Recent press reminds us that in addition to systemic unethical behavior (African dictators siphoning oil revenue or tax evasion networks), more specific pressure points create enormous and contagious ethical challenges. Whether reporting quarterly revenue at 11:59 pm on the last day of the expecting a signed contract the next morning, a weakness in processing bank transfers involving Iran, or failure to react vigorously to governmental threats to withdraw business privileges unless a Swiss bank account balance rises, pressure points should be a key element of ethics oversight for every board and senior management team.Pressure points include situations, structures, relationships, or events that put particular pressure on ethical decisions, usually involving a major organizational priority seemingly in conflict with the ethical decision. Some are one-off, and others are on-going. The conflict is rarely a true conflict. Most often the institutional priority will fail anyway if the wrong ethical decision is taken, at least in the medium- to long-term.
Often ethics concepts that seem perfectly reasonable on paper or in a board discussion fall apart when applied under pressure. Ethics oversight frequently stops with macro mechanisms such as codes of ethics or annual conference calls or reviews. Broad brush policies, infrastructure, risk management, and ethics culture are all essential but insufficient without management of pressure points for any organization – for-profit, non-profit, or governmental – in today’s world. Highly ethical pressurized decision making can be practiced and become a reflex, organizationally and individually.
Pressure points fall into several categories but vary widely.
- regularly occurring events: revenue recognition points; trading floors; legal departments pressured to approve slightly irregular practices, contract provisions or exceptions to rules; managers communicating performance-related pressure to individuals and/or teams; economic downturn for non-profit fund-raisers; a Chinese wall with porous areas (e.g. the odd exception to isolating fund-raising from admissions at a University or patient care from fund-raising at a hospital)
- major organizational transformation moments: merger or acquisition; down-sizing; introduction of complex new areas of service (HIV/Aids for a humanitarian organization or a new product line with potential privacy implications for a tech company); significant upheaval in the senior management team; or even several key people out sick or on maternity leave at the same time
- outside factors beyond the organization’s control: the financial crisis; natural disasters; a fire at an organization’s headquarters; a regulatory investigation (even ordinary course)
- one-off challenges: safety issue with a key product; strike or other employee issue; exceptional gift to an academic or non-profit organization with some question regarding inappropriate strings attached or the donor’s personal affairs for urgent program funding needs
- personal difficulty: good people doing bad things when unable to cope with illness, personal financial pressure, divorce, or other personal matters (e.g. a case of check-writing fraud by an assistant after 10 years of loyal service when bills from her husband’s cancer treatment overwhelmed them)
- pressure arising from reputational fear: pressure (or outright threats) from customers or donors; entrepreneurs’ implicit threats to venture capital investors that reputation will be hurt long-term if difficult ethical practices are enforced; an overall culture of fear
Creating Opportunities. Pressure points, like most ethics matters in my view, offer opportunities. When managed properly, they focus organizations on proactive reinforcement of weakness or diffusing the pressure before a real problem occurs. They also bring another layer of ethics oversight linking broader policies and practices to reality internally and externally. Below are suggestions for mitigating the risk of pressure points or taking the “deep breath” necessary to step away from the pressure and readjust the ethical lens through which responses are assessed.
First: Identify the pressure point risks within your own organization both at regular planning and ethics/governance/performance review sessions and on an on-going basis as part of the culture of the organization. Vigilance requires daily awareness at all levels of the organization.
Second: Address potential risk points head-on and proactively as they arise – before the symptoms or illness worsens. Diffusing pressure points should be woven into risk management. If there are issues around recording revenue or gifts for a non-profit at the end of the term, clarify (in writing and in meetings) the rules and practices and a range of potential borderline scenarios. Clarify what is to be done when the situation falls outside the rules. If the legal team runs interference with frequent requests for exceptions to contract practices or other rules, ensure everyone in the organization knows process for handling these. Reinforce Chinese wall weaknesses or areas of potential conflicts proactively with zero tolerance for exceptions. Don’t leave these or any other pressure point risks to become the reason for a problem or even the media’s support for a broader treatment of ethics in your organization. A double review process helps for sensitive areas beyond the classic dual signatures on checks and expense approvals.
Third: Reflect and check first before you act. When in doubt, take that deep breath. Check with colleagues, bosses, and/or expert outside advisers. Don’t act until you have had the necessary time to think and seek advice.
Fourth: Discipline in decision-making (which becomes habit over time) is essential. Are you rigorously asking with every decision: What are the relevant organizational and personal moral principles? Do you have all of the information you need to make the decision? What are the consequences (present and forward-looking to the organization and all stakeholders? This is easier said than done. The forward-looking consequences are particularly crucial as the bad ethical decision today could spread or create other pressure points even completely unrelated to the original risk.
Fifth: Don’t overlook the small things. One slip-up…small things inch their way toward bigger and bigger ethical infractions. Focus on quality not quantity: fraud is fraud, whether $10 or $10 million. One inappropriate relationship counts. A pattern is not a prerequisite for ethics management.
Sixth: Take control of your own behavior even if someone else may not behave well in parallel or in response.
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