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Cloudy Forecast for Ethics

Cloudy Forecast for Ethics | Human Resource Executive Online By the time young workers begin their jobs, it may already be too late to train them about ethical behavior.

Wednesday, July 1, 2009
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While some argue that HR executives are the very embodiment of ethical and responsible behavior, no one is immune from having an itch -- and those who scratch that itch are not uncommon, say Nicholas and Carolyn Ryberg and others.

With broad-based decision-making authority, lax oversight and weak ethical training, the potential for criminal activity rises, and the business world is in desperate need of more ethics training and commitment, say the Rybergs.

For proof, the couple point to the 2008 Report to the Nation on Occupational Fraud and Abuse, by the Association of Certified Fraud Examiners. The Austin, Texas-based group compiled data from 959 cases of occupational fraud between January 2006 and February 2008, and estimated that affected companies lost nearly $1 trillion to fraud.

Fraudulent billing schemes, similar to the ploy the Rybergs were convicted of using against Koch Industries, Nick's employer, accounted for nearly one-quarter (24 percent) of the cases reported.

Sometimes, the best way to prevent such criminal plans is via perception, says John Jones, vice president and chief scientist for Vangent Inc., a human capital management service based in Chicago. He says those in the C-suite must ensure they're not inadvertently communicating a sense of disorder to both employees and to customers.

Company leaders, he says, should take note of what is known as the "social-disorder theory." The premise is that the more unkempt a neighborhood appears, the greater the likelihood of its harboring criminal activity.

So, in addition to paying heed to an organization's visual cues, such as facility upkeep and orderly services, he advises HR leaders and risk managers to focus on loss control, security and safety.

Maintaining employee development and training programs, stressing ethical standards and continuing with ongoing screening also help to bolster the perception of an ethical culture, he says.

"Do targeted coaching audits, where you're really aware of how your leadership team is withstanding the pressure," he says. He also suggests using a multi-rater system for leadership-personality development. Once or twice a year, assess the leadership team to obtain a metric on their skills and ethical behaviors.

And if there's a red flag? Coaching can help, says Jones, but "do not minimize the fact that the coach and the person being coached have increased self-awareness that there's risk [of being caught]. That is powerful."

Organizations must maintain rigorous control systems to prevent a sense of opportunity for those whose ethical standards are borderline, he says.

Carolyn Ryberg says executives must also practice ethics and personal accountability every day. She admits it sounds trite at first, but she points out the alternative as an example of what can happen.

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"If you practice lying, you get good at it," she says. "If you practice taking the short cut ... [the short cut becomes the norm]. And that's what I tell college kids. I'll say, 'Take the D, even take the F, but don't cheat.' "

Practice in school could lead to the perfect criminality in corporate America, she says.

Henry Shea, a former assistant U.S. attorney who has prosecuted many corporate fraud cases, says controls such as internal audits are important once people are in the workplace, but his concern is in raising ethical standards before students enter the workforce.

That's why he now tours with the Rybergs and others to spread the gospel of ethical business practices.

When he's not touring, Shea is an instructor at the University of St. Thomas School of Law and the Holloran Center for Ethical Leadership in the Professions.

Shea notes that the future ethical outlook may be cloudy, citing the most recent survey by the Josephson Institute, a Los Angeles-based ethics-training center, which revealed that lying, cheating and stealing are apparently prevalent among today's high-school students.

The bi-annual survey was published last year, and polled about 30,000 students at public and private high schools nationwide. Among the findings, the survey revealed that nearly half of the boys (49 percent) and more than one-third of the girls (36 percent) reported they lied to save money, and nearly two-thirds (64 percent) of all respondents confessed to cheating on a test within the previous year.

"And they asked [the respondents], how many were satisfied with their personal ethics, and the answer was over 90 percent," says Shea. "It starts in high school, and it continues."

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