According to a post in Forbes by Gregory Unruh, citing one at Motley Fool, many corporations include “ethical waivers” in their corporate Ethical Codes of Conduct, including Goldman Sachs, ExxonMobil, Citigroup, Altria and many others.

Waiver clauses leave the door open for companies to violate their own code of ethics if executives and the board decide it’s a “good” idea. In effect, waivers are a “code of ethics safety valve,” the metaphorical opposite of a blow-out preventer. Why have them? Waivers will just cause problems; a corporate code of ethics is created and designed to limit management decision options to ethical choices. Usually it’s not a problem, but ethics can sometimes impinge on profits. Corporations and their shareholders don’t like to miss out on profits, so the safety valve allows them to sacrifice their ethics if the price pressure is high enough.

Why am I not surprised?

Both authors do an excellent job lambasting the idea that if it pays enough ethics can be waived, so I’m not going to restate the obvious.

Granted, it does take Board approval to use the waiver clause, but that doesn’t seem to be a problem.

Enron’s Board waived the Code of Ethics that prohibited self-dealing by corporate officers and approved off-balance sheet “special purpose entities” and we all know the result of that.

Again, no surprises; not when so many companies put profits, share price and looking good ahead of everything.

What did surprise amaze flabergast, me was that the Goldman Board has issued no waivers.

Confronted about this waiver, a Goldman spokesman responded to blogger ZeroHedge by saying: “The ethics code, including waiver provision, was required under [Sarbanes-Oxley] (Note: It’s not.). No waivers have been requested.”

Isn’t it nice to know that Goldman considers all their actions over the last few years to be ethical.

Wow! I’m not just surprised, I’m speechless.

Flickr image credit: http://www.flickr.com/photos/saeba/3479264260/

Fudge, fib, prevaricate, lie.

“Liar, liar, pants on fire!“

Kids hate liars, but rarely turn in the culprit since that would be snitching, yet that doesn’t stop them from glorying when the liar is caught.

But what about when they grow up?

Fudge, fib, prevaricate, lie.

We’ve seen so much of it the last couple of years, more than in the past—but is that accurate? Or is more just coming to the surface?

In 2007 the Ethics Resource Center found that ethical standards had nose-dived back to where they were in 2000.

According to the 2007 National Business Ethics Survey®

“Over the past year, more than half (56 percent) of employees surveyed had personally observed violations of company ethics standards, policy, or the law. Many saw multiple violations. More than two of five employees (42 percent) who witnessed misconduct did not report it through any company channels…”

According to Dr. Patricia Harned, President of ERC,

“Employees at all levels have not increased their ‘ethical courage’ in recent years. The rate of observed misconduct has crept back above where it was in 2000. And employees’ willingness to report misconduct has not improved, either…”

The good news is that the rate of misconduct is cut by three-fourths at companies with strong ethical cultures, and reporting is doubled at companies with comprehensive ethics programs.”

Got that, “strong ethical culture”—not exactly the type of culture prevalent on Wall Street or in companies whose focus is making the numbers no matter what.

In fact, the only ‘no matter what’ that should be a part of your culture is along the lines of “we will adhere to both the letter and the spirit of the law and make ethical and moral decisions at all times no matter what.”

Image credit: giopuo on flickr

Image credit: Kate_A

Corporate culture is the darling of today’s pundits, toasted and blamed for enhancing, allowing, enabling or contributing to every success and failure when it hits the media—and for good reason.

But is corporate culture also at the bottom of the amazing number of ethical lapses that have come to light over the last decade or so?

In a talk on ethics Bradley Preber, Grant Thornton’s partner-in-charge of its Forensic Accounting and Investigative Services practice commented that “Any company that continues having pervasive and systematic behavior problems with its employees must look at its culture to see if it could be partly what drives that unethical behavior. And if the recurring problem stems from upper management then this will have repercussions for the rest of the company. He added that culture is a factor that can be used to predict fraud and evaluate a company’s ethics.”

Moreover, the ethical breaches that surface shouldn’t come as a surprise.

According to Marianne Jennings, author of The Seven Signs of Ethical Collapse and professor of legal and ethical studies in business at W. P. Carey School of Business, “All unethical organizations are alike; their cultures are identical and their collapses become predictable.” Moreover, there are seven warning signs for which you can watch,

1. “pressure to maintain numbers;
   
2. fear and silence in the ranks and leadership;
   
3. young and inexperienced executives and a bigger-than-life CEO;
   
4. a weak board;
   
5. conflict;
   
6. pressure to produce constant innovation; and
   
7. a penchant for philanthropy that assuages guilt for questionable decisions.”

Just don’t expect this checklist to be posted in neon in your office or offered up on the company wiki.

Plus, there’s an entire gray area that although the actions may not be illegal they are unethical. It’s your responsibility to keep your head out of the sand, your eyes open and to recognize when you’re in that gray zone.

Just as you know that when something is too good to be true it probably is, know that if you’re wondering if something is unethical it probably is.

Do you see any of the seven signs in your company’s culture?