Organisations and financial institutions are under pressure to become more ethical. Fostering an environment of compliance is central to holding an organisation up to higher ethical standards, but how can business leaders ensure they are doing this? What happens when this goes wrong?
Studies looking at ethical behaviour have consistently shown a contrast between how ethical people believe their behaviour is and how ethical it is in reality. People are more inclined to predict their behaviour will be more ethical and recollect that their previous actions were more ethical than is true. This is an issue for businesses wishing to do the right thing – how do they ensure employees' moral compass is pointing due North?
Ethics and compliance Consultant Richard Bistrong, who was imprisoned for conspiracy to commit bribery under the Foreign Corruption Practices Act (FCPA), was recently interviewed by Forbes about the 'dangerous excuses' people give themselves for carrying out unethical behaviour in business.
Bistrong explained that, in the wrong environment, even the most ethical employee may consider taking unethical action. The temptation to do so may come from rationalising the behaviour within the corporate environment or justifying the activity as low-risk in the face of high-pressure.
Bistrong explained: "Slippery slopes are most dangerous when we conclude we are not at risk of sliding down them. Whether you are a sales professional trying to make quota in regions known for corrupt business practices, or you are vying for a competitive job, temptations to compromise our integrity and rationalise doing so are plentiful."
In the summer of 2016, Ashish Awasthi, a 27-year-old Sales Executive at US-headquartered pharmaceutical company Abbott Laboratories committed suicide. In his suicide note Awasthi stated: "I am going to commit suicide because I can't meet my company's sales target and my company is pressuring me." The case exemplifies the negative impact a poor corporate culture can have on the wellbeing of employees and the reputation of the organisation.
While there has not yet been any indication given as to whether the company has committed any FCPA violations, some of the pressures the company puts on its employees were explained by the New York Times in an article following a six-month investigation into the case.
The company required its sales representatives to conduct 'health camps', where potential customers were invited for health check-ups and Abbott employees would recommend Abbott products, whether warranted or not. It has also been suggested that Abbott employees posed as medical professionals during these events despite being unqualified.
Sales representatives have also admitted to purchasing Abbott medicine out of their own pocket in a push to meet sales quotas. This could equate to half of an employee's monthly wage.
Sales executives are always under pressure to meet performance targets. Companies that foster not only a culture of compliance, but one of ethical behaviour, significantly reduce the risk of employees exposing the company to compliance risk. In the wrong corporate environment, high-pressure sales targets can cause people to rationalise unethical behaviours, cut corners to reach targets, or worse.
Bistrong explained to Forbes that: "Sales leadership is the make or break organisation of a compliance program… It is where compliance can get amplified, distorted or discarded depending on the leader."
When the only messages employees hear are about hitting sales targets at all cost, there is an unspoken message about compliance. Leaders of an organisation need to stress that they care about how employees hit sales figures. When employees are confronted with compliance issues, knowing that the organisation is there to help and support them minimises the risk of unethical or illegal behaviour taking place.