Jeff Kaplan: There are indeed lots of those sorts of hills on the E&C career map, and, as with most types of risks, the most commonly encountered ones tend to be the least serious. Among the hills that are probably not worth dying on are management’s failing to do all that it should to have a strong E&C program. If that were a “quitting offense” the field would be rapidly depopulated – not just generally but of the most conscientious practitioners in particular. But the calculus starts to change based on two largely independent variables. The first is whether the company – typically meaning management – is acting in an illegal or clearly immoral way. The second is whether the E&C officer herself is being pulled into the wrongdoing, for instance, by being asked to create a “half measure” anti-corruption compliance program that she believes is actually being implemented to mask ongoing bribery. So, those are my gloomy views. How do you see it, Steve?
Steve: I agree that E&C officers face a lot of hills. Many of them are the same type of hill that every conscientious business leader faces: “I am not comfortable with this course of action. Do I raise my concern? To whom?” When the course of action is something minor like “Do we renew our Chicago Bears skybox lease?” it is pretty easy to rationalize saying nothing, even if you deem entertainment to be a risk for the organization. One doesn’t want to have a reputation of an ethical nudge, but of a good solid ethical conscience.
Jeff: And one doesn’t want to get a reputation as a quitter, either. But what about the other alternative, which is escalation?
Steve: Deciding to communicate around leadership, for example to the Chair of the Audit Committee, can also seem like a “hill” to many astute observers of management tea leaves. Internal whistleblowing is not without risks, even for E&C officers.
Jeff: And in addition to the risks, which are obvious, E&C officers face a lack of governing professional standards for guidance and protection. By contrast, the rules of professional responsibility for attorneys do specify when an attorney should escalate a matter involving wrongdoing to a higher authority within an organization. Of course, there are codes of conduct for E&C officers, but they don’t have the force and effect that the legal profession’s rules have. Hopefully, that will change with time – but E&C officers facing these issues today need to understand the landscape that surrounds the “hills.”
Steve: Sometimes we think the landscape is more threatening than it is. I have known E&C officers who think they are about to die on a hill by going to the CEO or Audit Committee Chair with an issue, and instead they are met with sincere appreciation. But the reality is speaking up internally is hard. And going external can feel like the nuclear option—mutually assured destruction.
Jeff: Let’s step back in time and look at it from a preventive perspective (which should be part of any E&C conversation): what can E&C officers do prospectively to help minimize the risk that they won’t need to die on any such hill? For instance, is having good escalation procedures helpful in this regard? On a less formal level, What about relationship building? Anything else along these lines that in your experience works?
Steve: After 20 years of assessing companies, it is inarguable that you can’t have an effective compliance program without having clear, mandatory escalation procedures. And I would suggest a second, far more personal preventative: commitment. Bringing together recent research and centuries of history, prospective ethics officers (and current ones who have not done this) should think deeply and thoroughly about their own lodestar. In this profession, we should all be able to write down “I am committed to doing the right thing, even if it means losing my job.” And mean it. Then spend some time thinking, prospectively, what “the right thing” is in certain circumstances. “If I am asked to mislead or not discuss material issues with the Board, I will do Y.” The research is clear: We human beings are easily diverted from our lodestars by people and situations. Understanding, writing down, sharing and renewing our commitments makes it more likely that we will be the people—and ethics officers—that we want to be.