As a native New Yorker, the headline certainly caught my attention: could our former governor be redeeming himself and turning his notoriety to a nobler cause, recommitting himself to serve the public good? Alas, it was not to be; but it turned out to be a report of a far more intriguing endeavor by the outgoing president of Gonzaga College, Robert Spitzer (no relation to Eliot), turning his vast educational experience and religious training to serve the call for instilling a new code of ethics to the regulation of our ailing financial industry (Spokesman Review, April 14, 2009).In calling for broad regulation to prevent further lapses in ethical behavior, the retiring university president sees the need for encouraging new corporate cultures that are not based on greed, arrogance and fear. He cites the destructiveness of cultures that are overly reliant on ego, arrogance and aggressiveness. “Arrogance and fear are much more likely to be the sources of unethical behavior,” he said in the article. And he thinks the right place to start is with corporate leadership.
The bedrock of corporate reputation is a culture built on ethics, values and a code of conduct that informs and guides all employee actions and behaviors from top to bottom. Nearly every major financial organization involved in today’s economic malaise committed itself to a code of ethics or conduct that embody the worthy principles and guidelines that would, at first blush, help prevent lapses in judgment that might blacken corporate reputation. See: AIG Employee Code of Conduct; Merrill Lynch Code of Ethics for Financial Professionals; Citibank Code of Conduct, Bank of America Code of Ethics; Goldman Sachs Code of Business Conduct and Ethics.
If good ethics is good business, then the act of committing a company’s Code to paper and requiring every employee to sign it, should have had the desired effect of motivating and instilling appropriate behavior. So what went wrong? The reality is that the human mind is inherently fungible; the act of signing a piece of paper can quickly be displaced by selective memory that suits our need, particularly when it preserves our self image. In the financial community, cognitive dissonance seems to have easily taken over the urge for maintaining ethics in the face of cultural group think in which the ends were seen to justify the means along with the prevailing attitude that, hey, everybody’s doing it (and making scads of dough!).
As Spitzer implies, the culture of arrogance, greed and fear that pervaded the financial community had its roots in company leadership. Were the leaders of these financial firms exemplars of ethical behavior through their words and deeds? Did they instill such behavior in their employees by elevating the importance of ethics through their personal commitment to training and enforcement of guidelines? Did they create workplace incentives to reward ethical behavior and conduct? Or did they flout the rules by circumventing regulations and erect opaque barriers that shielded themselves and their companies from transparency, accountability and good governance?
The answers suggest that corporate reputation and culture are not only inextricably linked but are, for the most part, shaped by the ethical actions, behavior and personal integrity of company leaders. In that regard, Father Spitzer’s launch of a new career in ethics training for financial executives couldn’t be more timely.