Ethics and Governing Dynamics

The pendulum in all organizations is beginning to swing to building cultures that are ethics driven and self-governing. It is fluid, long overdue, a response to growing pressures that are demanding accountability now and in the future.

The traditional structures in organizations: boards of directors, executive teams, and workers are being shaken hard and challenged.

Why is this happening and why should we care?

First of all, most top down leadership/management structures are not working. This is borne out by horrible employee engagement levels, high turnover, dissatisfaction, and the inability to receive meaningful wage increases or advancement. The majority of workers are sending strong messages about being heard, respected, and having input into building cultures where ethics is lived.

Secondly, organizations are being slammed by excessive laws, regulations, and processes that force them to spend millions of dollars to comply. They are subjected to a bevy of financial, environmental, and legal barriers that have grown in the United States and international markets. As a result, ethics has taken a major backseat strategically and cultural values resemble nothing but words.

Thirdly, the demand to achieve short term financial results has been so great that individuals are taking costly shortcuts; many of them leading to fraudulent behavior. Two of the best examples of illegal conduct took place at Volkswagen and Wells Fargo.

It is painful to report that fraud crimes accounted for the third largest portion (10.5%) of the total federal criminal convictions for fiscal year 2015. The 7,420 fraud cases reported to the U.S. Sentencing Commission were a decrease of 2.5 percent from the number of fraud cases reported the prior year. The losses in these cases ranged from no loss (134 cases) to more than $7 billion, with an average loss amount of $2,909,541 and a median loss amount of $213,831.

The concept of governing dynamics, the ability of a company’s board, leadership team, and rank/file to equally create ethics driven cultures where values rule is all about accountability, transparency, and enforcement.

Presently, there is growing pressure from investors, shareholders, stakeholders, the Department of Justice, candidates for board positions, insurance companies, and rating agencies to transform companies into a self-governing and ethics driven entities.

Failure to embrace this trend could put any employee at personal risk. Failure to adopt this operating model can potentially cripple organizations who choose not to do so.

My friends please remember this: respect, consideration, and courtesy matter a lot. Treat others fairly, decently, and equally.

Build your moral compasses carefully and always monitor them daily.

You know the battle cry: do your best each day. No one can ask more or less from any of us.

All the best/blessings, Mark