The Biggest Ethical Mistakes – And How to Avoid Them

Today’s guest blog is from Mark Pastin, president of the Council of Ethical Organizations, a non-profit organization located in Alexandria, Va.

I am often asked about the biggest ethical mistakes leaders make. In 35 years as an ethics consultant, I have seen some doozies. You only hire an ethics consultant if you face an ethical issue. And once an ethical mistake occurs, it is extremely hard to set things right with the public and media already believing that companies routinely engage in unethical conduct. Most of these mistakes are entirely avoidable – if you are on the lookout for them.

Here are three of the biggest ethical mistakes made by leaders in reverse order.

The third biggest ethical mistake made by leaders is confusing legal advice with ethical advice. The job of legal counsel is to tell you the legal consequences of various courses of action – not whether you should take those actions. An action can be legal but still be unethical. Many of the investment activities that led to the 2008 recession were perfectly legal – and also perfectly unethical. It is a mistake to use legal counsel as your conscience just because you are used to disclosing confidential information to your lawyers. Once you step outside of the domain of legal advice, legal counsel is no more able to give good ethical advice than any of your other colleagues.

The second biggest mistake is fixing a problem going forward without owning the problem’s history. This never works but it is very tempting to leaders who don’t want a past problem dragging their organization down. How often have you heard a CEO say, “As soon as we learned of the problem, we fixed it.” That is simply not good enough. You need to show that the organization recognizes the harm caused by an unethical practice and is taking steps to rectify past harm, while avoiding repeating the same action. Everyone will be asking, “What about everything leading up to the present?” You have to be ready to answer this question.

The biggest ethical mistake of all is judging the information you receive by the person from whom you receive it. I know of no ethical fiasco that did not present clear warning signs. Somehow these signs were ignored – and not without reason. The information that would enable you to prevent an ethical crisis often comes from individuals who are risk averse, whine about everything, and have a chip on their shoulder. I have just described one type of whistleblower. Whistleblowers are highly protected under current law. This is especially true of whistleblowers in the defense, financial services and healthcare sectors where whistleblowers are not only protected; they can sometimes receive bounties in the tens of millions of dollars. Sharp leaders ignore the source of troubling information and evaluate the information without bias. An ethical leader is always asking, what if this information, although from a questionable source, is true? Would I gamble the future of my organization on it not being true?

These ethical mistakes can be avoided if you are on the look out for them. The most important way to avoid ethical mistakes is by paying attention to information that you would rather ignore or believe to be untrue. Ethical mistakes tend not to go away. The longer you know of an unethical action without reacting to it, the worse the consequences of eventually admitting the mistake. Leaders who avoid big ethical mistakes know that such mistakes, even if not involving illegal activities, can destroy the reputation of an organization. And they know that ignoring or covering up such a mistake simply compounds the consequences. Ethical leadership is not just about having and acting on sound values; it is about confronting the facts no matter how uncomfortable it may be to do so.

To learn more about ethics in business, enroll in Mark Pastin’s course Influence with Ethics at SoundviewPro.

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