By Cindy Bo '06 and Jim Deasy.
David Gebler, president and founder of Working Values Ltd., had breakfast with 13 students on Thursday, March 30, as part of the Paul M. Montrone Seminar Series on Ethics.
The session was an opportunity for Gebler to share his experience with creating a healthy corporate culture that minimizes unethical behavior. David Gebler (forth from left) with MBA students. Gebler opened the discussion with an interesting observation: few corporate scandals are caused by crooks deliberately trying to rob a company. Most fraud, he said, is perpetrated by good people who make bad choices due to the surrounding culture and external pressures, much as you see a highway with a speed limit of 65 mph—but on which everyone is traveling at 75 mph. Most people rationalize their actions (the weather is clear, or there are no police around). However, if a monitor displays drivers’ speed on the side of the road, they often slow down; people tend to modify their behavior when rule breaking is publicly recognized.
Gebler went on to give the example of Betty Vincent, one of the lead accountants at WorldCom and by all accounts a “straight shooter” and model employee. Well versed in the rules of accounting, she nonetheless succumbed to pressure from the CFO to rework the numbers. Once she began down the slippery slope, there was no way for her to recover.
Gebler also stressed that companies racked by scandal often have a culture of fear. Throughout the session, the group discussed the role of legislation in curbing corporate wrongdoing.
Gebler feels strongly that laws are only part of the solution, and too many rules would overburden employers. He went on to explain that the old view of compliance was based on preventing employees from stealing from an employer, while more recent approaches focus on keeping good people from doing bad things. And although rules can increase corporate transparency, Gebler said, they cannot alone change behavior—the key to limiting wrongdoing within an organization is to create a healthy and open culture. Employees need to feel that they are in an environment where they can raise ethical issues without fear of retribution. In addition, one of the most important actions a manager can do is to create an open environment of accountability by acknowledging their own mistakes.
Several students brought up issues relating to companies that are required to report their quarterly earnings and how this puts too much pressure on the organization to deliver short-term results. By not focusing more on long-term strategy, companies can get caught in a cycle that is ultimately damaging to their firm. Gebler’s perspective is that there has not been a sufficient shift in focus from short-term results to long-term goals.
So what does a healthy, ethical culture look like?
Gebler said it’s one in which “employees and managers understand why being ethical is important for the organization's long-term viability, and they have the determination, courage and freedom to see that the right thing gets done.” He also outlined some best practices and key indicators: Employees feel a sense of responsibility and accountability for their actions and for the actions of others; Employees freely raise issues and concerns without fear of retaliation; Managers teach others how to admit a mistake rather than just asking others to “do the right thing” since unethical behavior stems from fear of retaliation; Leaders understand the pressure points that drive unethical behavior and develop processes to identify and remedy areas where pressure points occur. At the end of the session, one student asked Gebler’s advice on the best way for business schools to teach ethics. “Having an integrated program where a variety of classes have an ethics component allows the message to sink in from all directions and is the most effective way to reinforce these notions,” he said.
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