All too often, we hear about corporations landing themselves in substantial trouble after a lapse in ethical behavior has gone unnoticed or unaddressed for far too long. The article “How Boards Can Reduce Corporate Misbehavior,” by Constance E. Bagley, Bruno Cova, and Lee D. Augsburger, published in Harvard Business Review, discusses key steps that will lower the risk of misbehavior in the workplace. First, all corporations must define ethical and compliance standards and procedures. The article suggests posting an online code of conduct, stating, “The code of conduct should be simple, easy for employees to understand, refer to values that will resonate with employees, and contain straightforward, relatable, and authentic examples.” There should be little room for “grey areas” that can be manipulated to justify anything short of exemplary behavior. Furthermore, workplace integrity should be made measurable and should be checked with frequency. The article lists customer and employee complaints, comments on help lines, and comments from exit interviews as some sources that can be used to ensure that a corporation is good moral standing.
It is of utmost importance to have a pre-establish team that addresses any workplace misconduct in case any situations do arise. The article suggests that an ethics committee of the board should be created with a chief ethics and compliance officer (CECO), who works daily to promote ethical behavior and compliance. It is critical to designate a group to handle misconduct because this will prevent an issue from being unaddressed for a longer time. This step also ensures accountability among those who address the issues. Another key directive for the Board is to establish an “escalation policy with clear guidance on what types of issues can be handled at the local plant level and which matters should be immediately surfaced to others higher in the organization.” Sticking to a predefined protocol will also prevent any misconduct from slipping under the radar.
Finally, in order to promote a work environment characterized by ethical behavior and integrity, it is important to establish a climate of transparency and honesty. Employees of all statuses should be trained to properly handle any misconduct they may encounter. The authors write, “Every job description should include explicit ethical expectations (including the obligation to report misconduct and a ban on retaliation).” It is explained that training should be used with relevant examples, to empower employees to speak out against misbehavior. Above all else, steps must be taken to ensure the safety and job security of those who are brave enough to stand up for the good of the organization. The article notably states, “The board should ensure that the company has a well-publicized reporting system, so employees can report (anonymously or confidentially if they choose) ethical and compliance concerns.” Investing in a hotline such as Red Flag Reporting not only empowers employees to take a stand against unethical behavior, it allows organizations of all sizes to avoid the catastrophic consequences of unaddressed misconduct. We, at Red Flag Reporting, certainly hope that your organization never has to experience these burdensome consequences, and as always, we are here to protect organizations and their people.