Never Black and White: Eugene Soltes Exposes the Gray

White collar criminals typically conjure images of dark boardrooms, wealthy conspirators and syndicated, international crime rings. Yet, in a new book, Eugene Soltes shows white collar crime is less a cause of pernicious plots and more a product of a lack of focus, proximity and context.

What distinguishes Why They Do It from others on the subject is Soltes’ extensive use of almost 50 interviews with those convicted of white collar crimes- which he defines as individuals in high social standing who committed crimes while doing business. The main takeaway is that corporate leaders are more or less normal people, who are as susceptible to the same conflicts of interest and ability to rationalize decisions made in the moment as the rest of us. By virtue of their position, however, their decisions can do harm not only to themselves but also all with whom they do business.

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Featured Collaborator for May: Robert Bloomfield

Interview with Robert Bloomfield, Nicholas H. Noyes Professor of Management and Professor of Accounting at Cornell University’s Johnson Graduate School of Management

My research reinforces a maxim long emphasized by accountants: it is most useful to view ethical behavior as a result of institutional choices, rather than as a result of moral character.  It isn’t that a manager’s character has no effect on the ethicality of their decisions, just that it tends to be swamped by institutional forces—and in general, people are far too prone to attribute ethical actions to character when they are actually driven by environment; this bias is so well documented it has been named the Fundamental Attribution Error. Also, we rarely know a person’s character, and even if we do, we don’t know much about how to change it. 

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Twice as Nice: On ethics teaching

Can people be taught to be more ethical? While some may say teaching ethics is a recipe for continued headaches and an ongoing, almost Sisyphus-like journey to ensure lessons are absorbed, a new study has positive implications for both academics and practitioners who have dedicated their work to engaging others in ethics education, training and programs.

The as yet unpublished study, covered by Ben DiPietro in The Wall Street Journal’s “Morning Risk Report” and presented at the recent Academy of Management conference, spotlights a key training tactic that will greatly increase ethics knowledge retention and, in the long term, may possibly reduce misconduct.

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Guarding Ethics: Azish Filabi's Keynote at Food and Enterprise Summit

What does it mean to eat and shop “local”? While there is no prescribed territory that those in- and in charge of regulating- the food industry can point to, many will generally agree that it is best to avoid regulation around the appropriate use of the term.

While there is widespread disinterest in having officials involved, when businesses cannot agree on how to accurately define, and ethically use, increasingly common terms like “local” (as well as “sustainable”, “natural’, and “artisanal”) it opens the door to participation by regulatory bodies.

Many are drawn to the local food movement because of a passion for community involvement and realizing their role in local economic development.  Intending to start, manage or invest in a purpose-driven business, however, is not sufficient without establishing mechanisms to guard the company’s ethics in the long-run.  This theme was at the center of my recent keynote address at the Food & Enterprise Summit in Brooklyn on April 8 (audio now available via the Heritage Radio Network). Our motivation to be ethical can only take us so far- businesses need proper corporate governance, accountability mechanisms, and strong community ties to help guard their ethics as the company grows.

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Lapsed Priorities: New Survey reveals lack of focus on bribery and corruption

If the following survey results are any indication, a betting man would be doubling down on increased FCPA cases in 2016.

The study by international law firm Hogan Lovells and reported in the International Business Times highlights that, for over half of multinational companies, fighting bribery and corruption does not feature as a main priority.

The piece reveals that old habits die hard. A focus on short term sales goals, making deadlines/sales quotas and operating in areas where bribery runs rampant contribute to a casual attitude towards maintaining ethical behavior and staying true to internal values and external regulations.

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Combating a Culture of Minimalism with Preet Bharara

What does it mean to have an organizational culture of minimalism? On the surface, it results in doing only the bare minimum to avoid punishment from internal or external groups. The more insidious implications means that both shareholders and stakeholders end up disillusioned and disconnected after prolonged exposure to the ennui and modicum of expended energy in actually making positive change.

In a recent talk by U.S. Attorney Preet Bharara as part of NYU Stern Business and Society Program’s Sani Lecture Series, he identified cultures of minimalism as a trending, troubling development in today’s business world. And this is, without doubt, extremely vexing for business leaders, investors, academics and advocates.

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Featured Collaborator for April: Jeffrey Kaplan

Interview with Jeffrey Kaplan, partner in the Kaplan & Walker LLP law firm in Princeton, New Jersey

What are your main areas of research /writing? 

I am principally a practitioner - in the compliance and ethics (“C&E”) field - rather than a professional researcher, and I certainly have not conducted any experimental research. I have done survey research – for the Conference Board (on the role of corporate directors in promoting C&E and on shortfalls in US government enforcement policy vis a vis C&E) and for the Ethics & Compliance Initiative (the “ECI,” which used to be called the ECOA) on conflicts of interest and various C&E program practices. Also, for the past four years I have been assembling and analyzing cases and articles about conflicts of interest (“COIs”) for a blog which looks at various COI issues across varying industry contexts (e.g., what types of interests are cognizable for COI purposes or when should a waiver be permitted) I hope at some point to turn these posts into a book about all things COI-related.

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Internal Reporting: Praising leaders for identifying issues

Internal reporting is one of the quickest ways employees can alert relevant organizational- and governmental- contacts that something is amiss. While extensive research shows that a major impediment to doing so is fear of retaliation, new research from ES collaborator David Mayer and others demonstrates that for organizational leadership, speaking up is an asset while keeping quiet about ethical lapses is viewed as detrimental.

The study, “When are Do-Gooders Treated Badly? Legitimate Power, Role Expectations, and Reactions to Moral Objection in Organizations,” [PDF] to be published in the Journal of Applied Psychology, identifies important implications for both people and organizations.

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The Global Ethics Summit: Culture at the forefront

Last week, I had the pleasure to attend The Global Ethics Summit, put on by The Ethisphere Institute. The event brought together over 400 people with broad perspectives on managing ethics within organizations, including ethical culture, encouraging speak-up culture, and best practices for Board management.

At the plenary on company culture, it was instructive to hear strategies companies are using to address one specific challenge – how do you use the lever of values to change behavior and outcomes in organizations?  For us at Ethical Systems, this panel was particularly important because we recognize that creating and maintaining ethical culture within an organization is key to supporting everyday ethical behavior.

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Professionalism and Ethical Leadership From General Counsel’s Suite

Among the active debate among compliance professionals, lawyers, and commentators about the proper role of compliance within a corporate hierarchy, there is an emerging consensus that lawyers have become the “loophole finders” and that compliance must step in to protect the firm’s integrity and ethics. 

Azish Filabi, CEO of Ethical Systems and Jim Lager, ES collaborator, have written a piece for Corporate Counsel that addresses this ongoing conversation. Read the piece on "Professionalism and Ethical Leadership From General Counsel’s Suite." >>

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