line starts to blur.

The situation gets better or worse depending on your perspective. If you know anything about whistleblowing, it is the responsibility of the compliance officer to protect the organization from any “retribution” resulting from an individual coming forward. The ethical line blurs even further once you know the 911 center official in question is a high-ranking deputy who was stripped of his responsibilities in 2008 after blowing the whistle on alleged contract irregularities involving Motorola that cost taxpayers $2.25 million.

Mark’s quote in the Sun Times says it all. “It was a privilege to have been part of something that had never been tried before; corporate-style compliance in municipal government…Mayor Daley should be applauded in his efforts at true reform. Unfortunately, fear and blame seem to be winning over culture change. I return to the private sector with no regrets for having spent the last two years working with some of the best public servants anywhere.”

What a twisted web. You have heard me say many times the role of a compliance officer is not black and white. The role requires discernment and often a balancing act of issues that would make Solomon shudder. This is no different in government or the private sector. Let’s consider for a moment that the evidence in this case is inconclusive (let me be clear that I have no inside information on this matter). Yes, there is an accusation but it is difficult to fully substantiate. There are multiple variables in play and the subject of the investigation is a person who “blew the whistle.” Appropriately, you might have some trepidation that the accusations could be retaliatory. So I ask you – what would you do?

I like Mike and Tony, which makes this difficult for me. It upsets me that in the public sector what some members of government say in front of a microphone, even for their own benefit or gain, often shapes the court of public opinion, and good guys pay the price.

February 10, 2010

Global Sourcing: The Next Level of Risk

As I mentioned in my last posting, the Justice Department is becoming more serious about Foreign Corrupt Practices Act (FCPA) enforcement and the recent sting operation in Las Vegas certainly reflects the hard-line, somewhat insidious, strategy of their new playbook. While the indictments involved individuals in the defense/arms industry, I expect enforcement to increase across many industries.

Aside from the recent events foreboding stricter enforcement, some of my peers are also predicting a surge in activity. For example, a former US Attorney assured me this sting was only the beginning and that two more will emerge in the coming months. Dan Karson, an executive managing director for Kroll, said the recent sting operation has “sent chills” down the spine of small and mid-sized businesses who may have falsely hoped the Justice Department’s interest in FCPA was reserved for global Fortune 500 companies.

This increasing level of FCPA enforcement has major implications for companies and how they choose supply chain partners. In the past, a partner’s misconduct may have impacted the organization but didn’t necessarily come with the immediate publicity and massive fines experienced today. This is why companies who never considered making the investment are now starting to consider extending their internal compliance expectations and training throughout their supply chain. Cultural and language barriers aside, this remains a daunting task.

Global sourcing relationships have always been about trust and service – but this is new territory that stretches the boundaries of these relationships. The two most important factors in mitigating an FCPA violation in this instance are selecting the right vendor, supplier or agent from the start and developing a process that ensures transparency. I will be writing much more on this topic as the year moves forward. Let me know what you think – can you expect a vendor, supplier or agent to act in accordance with a company’s compliance policies, procedures and guidelines?

About Me

David Childers
of EthicsPoint

View David Childer's profile on LinkedIn contact david Email Me


Favorite Quotes:

Ronald Reagan
There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right.

John Quincy Adams
If your actions inspire others to dream more, learn more, do more and become more, you are a leader.

We are what we repeatedly do. Excellence, therefore, is not an act but a habit.

Ray Kroc
The quality of a leader is reflected in the standards they set for themselves.

John Maxwell
The first step to leadership is servanthood.