Toxic Company Culture: A Major Obstacle for Corporate Compliance Programs
At the top of a tree perched Master Crow; In his beak he was holding a cheese.
Drawn by the smell, Master Fox spoke, below. The words, more or less, were these:
"Hey, now, Sir Crow! Good day, good day! How very handsome you do look, how grandly distingué!
No lie, if those songs you sing, Match the plumage of your wing,
You’re the phoenix of these woods, our choice."
Hearing this, the Crow was all rapture and wonder.
To show off his handsome voice, He opened beak wide and let go of his plunder.
The Fox snapped it up and then said, “My Good Sir,
Learn that each flatterer, lives at the cost of those who heed.
This lesson is well worth the cheese, indeed."
The Crow, ashamed and sick, Swore, a bit late, not to fall again for that trick.
In this famous fable by La Fontaine, the crow represents species that are easily deceived whereas the fox represents those that are cunning and opportunistic. Indeed, foxes have developed some abilities to survive in the wild but characterizing them as cunning is a product of human thought. Cunning and intelligence are often confused, sometimes cunning people are respected, sometimes cunning is seen as an abuse of intelligence. But what is “intelligence”?
Throughout human history, the concept of intelligence has always been seen as a criterion for technological advancement in human progress. Today, intelligence is defined as “the ability to learn, to benefit from what is learned, to adapt to new situations and to find new solutions”. According to this definition, an intelligent person is one who evaluates what they have learned and can bring new solutions to problems. IQ, which is the abbreviation of Intelligence Quotient, is a method of measuring intelligence, designed by Alfred Binet and Theodore Simon in 1912. IQ tests, a cognitive intelligence measurement that includes logic, mathematics, visual and verbal intelligence, have been used in education and business life for many years, however, in the 1980s a different way of evaluating intelligence began.
Multiple intelligence theory, developed by Howard Gardner in 1983, is a model that suggests intelligence is not just logical reasoning but consists of different special dimensions. With this model, Professor Gardner demolished the reign of IQ that had dominated for years. According to Gardner, each of the multiple intelligence elements people have are effective tools used to live, learn, solve problems, and become human. A quote, often misattributed to Einstein, in fact, underlines the dysfunction of the uniform intelligence test model by saying “Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid”.
Intelligence types according to Prof. Gardner:
In recent years, intrapersonal and interpersonal intelligence have been discussed by scientists and educational scientists under the single definition of “Emotional Intelligence”.
Before defining ethical intelligence, it is necessary to start by defining ethics. Ethics: the discipline of separating right from wrong and the concept of thinking that explores “what you have a right to do, but also what will be right to do in every situation”. Ethics, as a branch of philosophy, explores living and decision-making with principle. The focus of ethics is to think for the benefit of others as well as for oneself. In this respect, although morality and ethics are very similar concepts; while morality varies from person to person, from society to society, from geography to geography, ethics are based on universal norms. Therefore, in this article, ethical intelligence will be used instead of the concept of moral intelligence.
Ethical intelligence was first described by Doug Lennick and Fred Kiel in 2005 as “the ability to distinguish between right and wrong and act according to the values believed to be right”. They argued that ethical intelligence can strengthen as it works just like a muscle in the body, it is not genetic and can develop or regress with environmental factors. In their 2011 study, Beheshtifar, Esmaeli and Moghadam argued that ethical intelligence should be considered the central type of intelligence for everyone, and that it should be handled separately from both cognitive and emotional intelligence.
Doug Lennick and Fred Kiel mentioned four competencies for ethical intelligence:
Let’s assume that we are a very experienced ship’s captain, and the knowledge and achievements we have acquired over the years are our latest model ship. Our cognitive intelligence provides the technical equipment for our ship, and our emotional intelligence enables us to gain the trust of our colleagues working on our ship and to manage them effectively. At first glance everything seems to be in place to make a journey, but to complete the picture we must include our ethical intelligence that helps us to know where to go and to follow the right route.
Just like in our example, in Homer’s immortal work Odysseia (the Odyssey), the hero Odysseus goes on a challenging journey as the captain of the ship. As Odysseus and his warrior men approach the Siren cliffs in his ship, Goddess Kirke warns him: “First you will come to the Sirens who enchant all who come near them. If anyone unwarily draws in too close and hears the singing of the Sirens, his wife and children will never welcome him home again, for they sit in a green field and warble him to death with the sweetness of their song.”
Odysseus orders everyone except himself to cover their ears with wax. He also tells his men to tie him firmly to a mast on the ship and not to listen to him until the ship passes by the rocks no matter how astray he wants to go towards the sound of the sirens. And, while Odysseus is enthralled by the sounds of the sirens as the ship passes by the cliffs, no matter how much he pleads, his men do not untie the ropes and the entire crew continues on their way safely.
In this myth, sirens may symbolize opportunistic people/thoughts trying to lead us astray; orders given by Odysseus to the men symbolize the values and codes of conduct of companies; Goddess Kirke symbolizes support departments like compliance and legal underlining the risks and principles; Odysseus symbolizes a leader with advanced ethical decision-making competence. Odysseus did not escape from the behavior that would compel him, on the contrary, he faced it bravely with help from his men. Proactive decision making, which is essential in ethics and compliance management can be found clearly in this example. However, in business life, it is also observed that leaders show different behaviors when faced with difficulties.
Leaders who use ethical intelligence and competencies, just like in our example, see the journey in the long term and always consider doing the right thing, and the human benefit. It is easy to demonstrate ethical leadership when things are going well, but, as with the current world situation, when things go wrong it is a serious test for leaders. In the pandemic crisis we are going through some companies have parted ways with their employees in order to protect their financial interests, while others have supported their employees more using alternative ways to protect their work contracts. It is believed that companies that show ethical leadership in times of crisis, acting for the good of society even at their own cost, will benefit from it in the long run. An ethical leader knows that if employees are valued, they will work with maximum efficiency for the success of the company. Ethical leaders understand the principle of the African proverb: “if you want to go fast, go alone; but if you want to go far, go together”.
On the other hand, ignoring ethical values has led to the bankruptcy of some of the world’s biggest companies with thousands of people becoming unemployed. The Enron scandal is one of the best examples of this. False financial statements were issued by the company, while its actual commercial status was deliberately concealed and made to appear as if it was making profit. At that time, Arthur Andersen, one of the world’s five largest independent auditors, was alleged to be involved in this crime. The scandal and legal process that followed caused the dissolution of the company. In addition to being the biggest bankruptcy case in American history, Enron has been interpreted as the biggest auditing abuse in history. As a result of this case, 85,000 employees across the globe lost their jobs, and small stock market investors suffered great damage. Due to the bankruptcy of Enron in 2001, audit laws have changed all over the world.
In his book entitled “Ethical Intelligence”, Professor Gardner mentions that the competencies to develop ethical intelligence actually start in the family. Children imitate what their parents do, not what they say. Parents’ smallest behaviors in ethical decision-making affect an observing child, whether it be the way the parent treats the employees of a company they manage or running a red light at 3 a.m. when no one is around. Especially not giving credit to cunning tales mentioned in the fable at the beginning of this article and encouraging children to do the right thing in every situation is important for ethical education. When there is abuse, developed societies ask the question “why was it necessary”, but emerging societies see an opportunity, they think “how did they do it, why didn’t I think of it?” Since ethics training starts in the family and continues throughout school life, people can take responsibility for their own decisions and initiate change in their own environment. In order for the world we live in to be a good place, it is important that we all take responsibility in our own lives and set an example for others. In institutions that are microcosms of society, everyone from the lowest to the highest level has a role in leadership, corporate culture and being a role model. The great thinker of the 19th century, Goethe said “Let everyone sweep in front of his own door, and the whole world will be clean”. We can add the following aphorism to this phrase: “Be the change you wish to see in the world”.