Wednesday, September 12, 2012

Reputational Risk – The Foundation of Ethical Society

A noted researcher on business ethics argues that the only sure-fire way to ensure ethical behavior is what we’ve all come to call transparency, a word so overused it is almost useless.

His description in a new book entitled The Righteous Mind is much more powerful:

“…the most important principle for designing ethical society is to make sure everyone’s reputation is on the line all the time, so that bad behavior will always bring bad consequences.”

For that nugget, the author, Jonathan Haidt goes back to 4th century BC and commentary by Plato’s older brother Glaucon.  For all of the codes of ethics, protestations, centers, seminars, books and workshops devoted to ethics, all that really needs to be done is to ensure “reputation is on the line all the time.”

In my experience, the more indignant a reaction is to questions about or suggestions of unethical conduct, the more likely it is that an individual or group of individuals is hiding something shady to protect their personal or associated reputations.

Reciprocity can be a positive outcome of groupishness but all to often it is an enabler of unethical conduct.

There is a reason that investigative reporting is so expensive and now so increasingly rare.  It takes a lot of time to get to the bottom of even the most seemingly transparent issue.  If you ever read one of those nonsensical, “he said - she said” news reports and wonder WTF, there is always more to the story and it usually relates to ethics.

While exploring the scores of different surveys on the website that Haidt helped create, my eye was caught by one designed to score where a person stands on various business-related ethical issues.

It drills down on aspects such as usurping credit, taking favors, playing games, concealing misconduct by others and taking advantage of others.   In this one, the higher the bar, the more accepting you are of those behaviors.  It will be revealing even to someone tempted to try and game the survey.

The results (shown as an image in this blog) provide an individual score first (in green,) followed by the average for thousands and thousands of males (brown) and females (orange) who have taken the survey.  It even gives a result (not shown) about the perception one has of how accepting others are of unethical behaviors.

Both males and females who were accepting of those unethical behaviors on the survey believe that others are even more likely to be unethical.

I was always grateful that the Durham Convention & Visitors Bureau (DCVB), where I worked the latter half of my now-concluded career was created under state statute as a public authority with a governing board appointed by local elected officials according to a balanced set of categories.  Many such organizations and non-profits self-appoint all or most of their governing boards.

As a public authority, DCVB is not only subject to independent scrutiny such as annual audits but to the standards, requirements and additional scrutiny of the North Carolina Local Government Commission.  In addition, the organization undergoes regular in-depth diagnostics for aspects such as accreditation.

The Commission was created in 1931 in the depths of the Great Depression and it is the singular reason so many local governments and local authorities have such stellar ratings from independent agencies.

Unfortunately this isn’t always true of other DMOs or especially non-profits, even those contracted by local governments.  The Commission has made mistakes, usually under political pressure, but I would support efforts to involve it even more deeply and definitely more broadly in oversight of any public or non-profit responsible for the use of public funds.

As blogger Tom Fishburne humorously blogs today, trust today is very rare and he supports the concept that businesses and organizations should be required to earn trust before telling their stories.

To me, earning that trust begins with “making sure everyone’s reputation is on the line all the time.”

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