We have an ethical crisis in corporate America. We have seen Enron officials' self-serving criminal actions, Andersen's destruction of evidence, WorldCom accounting scandals and much more. The ethical crisis reminds me of the well-known African proverb that Hillary Clinton chose as a title for her book about what children need to survive and thrive, "It takes a village to raise a child." Clinton believes that changes in society (our "village") are necessary to enable children to grow into able, caring, resilient adults. It's the network of relationships and values a village provides in addition to the family that supports and affects our lives. "It takes a village" is equally applicable to the current corporate ethics crisis. I believe that societal changes, not just governance and oversight improvements, will be necessary for us to enable the healthy growth and interdependence of American business.
We have seen people put themselves and their own interests above their companies. We have seen certain individuals profit while their companies failed and their employees' life savings were depleted. We have seen willful blindness to dishonest activities. We have seen the failure of boards of directors to oversee company activities. We have seen board members claim not to understand the transactions, rules and regulations affecting the company they serve. We have seen people without accounting expertise oversee accounting activities, people without audit expertise oversee the audit committees of boards of directors and auditors overlook obvious errors in accounting.
The ethics crisis will undoubtedly result (if it hasn't already) in an increased emphasis on ethics as a course of study in colleges and universities across the nation. There will be more courses dedicated to teaching students what is acceptable behavior in different business situations and what is not. These courses will undoubtedly include many case studies where the fine line between doing what's right for the business and lining one's own pockets is discussed. "Conflict of interest" will be defined in great detail. There will be classes chronicling the entire Enron affair, Tyco, Adelphia and WorldCom. These courses are absolutely necessary and can definitely help young people understand the nuances of corporate behavior. They will learn to understand what is appropriate and what is inappropriate as they enter corporate America.
However, an even bigger issue in the ethical crisis in America is the issue of whistle-blowing. Most of us understand what is right and what is wrong, and hopefully most of us try to do what is right. However, what is obvious in many of the situations that have caused the ethics crisis is that even if people recognized something wrong was occurring, they were reluctant to say anything about it to anyone. Sherron Watkins was the one person at Enron who saw inappropriate activities and blew the whistle, but where was everybody else? How can egregious business activities go on without anyone blowing the whistle? Certainly the scandals eventually became public, but very few people were actually involved in bringing questionable behavior to light.
It seems to me that it is going to take a village to solve the ethics crisis in America. Yes, company management, boards of directors and auditors are going to have to understand accounting and legal issues applicable to their business. Yes, CEOs and CFOs are going to have to attest to the validity of their companies' financial statements. Yes, board members are actually going to have to understand and take responsibility for the companies they serve. Yes, the SEC is going to have to get tougher in its oversight activities.
But, it seems to me that business society in total that includes you and me is going to have to take responsibility for righting the situation. We know basic right from wrong. We can see when a situation might be construed as a conflict of interest when someone is involved in self-dealing at the expense of the corporation. We need education to address strategies for telling management when something isn't right and strategies for how management should accept the news and deal with the situation. If we don't understand a situation, it is incumbent on each of us to ask the tough questions until we do understand it. Maybe we need education that addresses strategies for being direct when we see something bordering on impropriety, or maybe we just need the fortitude to do it.
We are all inextricably linked to business success in America. It is the corporate relationships and values we all possess that affect the lives of our organizations. To overcome the ethical crisis, we "villagers" need to step up, be direct, ask tough questions, blow the whistle on unethical behavior and help corporate America survive and thrive.
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