Ethikos Weekly Editor’s Picks – December 18, 2014

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Editor’s Top Choice:

Culture Drives Reputation

From Max Rudolph of Corporate Compliance Insights:

Culture describes how a company really does business, and reputation is how external stakeholders perceive it. Over long time horizons, these internal and external views converge (and often overshoot). There is a cost associated with having a worse reputation than is justified, from higher lending costs to fewer quality applicants, so companies often invest to improve their reputation with the general public.

Reputation risk often overlaps with concentration and strategic risks. The CEO is the leader of the firm, and the internal culture gets its direction from the person at the top. Sometimes this person is a great decision maker and needs little input from others. This can lead to a weak management team with little bench strength, since employees expect minimal personal growth and find greater challenges elsewhere. Other times, the CEO is ignorant of their poor decision-making skills, resulting in a culture of “yes” men and lack of open communication. The sweet spot is the CEO who encourages contrarian opinion within a legal and ethical culture.  When risk limits are aligned with the risk appetite, this allows decisions to be made at the lowest reasonable level. For example, the CEO should determine the capital allocation strategy, but not the brand of paper for the copier. Read more


Other Featured Picks of the Week

The Eve of Destruction and Tone at the Top – You Are Who You Say You Are

From Tom Fox of the FCPA Compliance and Ethics Blog:

In 1965 the single Eve of Destruction was released. It was written by an 18 year old named Phil Sloan and was sung by former member of the New Christie Minstrels named Barry McGuire. To top it off, it was produced by Lou Adler. These facts, the story of the song, its recording and release were related in a recent Wall Street Journal (WSJ) article by Steve Dougherty entitled “Still on the ‘Eve of Destruction’”. There are some singles that got under my skin when they were released and have remained there. This song was one of them. For me, the single most powerful line in the song was following:

Think of all the hate there is in Red China; And take a look around to Selma Alabama.

Even as an eight year old I pondered the import that line. While we were taught that the Soviet Union might have wanted to defeat, conquer, and then enslave us; it was Red China that hated us so much they wanted to wipe us out of existence As we were taught back then that it was the Red Chinese who hated us; I wondered if there was that much hate in Selma Alabama. For if there was as much hate in Selma Alabama as there was in Red China, it had to be quite a lot of it.

I thought about Eve of Destruction and those lyrics about the hate in Selma, Alabama when I read about the conduct of a couple of senior managers recently. While they have both apologized for their conduct and comments that were clearly beyond the pale, I wondered that if you do say and act a certain way, if it really translates into who you really are. For the compliance practitioner, I wondered what such comments or actions might mean about a Chief Executive Officer (CEO) or other senior management’s commitment to doing business in an ethical manner and in compliance with anti-corruption laws such as the Foreign Corrupt Practices Act (FCPA) or UK Bribery Act. Read more


Being Serious About Integrity

Philippe Montigny, President of the ETHIC Intelligence Certification Committee:

Today I share two viewpoints about integrity, from much different perspectives and experiences. If there is one blog to read this week, it is Richard Bistrong’s blog posted on Monday, Too Big To Debar (Link). This article reflects a sense of integrity and humility that is rarely demonstrated. Imagine someone who has been convicted for FCPA violations, sentenced to jail, and debarred from doing business with the US Government, who now says loud and clear that it was fair and appropriate. Imagine the same person who now articulates that there is in fact only one way to do business, which is to behave ethically, comply with the law, and to demonstrate that compliant business is competitive business, i.e. 100% based on innovation and pricing which drives value to both the buyer and seller. He shares this unfiltered from a front-line experience that we don’t often hear in this debate. Read more


A Trust and Credibility Manifesto for Leaders and Organizations

From Jim Lukaszewski of www.e911.com:

A manifesto is generally a document that contains language to motivate, activate, energize and inspire appropriate, productive and useful action. When it comes to credibility and trust, the fundamental behavior of an organization reflects its leadership and the leadership’s commitment to trustable behavior.

Management’s Credibility Mantra: Credibility Is Conferred on Us Based on Our Past Behavior.Read more


How Do You Spell Success? E-T-H-I-C-S!

Frank Bucaro, CSP, CPAE:

I am tired of people blaming the economy for their lack of business, stagnation or loss of motivation. The reality is that companies have cash reserves, 90% of the workforce is still employed and the market is recovering. So what and where is your success? It lies within you.

Let me share with you a few ideas that might help.

How do you spell success? E-T-H-I-C-S! Don’t think so, read on. Read more