On November 28, 2017, the Supreme Court will hear arguments in Digital Realty Trust v. Paul Somers on the question of whether the whistleblower protections of the Dodd-Frank Act extend to internal whistleblowers, or only to those who report to the SEC.
Research shows that the majority of employees who report misconduct do so internally, through informal discussions with managers and other conduits. If the Court interprets the Act’s protections as extending only to those who provide information to the SEC, it could stymie and complicate the important work of ethics & compliance ers.
Interview with Azish Filabi, CEO of Ethical Systems
As the CEO of Ethical Systems, what keeps you motivated? Are you optimistic about the current state of business?
I am motivated every day by the opportunity to connect businesses with research and strategies that will make them more ethical and productive for the long term. We at Ethical Systems believe that good ethics is good business and our mission is to strengthen ethics within organizations by providing content, resources and tools by which to improve internal cultures and climates. It is rewarding to know that our organization is playing a needed role, and connecting with like-minded professionals.
Ethical Systems CEO Azish Filabi, was interviewed in a far-reaching discussion with Hal Conick published on Marketing News, a publication of the American Marketing Association.
In the piece, which covers both the components and traits of an ethical leader as well as how to make ethics front and center in the hiring process and how marketers can be more ethical, Azish connects research with practice, helping identify academic reference points to confirm potential, and profitable, strategies.
In 1970 Milton Friedman wrote a now famous essay in the NY Times Magazine declaring that the social responsibility of business is to increase its profits. Since then, writers and researchers have been debating whether this accurately reflects the responsibilities of business in society. In the decade since the Global Financial Crisis these debates have become particularly critical, with some participants questioning the basic principles of free market capitalism and whether they serve our current societal needs.
But what if the best way to do right by shareholders was to run a socially responsible business?
New findings by JUST Capital are showing that this is often the case. JUST Capital is a non-profit research organization whose mission is “to build a more just marketplace that better reflects the true priorities of the American people.” Their distinctive research approach began with a survey of the U.S. public on what they believe makes a “JUST” company.
At the 2017 Global Ethics Summit, put on by the Ethisphere Institute, Caroline Rees of SHIFT spoke on a panel about business and human rights.
When asked about differences in stakeholder management approaches between European and U.S. businesses, and why U.S. companies are not as far along as their European counterparts, she highlighted that U.S. lawyers have a more dominant role.
When business leaders want to audit their supply chain, for example, lawyers often warn against such initiatives in the absence of a regulatory mandate. But, as Rees discussed, the existence of human rights risk in your supply chain is not a secret — it’s just a question of when and how it will be exposed.
In The Rule of Nobody, Philip Howard describes how bureaucracy is stifling U.S. institutions as well as the spirit of autonomy and free will among Americans. We live within a system whereby layers upon layers of often incomprehensible and inconsistent regulations, mandatory disclosures and requirements create a society that is “governed by dead laws” — meaning that since many of today’s laws are so outdated, they have been rendered irrelevant because layers of new (and sometimes inconsistent) laws have been enacted after them, or they have become otherwise destructive to the social good because they hamper progress.
The book is packed with examples of inept laws replacing common sense human judgment. In many cases, government agencies are comprised of well-meaning individuals who can’t apply their common sense and best judgment to resolve the problems they are hired to manage.
His recommendations for restoring human control of democracy and bringing about good government involves a series of reforms (summarized below) towards principles-based regulation, including appointing independent commissions to review and propose amendments to existing laws, to mandatory sunset provisions of all laws with budgetary impact, thus compelling Congress to consider the present needs of constituents when allocating expenditures.
I recently returned from a trip to London, where I spoke about the role of ethics and culture in organizations with varied, leading professionals. My meeting with the Banking Standards Board (“BSB”) stands out as a potential model for what financial services firms in the U.S. could emulate.
The BSB is a non-profit organization, established by the industry in the wake of the 2008 financial crisis to address core challenges relating to the culture of banking, and help restore the industry’s trust and reputation.
To raise standards of behavior in financial services, the BSB began with a comprehensive analysis of the current standards for culture, the details of which are provided in their 2015 assessment report, identifying themes relating to norms within the banking industry. After conducting assessments at individual firms, and extrapolating common themes, they plan to use these as the framework for future work plans. This assessment creates a baseline so that firms and the BSB can then measure the impact of reform efforts, both internal ethics programs and industry and regulatory initiatives, over time. As I’ve written in previous blog posts, evidence-based ethics research and culture measurement are key to determining what works to drive more ethical behavior in organizations. In order to improve culture, researchers need to help firms better measure their culture and track changes in indicators over time. The BSB has taken a vital step towards this goal.
As any Compliance Officer knows well, demonstrating that your company has an effective compliance program is one of the main goals of your day-to-day efforts, but also one of the most elusive. The Federal Sentencing Guidelines are designed to incentivize businesses to implement ethics and compliance programs by rewarding companies through reduced sanctions- if they can demonstrate that they have an effective compliance program. The broad goal for most companies is to demonstrate, in the face of an investigation or finding of illegal actions, that the act was caused by a rogue employee and not because of how the company inherently conducts its business.
Yet, we all know that in practice demonstrating effectiveness of a compliance program is rife with gray areas, cynicism and challenges.