A recent Financial Times piece (Alan Beattie and James Boxell, July 5, 2011 “Lagarde faces tough ethics regime at IMF”) describes how the new International Monetary Fund (IMF) Director Christine Lagarde will be “subject to the same heightened ethics rules as all IMF staff and will also undergo internal training” as a term of her employment. According to this interesting article this requirement appeared in a published letter sent to Ms. Lagarde from the IMF’s Executive Board. I should start this blog by saying that while I have always found Ms. Lagarde to be a highly respected public figure, I do not at all comment in this blog on her or the IMF specifically.
In one sentence, the rules apply to everyone. What do we learn from the IMF case? First it is unimaginable that this basic principle is just now being formalized in 2011. Ethics and accountability have been front and center in the for-profit and non-profit news for years, decades. Second, although it is always better to fix an issue “late rather than never,” it would have been more effective as part of a pro-active regular review instead of on the heels of the Dominique Strauss-Kahn case (on which I will not comment at all).
I cannot imagine any of the non-profit boards or advisory boards on which I have the privilege of serving would think otherwise. I cannot imagine any corporation, certainly any publicly listed corporation, publicly stating otherwise or even daring to think otherwise behind closed doors. I cannot imagine any academic institution or governmental agency suggesting otherwise.
However, if your organization is indeed suggesting, doing, or behaving otherwise – publicly or privately – it is time to change quickly and radically, and with appropriately rigorous transparency and outside expert advice. There are myriad ways of assessing specific ethics and accountability matters (including financial, harassment, and any other sort of impropriety) and more generally the compliance with ethics regimes at all levels of the organization. These include:
- integrating this into performance and compensation reviews at all levels;
- regular review of Board policies to ensure broad coverage;
- regular review of human resources policies to ensure broad coverage;
- various internal and outside audits;
- open discussions on relevant topics, sometimes mixing different levels of hierarchy (an internal brown bag lunch opportunity, seminar groups, a town meeting);
- regular review of financial, open bidding, conflict of interest and other such policies and practices; and
- a whistleblower or ombudsman process (adapted to the various different cultures and legal systems). I regularly develop more custom-designed approaches for individual clients
20/20 Foresight. Many of you know that a running theme in my blogs is 20/20 foresight. Get out in front of the problem. Implement the policies, practices and organizational culture now necessary in order look back from some future time and say that you did everything reasonable and to first in class standards to ensure the broadest coverage of all ethics regimes. Address the appearance of impropriety as well. The FT articles quotes the letter to Ms. Lagarde as quite rightly requiring avoiding “even the appearance of impropriety in [her] conduct.”
Finally, this doesn’t mean that salaries or benefits are all the same. There are proper processes and benchmarking procedures for handling compensation at all levels of an organization. In most cases the leaders are in a higher salary bracket commensurate with higher levels of experience, workload, pressure, career seniority, and, very importantly, responsibility to be a model of compliance with all ethics and other related policies and practices. Indeed part of the compensation should be tied to the leader’s ability to model and develop a culture of “the rules apply to everyone.”
Copyright 2011 Susan Liautaud. All rights reserved