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Those in the ethics and compliance community and at the Department of Justice (DOJ) constantly chirp about the need for entities to have an ethics and compliance program which encourages not only compliance with laws, but ethical decision making. In fact, the Federal Sentencing Guidelines, the Federal Acquisition Regulations and other laws and regulations require that organizations establish a “tone at the top,” which means an organization’s leaders must message ethics and make ethical and legal choices.


In addition to having leadership committed to a culture of ethics and compliance, organizations are also expected to implement training programs that not only provide employees guidance on following the law, but also encourage them to make ethical choices.


However – can this really be done? Can an employer truly sway an employee to make decisions of integrity and follow the law? Or, do employees arrive at work with their character already set in stone? Are their choices dictated by their personal code and simply not influenced by strong ethics and compliance programs?

Two examples beg this question.

Example One – Renowned Journalist

I had an occasion to sell a relatively high-end espresso maker my husband had bought me that I never used and was less than a year old. Since I was not using it, I figured that someone else would enjoy it. So although it retailed around $400, I priced it to move at $25 on Craigslist.


Shortly after posting it, I received an email and call from an interested buyer, who actually turned out to be a renowned journalist. The “Renowned Journalist” asked all the questions you would expect (Is it clean? Does it work? Why am I selling it? etc.). The “Renowned Journalist” also queried if I would take it back if it did not work. I answered all the questions and assured the “Renowned Journalist” that I would take it back if indeed, it did not work. We agreed on a time to meet at my house.


The “Renowned Journalist” promptly arrived and asked if I had change because they only has two twenties. They explained that “banks do not pass out fives anymore.” I did not have correct change. So, the “Renowned Journalist” asked if I would just take $20 for the espresso maker. I did a quick assessment in my head. First, why did they come without correct change and why not just ask me this on the phone? Second on principle, I should stand my ground and demand the five dollars. So, I say no. The “Renowned Journalist” then assured me that if I let them take the espresso machine they would mail me the five dollars or stop by with it later that day. I never got it.


I then started to think – If this is how ‘Renowned Journalist’ rolls, what do they do at work? Did any of the training or “tone at the top” of the “Renowned Journalist’s” employer matter? When they are preparing a story, facing a deadline and need material, does the “Renowned Journalist” just plagiarize, rationalizing that the plagiarism is OK for whatever strange reason they come up with? Is that reason similar to the strange reason “Renowned Journalist” conjured up to justify ripping off someone over five dollars?


Or, when they are abroad to research story and need to interview foreign government officials, do they pay off some of those officials to get the scoop?   If the “Renowned Journalist” were to pay off some foreign government officials to get the story, their employer may face charges for violating the Foreign Corrupt Practices Act. Not a stretch of the imagination by any means because DOJ investigated Murdoch’s News Corp for such allegations.


Would the “Renowned Journalist” stop and think, “What is the right thing to do before paying the bribe or plagiarizing the story?” Or, on the contrary, is their character so deeply ingrained that regardless what company training the “Renowned Journalist” received or how often the journalist witnessed their corporate leaders making decisions with integrity, they are going to come up with their own distorted rationalization to make the unethical choices?


Lest we think this is how the entire world operates, to further analyze this question, lets review example two – the real estate agent who did not possess a law degree like this journalist did and completed no ethics/compliance training. However, they made an ethical decision just because it was the right thing to do which resulted in a huge out-of-pocket loss to them.


Example Two – Realtor

When purchasing our last home, my husband and I worked with our real estate agent to prepare and submit our offer to the seller. Our agent quickly reviewed the offer with us and gave us a copy to sign. We very quickly reviewed, signed and gave it back.


After settling on a price, our appraisal came back lower than our agreed upon price. However, when we went to negotiate with the buyer, the buyer pointed out that the contract did not some required clause so, we could not re-negotiate based on the lower appraisal. We were shocked. So, now we found ourselves either having to pay the agreed upon price (which was over the appraised amount) or having to walk away (in which case we would lose our hand money).


We learned about this dilemma when our agent visited our house late one evening to inform us. Clearly distraught, he came into our living room and told us he had failed to check the box which indicated this clause applied.


But the conversation was amazing for several reasons. First, our agent assumed complete responsibility and apologized for his error. He could have said, “Yeah, I made a mistake but, you two lawyers read and signed the contract, so it’s your problem.”


However, he did not.


Second, he told us whichever route we chose to take he would pay us the amount we would lose. So, if we walked away and lost our hand money, he would reimburse us. If we wanted to buy the house, he would make up the difference between the purchase amount we agreed to and the amount for which it appraised.


There was no assignment of blame and no negotiation about splitting the cost. He just admitted upfront that he made a mistake and subsequently offered to fix it. Without completing any ethics training – without experiencing the “tone at the top” – without any of the formality of an ethics and compliance program – our agent made the ethical choice.


As the agent sat in our living room, clearly nervous and upset with himself, I thought of the “Renowned Journalist” and her decision-making. I realized that all of the ethics and compliance programs in the world could not give our real estate agent the courage and the character to own up to what he did and foot the bill for it. He just had that courage and integrity inside himself.


I also realized that all of the ethics and compliance training in the world will never give the “Renowned Journalist” the courage or character to make ethical choices. And, as you can imagine, the realtor’s mistake cost him a lot more than five dollars.


What organizations have to do is empower, reward and encourage employees who take the real estate agent’s approach to decision-making.


For those employees inclined to the “Renowned Journalist” approach – it will be a matter of good internal controls catching them when they act against company policy.


Until the next post…..behave.


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