The E&C Pulse - July 17, 2019

July 25, 2019 LRN Corporation
Ben DiPietro interviews crisis management expert Daniel Laufer about when to use a chief executive as the main spokesman in a crisis.
 

July 17, 2019

LRN’s 25-Year Journey and What to Expect in Our Next 25 Years 

 

By DOV SEIDMAN

LRN Founder and CEO

I’ve been reflecting on the technological advancements that have reshaped business, society and our world which now are commonplace but were barely if at all in our imaginations 25 years ago.  

Individuals have gone from being merely connected a generation ago to globally interdependent today.  The behavior of any one person can affect so many others, even those a continent away, as never before.  Technology has brought strangers into intimate proximity at an accelerated pace, affording us richer experiences, but also demanding new levels of empathy and understanding.  These same technologies have also granted us MRI-like vision into the innermost workings of once–opaque organizations and even into the mindsets of their leaders.  

I often say our world hasn’t just changed but been reshaped faster than we’ve yet been able to reshape ourselves, our leadership, and our institutions.  

The urgent need to reshape how we lead is perhaps the most prominent call to action I try to communicate to leaders I speak to inside and outside of business circles.

I founded LRN in 1994 before the Internet was ubiquitous; before ecommerce was global commerce; before email was the primary form of business communication; before Enron; before Deepwater Horizon; before Madoff; before “An Inconvenient Truth;” before the financial crisis; before the monetization of moral outrage; and before ethics and compliance was a standalone function and industry.  

Today, 25 years in, the disruptive forces at work in our society -- revolutionary advances in technology, social media, changing social norms, evolving regulatory environments, unpredictable political decisions, climate change – are forcing business to ask fundamental questions: Why do we exist? What do we stand for? What do we have responsibility for? Whom do we have accountability to? Do we believe what we say? Do others believe us? Do our actions match our words?

When I founded LRN, the ethics and compliance industry was in the business of what I call fire-fighting: responding to individual legal and ethical lapses without reference to the larger, systemic causes that created them. What I documented in my testimony to the United States Sentencing Commission, after Enron, was rules-based systems tend to invite behavior that seeks to subvert the spirit of those rules while honoring their letter. Compliance, absent an allegiance to ethics, is about nothing more than doing the minimum required to comply with basic requirements. 

An important evolution occurred post-Enron, and coincided with greater internet accessibility. The ethics and compliance industry transformed into the business of fire prevention. It began proactively providing employees with the knowledge and information needed not only to comply with the law, but to instill an atmosphere of trust, a sense of mutual respect, and a commitment to doing the right thing.  

I am so proud of LRN’s role in helping to lead and enable this progression.  Over our 25 years, we’ve helped more than 25 million people working for companies around the world simultaneously navigate complex legal and regulatory environments and make ethical decisions.  We’ve also helped hundreds of companies to foster more ethical, responsible and inclusive cultures. 

We’ve introduced new, innovative solutions that support our client partners in educating and engaging their employees, assessing workplace conduct, guiding principled performance and demonstrating the return on investment in effective ethics and compliance.  

I’ve often said that LRN is not a business with a mission, but a mission with a business, and we take our mission and purpose to “help people around the world do the right thing” by “inspiring principled performance” very seriously.  

In this way, above all, our greatest innovation is LRN itself.  I’m incredibly thankful to our talented colleagues, who are so deeply committed to our mission that they manifest it, day in and day out, in service to the companies we work with around the globe.

Now, as we aim to celebrate 25 years of LRN and assess our impact, what strikes me most about the state of the ethics and compliance industry is how it’s moved from the periphery toward the center of business.  

The issues of our time that grab headlines and occupy dinner-table conversations -- those of trust, behavior, corruption, fake news, #MeToo, the impacts of AI on humanity – are issues for both CEOs and the ethics and compliance function.  

Over my 25 years leading LRN, and trying to spark a movement toward greater ethical behavior and moral leadership in business, ethics and compliance officers have been the greatest missionaries for responsible business. They have been helping to address the unique needs of modern, global organizations at a time of intensifying focus and scrutiny on corporate and individual conduct.  

As I look to the future – the next 25 years – I believe a deeper collaboration between the executive suite and the ethics and compliance office offers the greatest potential to shape the future of business for the greatest good.

Why?

It is not possible to compete in business without a normative point of view on the moral, political and social choices presented to businesses daily and unexpectedly. It is not possible to act with all stakeholders and interests in mind without a deep connection to, and respect of, a company’s mission, purpose, principles and values. It is not possible to do anything with authenticity without an aligned leadership team and culture. It is not possible to win without touching both the hearts and minds of your people and customers alike.  

The ethics and compliance office knows better than any other business function how one incident, felt deeply enough by enough people, has ripples that affect all of us. A racial incident in a single, global coffee chain location led to a nationwide closure of all its stores, and forced the company not only to examine its policies, managerial behaviors and customer expectations, but sparked a national conversation on unconscious bias.

The ethics and compliance office knows better than most that, in a transparent world, the nature of all relationships is revealed. Case in point: A foreign nation rejects a depiction of its leader in a film, hacks into the film company and shares documents with the media that offer MRI-like precision into the inner workings of a the company – who’s a jerk, who gets paid what, how leaders feel about each other and the industry at large. Or, a doctor gets dragged off a plane by police officers, the airline’s culture is criticized, and the company loses $800 million overnight. 

The ethics and compliance office knows better than most that to win consistently and sustainably in a more socially conscious and risk-ridden world, we all must aspire for more -- not just to do the next thing right, but to do the next right thing. We must have the right frameworks, education and policies to influence that behavior -- and the right systems, measurements and metrics to ensure it. We must remember it’s not easy to move a culture.

When I speak with CEOs, I often ask: What behaviors do you want more of in your companies? The answers: compassion, trust, collaboration, humility, understanding. Every top behavior CEOs are asking for is a uniquely human trait, not a mechanical skill.  

What’s clear is the issues that keep chief ethics and compliance officers awake at night are front and center for CEOs. This represents an evolution, as the executive suite now is concerning itself with deeper considerations about how to interact with others, how to make decisions, how to manage and conduct itself, how to inspire deeper connection and allegiance.  

Yet, LRN’s research on what makes effective ethics and compliance in institutions shows fewer than half of the senior leaders at their firms take action against compliance failures when they occur, and fewer than that support disciplinary action against  top performers who are guilty of misconduct. Just 40% of boards have metrics in place to measure ethical and compliant behavior, while more than 50% of boards spend two hours or less each year working on ethics and compliance.

What I hope is more CEOs begin to recognize within their own companies there is a group of people who have been thinking about and working on these issues for years. In that sense, chief ethics and compliance officers and their teams may be one of the greatest sources of experience, strategy and action to help companies wrestle with the existential issues of this world.   

Chief ethics and compliance officers are, in that sense, one of the most underutilized assets in companies. Asking more of them, and giving them a more important seat at the executive table and in the boardroom, is likely to be an increasingly frequent and powerful move over the next quarter-century.                                                              

 

FROM THE LRN BLOG

There's been a big surge in employee activism the past year, as workers collectively act to influence how their companies are managed and run, usually in the context of societal goals and business ethics and purpose.

 

READ THE ARTICLE  →

 

MIND NUMBERS

72x

A survey of more than 18,000 employees in 18 countries by ECI found workers are 72 times more likely to see misconduct if their supervisor doesn't emphasize the importance of company values to achieving business goals. 

 

THE ELEVEN

 

The $5 billion Federal Trade Commission fine against Facebook for data privacy violations highlights the importance of having ethical data policies, Tech Crunch reports.

 

Uber will link compensation for some senior executives to how well they make progress on diversity and inclusion, BBC reports.

 

Stories about a secret Facebook page for Customs and Border Patrol officers where offensive comments about migrants were found reflect the risks police departments face when it comes to their officers and social media, ABC News reports.

 

China has made significant changes to its data privacy laws that will make it harder for some companies to operate, China Law Blog reports. 

 

Vox interviews neurophilosopher Patricia Churchland about her research into how the brain invents morality.

 

Organizations wanting to improve how their employees act and perform may want to look at baseball and its relentless focus on data, Harvard Business Review reports. HBR also features a story on the crisis in trust between companies and people.

 

A startup wants to make it easier for employees of tech companies to speak out if they feel ethical boundaries are being crossed, Guardian reports.

 

Jenny Vaughn, BSR's new human rights director, writes about the role business can play in fostering human rights worldwide. 

 

Ignorance no longer is an acceptable excuse when it comes to risk management, Thomas Frenehard writes on SAP's blog.

 

Ethics may the differentiator for companies when it comes to artificial intelligence, Joe McKendrick writes in Forbes.

 

The movie "Jaws" is a story of ethics that pits a threat to public health against economic interests, Bruce Weinstein writes in Forbes.

 

 

THE QUOTE

"Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful."


– Samuel Johnson, author, poet

 

 

THE NUDGE

A 9-year-old California boy donated his allowance to pay for the school lunch fees of classmates who couldn't afford them. While young Ryan Kirkpatrick is to be applauded for his unselfish, generous and loving gesture, it's sad that we leave it to a 9-year-old boy to pay for his classmates' lunches.  

 

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The E&C Pulse - July 24, 2019
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The E&C Pulse - July 10, 2019
The E&C Pulse - July 10, 2019

Ben DiPietro interviews crisis management expert Daniel Laufer about when to use a chief executive as the m...

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