Archive for the ‘ Ethics ’ Category

The Washrooms are Equipped with Smoke Detectors: Corporate Responsibility Lessons from a Frequent Flyer

In this, the third in our series of Corporate Responsibility Lessons from a Frequent Flyer, we take a look at a more serious issue of corporate accountability.  For our first post in this series, Don’t Leave Your Baggage Unattended, click here.  For our second post in this series, Locate the Nearest Exit, click here.

 

If you’re a frequent flyer like me, you’ll know that a standard feature of the onboard safety briefing is that smoking is not permitted and the washrooms are equipped with smoke detectors.

IMG_4691The days of smoke-filled cabins on airplanes are, thankfully, a distant memory, but the urgency of the no-smoking warning remains, reminding would-be transgressors that even in the privacy of the washroom, illicit behaviour will be detected. Corporate actors would be similarly well warned that technology and social media are increasingly the detectors and disclosers of illicit behaviour, wherever it may occur.

In my view, this is a Good Thing; sunlight, as Justice Brandeis once opined, is the best disinfectant. Moreover, the boundaries are blurring between a corporation’s accountability and an individual’s responsibility for inappropriate behaviour.

As if we needed another example of this, we can point to the recent experience of Centerplate’s now-ex-CEO, Desmond Hague.

In late August, Mr. Hague was caught on video abusing a dog in an elevator. Here’s a link to that video [warning: some viewers may find this video disturbing].

Centerplate is a food services company catering to sports and other entertainment venues. It doesn’t matter that their business has nothing to do with animal welfare. The behaviour of its CEO was so morally offensive that the company would be tarred with the same brush if it did not demonstrate its intolerance. Faced with widespread outrage on social and mainstream media, the company expressed its concern, put Mr. Hague on probation, and required him to serve 1,000 hours of community service and make a donation to establish an animal welfare foundation. That wasn’t enough, however. Despite the CEO’s contrite apology, he was forced to resign when the scandal continued to grow.

Also in early September, a far more disturbing incident was caught on video, again by an elevator surveillance camera: football star Ray Rice assaulting his then fiancée, Janay Palmer. The public release of the video led the Baltimore Ravens football club to terminate Rice’s contract, and he was suspended indefinitely from the National Football League. In the weeks since, however, there have been many questions about who knew what about the incident and when, and much criticism about the adequacy and timeliness of the actions taken by the Ravens and the NFL, particularly since both organizations knew about the incident from a previously released video.

Both of these cases highlight the need for organizations to engage employees proactively regarding behavioural expectations both within and outside the workplace, to make clear the consequences of behaviour that doesn’t meet these expectations, and to have systems in place to ensure a timely and appropriate response when incidents occur.

Although we surely cannot mandate values, it is possible – and increasingly necessary – to foster a culture of responsibility that seeks in the best case to prevent inappropriate behaviour and in the worst case to ensure swift action when inappropriate behaviour comes to light.

Where there’s smoke, there’s likely fire.  Best not to wait for the smoke alarm to go off to figure out where the fire extinguisher is…

 

For more on the stories that prompted this post:

Click here for coverage in the Globe and Mail.

Click here for coverage in the New York Daily News.

The White House blip: would ethical standards be helpful?

This morning, an Associated Press Twitter account was hacked, and a false tweet reported explosions in the White House that injured Barack Obama.  There’s been no better illustration of the potential impact of social media on the economy than this:

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Impact of false White House tweet on the S&P 500

In just two minutes, the Dow Jones Industrial Average dropped 145 points!

Once AP stated its account had been hacked and the White House confirmed there was no incident, markets quickly recovered.  Nevertheless, the ‘blip’ stands as a great example of how significant the influence of social media has become.

It also represents another facet of social media use in respect of which comprehensive ethical standards may be warranted.  Although ethical standards are unlikely to be followed by hackers, such standards may assist legitimate social media users to adopt responsible use policies that will protect against inappropriate responses to unconfirmed or suspect information disseminated via social media.  From the early media coverage of the Twitter hacking incident this morning, it is apparent that some traders responded in a knee-jerk manner, while others waited.

How might general ethical standards or company-specific social media policies for the financial sector be useful in such instances?  Perhaps by providing criteria to guide traders in evaluating the legitimacy of information obtained through social media, encouraging responsible communication with stakeholders (e.g., clients), and supporting decision-making in the face of the ethical dilemma of whether to intentionally gain from someone else’s mistake.

For more on the Twitter hacking story that prompted this post:

Click here for coverage in the Wall Street Journal.

Click here for coverage in the Telegraph.

Click here for coverage in the Globe and Mail.

For related reading on social media standards, here‘s a great paper on the need for an “ethical compass” for crisis mapping: it was published early last year in Global Brief.

Too Little for Too Long

At the end of September, the Institute of International Finance held its annual meeting in Washington.  The IIF is a global association of financial institutions, whose mission is to “support the financial industry in prudently managing risks, including sovereign risk; in developing best practices and standards; and in advocating regulatory, financial, and economic policies that are in the broad interest of [its] members and foster global financial stability.”

Prominent on the agenda was international financial regulatory reform, over which considerable debate is ongoing. On the one hand, the G20 plan tougher financial regulatory requirements.  The IIF, on the other hand, while acknowledging the need for reform, calls for a cautious approach, arguing that stricter rules could compromise a fragile economic recovery.  In his speech to the IIF’s annual meeting, Bank of Canada Governor Mark Carney was critical of the IFF’s position, in part because it fails to assume any economic benefit from reducing the risk of future financial crises and because banks already have until 2019 to adapt to the changes. The contrasting viewpoints are summarized succinctly in this Globe and Mail article by Kevin Carmichael, titled “Carney, Waugh spar over new banking rules” (September 26, 2011).

Bank of Canada Governor Mark Carney

What jumped out at me from Mr. Carney’s remarks is this gem of a quote:  “If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon.

This statement reflects the reality that increasing demands for transparency, accountability, ethical behaviour, and consideration of non-financial material issues (like environmental, social, and governance issues) have been apparent for some time, and there is diminishing justification – and tolerance – for delayed action.  This is relevant not only to financial institutions, but to other corporate sectors as well.

The pressure to which Mr. Carney alluded will only increase with prolonged inaction, as the gap between corporate behaviour and performance and emerging stakeholder expectations and regulatory requirements continues to grow.

 

Click here for Governor Mark Carney’s full remarks to the IIF.

Click here to link to the IIF’s paper, “The Cumulative Impact on the Global Economy of Changes in the Financial Regulatory Framework” (September 2011).

Click here to link to the IIF’s latest paper on cumulative economic impact of regulatory reform, addressing revisions (October 2011).

Air Canada Is On Their Game

In Tuesday’s National Hockey League match-up between the Boston Bruins and the Montreal Canadiens, Habs forward Max Pacioretty suffered a serious concussion and a broken vertebra in his neck after a devastating hit by Bruins defenceman Zdeno Chara.  Chara received a major penalty for interference and a game misconduct for the hit, but, to the surprise of many, he was not suspended.

Now, despite being Canadian, I’m not a diehard hockey fan.  I watch Hockey Night in Canada sometimes, I’ll watch the playoffs, at least while there’s still a Canadian team in the running, and I even go to see a game once in a while.  But this hit has my attention, not because it’s so different from those that have happened before, but because of its link to – you guessed it – corporate responsibility.

What, you might wonder, does a check in hockey have to do with corporate responsibility?  Well, a lot, it turns out, if you’re Air Canada.
Click here to read more about Air Canada’s flying body check to the NHL…

Privacy breach reveals lack of ethical integrity

It was revealed this week that highly personal information about Sean Bruyea, an outspoken critic of veterans’ affairs in Canada, was included in a 2006 briefing note for a federal cabinet Minister (Psychiatric report of veterans critic inserted in minister’s briefing: documents, Toronto Star, September 21 2010). Apparently, the briefing note was seen by several senior bureaucrats. In addition, Mr. Bruyea’s file was accessed by hundreds of people, who shared Mr. Bruyea’s private information with hundreds more, including political staffers.

With few exceptions (relating mainly to legal compliance), Canada’s Privacy Act prohibits the use and disclosure of personal information without the consent of the individual to whom it relates, except for the purpose for which the information was originally obtained. In this case, the private information was originally collected to determine Mr. Bruyea’s eligibility under a disability program, but appears to have been used to undermine Mr. Bruyea’s credibility as a policy critic.

The mis-use and disclosure of Mr. Bruyea’s personal information is an appalling breach of privacy that should concern us for several reasons. Read why here…

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