Ethics, Temptation and Money
A corporate entity is like its own community – it has a culture, a set of values and principles that form the foundation for the company’s operations, and an overall purpose. The interesting factor that has to be identified, assessed and addressed is that a corporate entity has to be profitable, or in other words, it has to make money. We often hear that a compliance program is irrelevant if the company does not make money – that is another profound grasp of the obvious.
A corporate organization has to be profitable, but how is that defined and communicated within the company? If the company has an obsessive fixation on quarterly profits, short-term returns, and targets, you can expect that this focus will come at the expense of sustainability, long-term goals, and important support functions like compliance.
A CEO sets the tone on this issue – if success is defined in these short-term financial achievements, this attitude will permeate the organization. On the other hand, if the CEO takes a longer-term view of corporate development with due consideration of short-term goals, along with long-term growth and sustainable operation, a CEO can use corporate culture as a longer-term goal because of its important contribution to a company’s financial success.
Aside from the sustainable financial benefits of an ethical culture, research has shown that a company with an ethical culture will experience lower rates of employee misconduct. Interestingly, and maybe this is obvious to everyone, but employee misconduct surrounding money (e.g. reimbursement, payment authorizations) is higher than employee misconduct that occurs surrounding non-monetary functions. So, for example, when an employee is dealing directly with a money function, the employee is more apt to engage in misconduct than an employee who may desire to steal or misuse a piece of property from a company.
While my point may seem very obvious, we can boil it down to a true human character trait – temptation. An employee who is tempted, notwithstanding the positive corporate culture, may steal money or cheat for financial gain. The clash of corporate culture and human behavior is a difficult one to resolve but from a compliance standpoint the company’s goal should be to make the individual employee feel that he or she is part of a greater whole than short-term individual gain. This is the challenge for installing an ethical culture – to embed a culture that embraces all individuals as a group, as a part of a greater whole.
However, if the employee is operating in a company culture dedicated to short-term quarterly objectives, you can easily imagine that the employee is likely to make decision to advance his/her own self-centered needs to the detriment of larger corporate interests. Companies have to offer a larger alternative to its employees – a vision of an organization committed to broad goals and values and to each and every employee.
In ethical companies, employees embrace the corporate vision in order to feel part of a greater whole. Employees look to the corporate culture as a means to embrace larger principles and purpose. Employees do not want to limit their purpose to meeting quarterly financial targets; they want to advance a common good and a broader purpose for the company.