Are You “Headed for an Ethics Scandal?”

Imagine you had to draw the basic shape of your organization on a cocktail napkin (or, better yet, grab a pen and a scrap of paper and try it right now): What does your company’s structure look like?

  • Is it a typical, pyramid-shaped hierarchy?
  • Is it an inverted pyramid, where senior management responds to middle managers, who respond to front-line employees?
  • Is it a straight horizontal line, a circle, an interconnected network, or another kind of “flat” structure?
  • Or does it look like something else entirely?

Now, on your quick diagram, can you pinpoint where an ethical scandal is likely to occur? Where’s the most obvious starting point?

Chances are that if we could collect every reader’s sketch, the combined results would look like an illustration of cells in a human body: a collection of heterogeneous blobs with red dots, dashes, and bubbles strewn throughout. Organizations are complex, intricate, and often messy organisms whose continued functioning is dependent on myriad, interlocking systems and subsystems. And as is the case for a biological structure, there’s more—way more—than one way things can fall apart:

“Corporations often approach ethics as an individual problem, designing oversight systems to identify the ‘bad apples’ before they can turn the organization into a ‘rotten barrel.’ But at places like Wells Fargo, FIFA, and Volkswagen, we can’t fully describe what happened by reading profiles of John Stumpf, Sepp Blatter, or Martin Winterkorn. Bad apple explanations also fail to explain the string of ethical crises at Uber, the long-term impunity of powerful men who sexually harass colleagues, or any of the other ethics scandals we’ve seen this year. Rather, we see a ‘tone at the top’ underpinned by widespread willful blindness, toxic incentives, and mechanisms that deflect scrutiny. These conditions seem to persist and metastasize. They replicate despite changes in leadership and in management systems.

Groups are more than the sum of their parts; we know we act differently when we’re on a team (or in a mob). And our explanations for ethical scandals are incomplete without a focus on group dynamics.

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That’s from “5 Signs Your Organization Might Be Headed for an Ethics Scandal,” a recent article published in the Harvard Business Review. In the article, author Allison Taylor breaks down the group conditions that tend to indicate an imminent scandal regardless of organizational structure—i.e. how to tell the difference between a healthy cell and an unhealthy cell. Warning signs include isolation, in-group language, a backdrop of urgency and fear, organizational fragmentation and plausible deniability, and the sense of impunity that follows massive success.

Read the full article here.

Don’t wait for a scandal to address your organization’s overall ethical health. Learn how to look for and address gaps in your compliance program, and find out how to keep your program updated and flexible in today’s changing regulatory environment, in our Time for a Modern Compliance Program webinar.