Article originally published in the Philadelphia Business Journal on November 18, 2019
Why do some people act in an unethical or illegal manner? Do they think they can get away with it? Were they raised without a moral or ethical compass and without a proper role model to emulate? Are they not concerned about their children emulating their morals and ethics? Is financial or political gain more important to them than doing the right thing? Or, is it just the way they are wired?
Intimidating an accuser
While serving in an executive position at my company, a mid-level manager informed me that his general manager had violated an important company policy, which could have had serious ramifications. Our company did not have an ethics hotline for reporting wrongdoing at that time.
After searching for and identifying his accuser, the general manager brought him to meet with me and asked the employee if he, the general manager, had violated the policy. What an intimidating position in which to put the employee! Not knowing if the general manager would be terminated and fearing retaliation if he wasn’t, the employee withdrew his report of the violation.
I terminated that general manager in part for his unethical behavior. I don’t know why he thought he could get away with intimidating his employee. We shouldn’t expect an individual to make an accusation of wrongdoing if that individual thinks the accused will continue to exercise their power or could cause harm to them. Why would anyone place themselves in harm’s way?
Much has been made of Ukrainian President Volodymyr Zelensky’s denial that during a phone conversation with President Donald Trump, Trump asked for a quid pro quo – military aid in exchange for an investigation of Hunter Biden, the son of Trump’s political opponent, former Vice President Joe Biden. Zelensky would be risking retaliation by Trump if he admitted that Trump asked for a quid pro quo. Why would he take the risk?
What did you know and when did you know it?
In today’s age of social media, there is a high probability that you will be held accountable if you had the duty to report illegal or unethical behavior, but failed to do so. When the wrongdoing becomes public, you may be asked, “What did you know and when did you know it?” This question was memorialized when former Senator Howard Baker, (R-Tenn.) asked this about former president Richard Nixon during his Watergate impeachment hearing in 1973.
Nearly every day the media reports instances where people in positions of responsibility turned a blind eye to the illegal or unethical behavior of others. Don’t be one of these people if you don’t what to damage your reputation.
If you can’t trust your bank, who can you trust?
In 2016, Wells Fargo faced a scandal that eventually cost the bank billions of dollars in fines, lost business and damage to the bank’s reputation. In a Sept. 8, 2016 press release, the Consumer Financial Protection Bureau stated, “Spurred by sales targets and compensation incentives, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges.”
In a Sept. 21, 2016 CNN Money article headlined, “I called the Wells Fargo ethics line and was fired,” reporter Matt Egan writes that the news organization spoke with a number of Wells Fargo employees who were fired for reporting unethical and fraudulent practices on the ethics hotline and to the bank’s human resources department. Did the human resources department know that retaliation against a whistleblower is a federal offense?
There were many leadership, cultural and operational issues at Wells Fargo that led to the scandal. Aside from questioning the tone at the top of then CEO John Stumpf and the ethics of VP of Community Banking Division Carrie Tolstedt, where was the Wells Fargo board while all this was happening?
Volkswagen, where was your ethical, legal and moral compass?
In the years prior to 2015, Volkswagen deliberately installed software on diesel cars that would give lower than actual readings during the emissions testing process. Not only did this action permit these cars to falsely pass emission tests, the results were also used in Volkswagen’s strategy to market their “clean diesel” vehicle technology.
When questioned about diesel car emissions, Volkswagen at first denied there was an issue. Management knew full well that they were gaming the testing protocols. It was only after the EPA threatened to withhold certification of the company’s new car model did Volkswagen come clean and admit to the fraud.
After the Dieselgate scandal became public in October 2015, the company’s stock price tumbled. Volkswagen CEO Martin Winterkorn was forced to resign and has been charged with defrauding customers and investors. James Liang, the Volkswagen engineer who wrote the software to give false emission readings, was sentenced to 40 months in prison. Oliver Schmidt, one of Volkswagen’s compliance officers, received a prison sentence of seven years.
Rex Tillerson, former chairman and CEO of Exxon Mobil and former secretary of state under President Donald Trump, in his departure comments from the U.S. State Department said, “Never lose sight of your most valuable asset, the most valuable asset that you possess: your personal integrity.”
Tillerson continued, “Only you can relinquish [your integrity] or allow it to be compromised. Once you’ve done so, it is very, very hard to regain it. So guard it as the most precious thing you possess.”
As leaders, we should remember Tillerson’s comments. It should guide the tone at the top we set and the culture we nurture within our organizations.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated columnist on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.