Culture

Bank Culture: Can regulators have an impact?

A March 14 New York Times Dealbook article by David Zaring of the Wharton School looks at bank culture from a regulatory perspective and questions why NY FED regulators are taking on the grand task of attempting to make culture and ethics an important part of bank supervision- especially when “creating and regulating culture by regulatory fiat is so difficult.”

 

Ethical Systems has made fortifying ethical corporate culture a main concentration of our efforts, as there is no better determinant to predicting misconduct. An ethical systems approach to business ethics considers the interplay between corporate culture with considerations for how to motivate individual to be more ethical (nudging),and the regulatory (guiding policies that impact behavior and outcomes).

 

When examining company culture, leaders should consider whether it is one in which company values are infused into all aspects of the operation, where managers lead by example and teams are encouraged to speak up about ethics and other issues? Or, if it is a culture in which checking the compliance boxes off a list is seen as most important and certain behavior is tolerated by high-performers but not allowed for others?

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Interview with Rashmi Airan: Law, Blindspots, Prison and Redemption

An interview with Rashmi Airan, speaker on ethics, law and culture; leadership and compliance consultant; and growth strategist

 

Background:

Rashmi was a successful lawyer who graduated with honors from Columbia Law School. After working for several major corporations, she launched an independent law practice in Miami, Florida. During the housing boom, she was recruited to work with a local real-estate developer who later engaged in shady business practices. Her involvement resulted in a one year sentence in Federal prison, alongside a $19M judgment against future earnings, required community service hours and 3 years supervised release.  As a mother of two and devoted community activist, Rashmi has reconfigured her subsequent career to focus on growth strategies and leadership/compliance training for firms, corporations, and graduate schools.  She has also become widely known as a public speaker, sharing her story to help illustrate the ethical perils and situations that can result from a drive to succeed and the blindspots created when pursuing a goal.

This interview has been edited and condensed from a conversation on January 19, 2017.

 

1) What are the main takeaways from your story that you want others to know?

I believe there are many reasons why I am telling my story. I want to help people so that they do not find themselves in the same predicament that I was in and make different choices when faced with daily “gray” decisions.  I finally came to a place of peace that I had done something wrong when I gave myself the freedom to forgive.  After I forgave myself, my lessons became clearer. I reflected on different business relationships and the fact that I had not looked into things deeply enough.  I know there are lessons for both young and seasoned professionals. I believe I can enlighten people to the fact that there is a fine line and we must all walk between the two sides of right and wrong and choose to be on the right side of the line.

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Behavioral Ethics: From nudges to norms

Scott Killingsworth, Senior Counsel with Bryan Cave, LLP, writes a broadly applicable and thought-provoking piece on nudges vs. culture. Killingsworth illustrates how a strong ethical culture can take the place of consistent, ongoing nudges and shows that culture should be considered through the lens of not just preventing ethical mishaps, but also about creating a positive environment “where the good apples can thrive”. 

We encourage you to read this informative article >>

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Featured Ethics Scholar for December: Dennis Gentilin

Interview with Dennis Gentilin, Whistleblower, Author and Consultant on Corporate Citizenship

 

What are your main areas of research/work?

Let me begin by stating that I don’t see myself as a scholar (at least not formally). However I do see enormous value in using the findings and tools from the social and behavioral sciences to help address the ethical challenges facing the business world. This is one of the many reasons I am a big advocate of Ethical Systems.

As one would expect given my experience and background (outlined below), my primary area of interest is employee voice and speak up cultures. What my experience showed me is that even the best “formal systems” (rules, regulations, compliance and other such artifacts) have shortcomings. The best (and arguably the only) way to overcome these is to nurture the “human systems” within organizations. A speak up culture is a core component of this latter system.

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Corporate Scandal, Reputation Risks and Common Sense

When corporate scandal occurs- whether it makes headlines or not- there is a tendency to blame bad apples instead of examining the organizational culture to identify areas in need of further improvement or oversight.

In a recent piece in The Wall Street Journal, Lou Gerstner, a former chairman and CEO of IBM and RJR Nabisco, now chairman of the board of directors at the Broad Institute of MIT and Harvard, outlines why there is continued misunderstanding around culture and the various ways companies undercut their own efforts to strengthen it.

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ETSY: A Positive Culture of Negative Confessions

What happens when people make a mistake at work? That depends on the culture of the organization- covering it up or passing the buck are options when competition drives behavior or if there is a low trust environment. But at Etsy, employees are not only asked to own up to their errors but reveal them to the entire company.

In a recent piece on Quartz, Etsy CEO Chad Dickerson revealed that people at the company are encouraged to document their mistakes, how they happened and what they learned from it, in public emails. The company “also gives out an annual award—a real three-armed sweater— to whomever who made the most surprising error, not the worst one, as a reminder to examine the gap between how things are expected to happen and how they actually do.”

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Cultures of Compliance with Donald C. Langevoort

Donald Langevoort, Thomas Aquinas Reynolds Professor of Law at Georgetown Law has provided a copy of an article written for the American Criminal Law Review in which he deftly outlines a series of acute observations drawn from different social sciences—economics, psychology, sociology and anthropology—about cultures of compliance and noncompliance.

The abstract:

In the last few years especially, law-makers have increasingly invoked culture as something crucial to good compliance. The phrase “culture of compliance” has thus made its way into common legal discourse as describing both a goal and a marker. Precisely they mean by this is contestable, but there is enough evidence that the demand for healthy compliance culture is serious to invite careful thought. What is it, or should it be, and how might we know? This article draws from organizational behavior, behavioral ethics, and financial economics to develop an approach to how and why corporate cultures resist naively appealing interventions of “tone at the top” and ethical exhortation.

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Measuring Ethical Culture: Tips and Tools

As any Compliance Officer knows well, demonstrating that your company has an effective compliance program is one of the main goals of your day-to-day efforts, but also one of the most elusive. The Federal Sentencing Guidelines are designed to incentivize businesses to implement ethics and compliance programs by rewarding companies through reduced sanctions- if they can demonstrate that they have an effective compliance program.  The broad goal for most companies is to demonstrate, in the face of an investigation or finding of illegal actions, that the act was caused by a rogue employee and not because of how the company inherently conducts its business.

Yet, we all know that in practice demonstrating effectiveness of a compliance program is rife with gray areas, cynicism and challenges.

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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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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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