–if you don’t have it at the top, don’t expect it at the bottom

Regardless of what a company says, how a company deals with ethics and integrity issues directly reflects actual senior management values and loudly communicates those values to its employees.

It was announced this month that Wisconsin-based manufacturer Johnson Controls, Inc.’s board of directors cleared its CEO of unethical behavior (Johnson Controls Dismisses Management-Consultant Firm) after it was revealed he was having an affair with one of his executive management team’s consultants.  The board determined that there was no conflict of interest but terminated the long-time consultant’s contract, anyway.

Really?

OK, I have the stick for a minute.

I’m not even going to address the relationship between two consenting adults, or the fact that it appears one is being punished while the other is not.  Kind of reminds me of a New Testament story, and I try not to throw stones.

But the statement by the company spokesman stopped me in my tracks:  “All allegations involving senior management are referred to the board and handled in accordance with the company’s ethics and integrity policies,” the spokesman said.  “The board reviewed the referenced relationship and determined that no conflicts of interest occurred.  To avoid any perception or potential future conflicts, management elected to terminate the consulting firm (emphasis added).”

Am I the only one who gets the duplicity of that statement?  How can there not be a conflict of interest?  The consultant either directly or indirectly worked for the CEO.  By conclusively determining that there was no conflict of interest, the board is expecting us (and its employees) to accept at face value that the senior executive who signed the consultant’s check must not have known she was having an affair with his boss.  The board would have been predisposed to believe it, because Johnson Controls was named by Ethisphere Institute as a 2014 World’s Most Ethical Company (eight years in a row), so certainly no one on the executive management team would be less than ethical.

So I have some advice for the board:  with an issue of this magnitude, actually read the press release and think about how it’s going to be received by your clients, the public, and more importantly, your employees.  While a better statement may have addressed the investigation into the appearance of impropriety and conflict of interest finding no evidence, actions speak louder than empty words.  Instead, you’ve confirmed by your statement that there’s no accountability at senior levels in the company.  The lesson you just taught your employees is that ethics are situational and integrity is flexible, so they can now start (if they weren’t already) pencil-whipping ethics and integrity training.

Here’s a little extra advice for the executive management team:  I wouldn’t continue to self-nominate Johnson Controls for Ethisphere’s award if you’re not serious about what it means to be an “organization that continues to raise the bar on ethical leadership and corporate behavior.”  I’m comfortable stating that any organization that knows its operating with a CEO having an extra-marital relationship with a paid company consultant isn’t raising that bar very high, nor is the CEO demonstrating much in the way of “ethical leadership.”

Integrity is a black and white issue; you either have it or you don’t; it doesn’t come on a graduated scale.  How the board deals with conflicts of interest–perceived or substantiated–reflects directly on company and employee values.  You can parade all of the awards you want for being the most ethical company in the world, but if that doesn’t start at the top, don’t expect it at the bottom.

I wish I were making this up, but I’m hard pressed to improve on this quote from the CEO himself in a note to his employees concerning the company’s ethics policy:  “Acting with integrity allows us to attract and retain outstanding employees, maintain the Company’s ethical reputation and meet the high expectations of our customers, partners and communities.  Our securely rooted ethical culture gives us a competitive advantage.”

Okay, board of directors…ready to try again?

 

You have the stick.

 

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