Integrity comes before loyalty

Financial Review

PUBLISHED: 12 May 2012

Anna Bernasek 

America’s legendary cowboy humourist Will Rogers discerned three types of people.

For every one person who learns by reading, a few more learn by observation. The rest, a vast majority, have to pee on the electric fence to find out for themselves.

If Rogers were alive today he’d have some pert things to say about our latest wave of corporate scandals. There seems to be a never-ending supply of companies that engage in lawbreaking and then try to cover it up. Judging from past experience, that rarely ends well and someone always gets hurt.

Three otherwise impressive global companies are currently being investigated for wrongdoing and corporate cover-ups.

News Corporation hacked phones in Britain. Walmart bribed officials in Mexico, and Google purloined private data from millions of unsuspecting Americans.

In each case the companies involved were quick to blame rogue individuals or put it down to isolated cases. Further digging eventually indicated that wasn’t quite true; that the blame was more widespread. Yet rather than come clean, the companies have dragged their feet, hoping the stories will just go away.

The trouble is, any big company relies on the trust of lots of people to function. When that trust is undermined by a scandal, rebuilding trust should be the top priority, but again and again we see executives at a variety of levels avoiding the steps needed to put things right.

The ultimate responsibility for regaining widespread trust lies uniquely with the chief executive. When that doesn’t happen, it raises an issue of fundamental competence. Whether or not you believe that Rupert Murdoch, the head of News Corporation, is a fit person, it’s clear that he’s lost the trust of the British government.

In Google’s case the engineer at the centre of the personal data theft has pleaded the fifth amendment – his right to refuse to answer any questions. The fifth amendment applies, of course, only when there is a concern about a criminal conviction. According to official reports, others at Google were involved. So management’s initial hasty response isn’t looking too persuasive.

In News Corporation’s case, the board was quick – perhaps too quick – to express its confidence in Murdoch.

The Walmart and Google boards don’t seem overly concerned, either. That’s because the boards are pretty well insulated from responsibility. The worst that can happen to directors, generally, is to quietly retire from the board.

Not so for employees down the chain. There have already been arrests of News Corporation employees and there could be more. So some lessons to learn from corporate scandals apply to junior employees and mid-level executives; anyone, in fact, below the board of directors level.

Finding yourself looking at a nascent corporate scandal in the workplace can be pretty daunting. But bad things happen at companies, even really good ones, every day.

If you suspect illegal activity at your company or are asked to do something that feels wrong, how should you handle it?

The textbook response is to never do anything that you wouldn’t want to be publicised. But life is more complicated than that. It’s no simple thing to accuse your company of impropriety. Quitting or going to the authorities are not easy choices, either. In the current lousy job market one has to think twice before making waves on the job.

So in the spirit of making the best of a bad situation, here are a few ideas for junior executives to navigate their way around their next corporate crisis.

First and foremost, investigate the options. There’s usually a legal way to accomplish almost any legitimate goal. Breaking the law isn’t too bright when there are so many good alternatives. There’s never only one way to proceed.

Be sure to seek advice. Judgments about legal propriety can involve subtleties. Most companies have resources, in the legal department and elsewhere, that will be happy to assist in thinking through a smart course of action.

Ask questions. A really good one is: “Why are we doing this?” It’s not accusatory, but it’s not complicit either.

And never – never – get your own hands dirty. If something doesn’t smell right to you, either challenge it or work out how to gracefully step away.

Once you take part, even in a small way, there’s no saving you. As we’ve seen in previous scandals, the board of directors will simply wash its hands while employees, often after simply trying to please their bosses, take the fall.

In life there are some things money can’t buy. Your integrity is one of them. So manage your reputation like the valuable asset it is.

If the culture at your company is dishonest, eventually you’ll have to make a change. Sticking with it is a recipe for disaster.

Don’t pee on the electric fence!