Richard Fenning, CEO for Control Risks discusses balancing a results-oriented culture with transparency about wrongdoing remains a challenge for many leading companies.

By Richard Fenning

Open the newspaper and you would be forgiven for thinking that the boardrooms of the world are concerned with little else other than how to cook up nefarious schemes to defraud shareholders. One story after another about fraud, price fixing, bribery, and all kinds of other financial malfeasance seems to dominate the headlines. It is not true, of course. Rather like most politicians, the vast majority of business people are honest and diligent. But a minority are not.

What motivates these people to do the wrong thing? Well, many of them are just downright dishonest; the better angels of their nature have effectively been silenced and the normal boundaries of personal and corporate morality have disappeared. Others err once—”I just needed to clear those credit cards so my kid could go to college”—and then, in an effort to cover their tracks, start repeating patterns of dishonesty until the self-justification gene kicks in and persuades them that they are no longer doing the wrong thing. We should never underestimate the capacity of our fellow humans to rationalize bad behavior or to justify their actions by citing some perceived injustice—real or imaginary—that was once meted out to them.

There is another motivation for dishonesty: panic. Time and again, Control Risks is called in to unpick some kind of corporate crisis, only to find that the root cause is an individual who, when faced with a horrible problem, embarks on a course of action that spirals out of their control.

We see executives, often thousands of miles from home, working on large and complex deals that, if successful, will transform their careers. At the eleventh hour, a bribery demand is made—it may be a modest sum—and even though they know it is the wrong thing to do, they pay. And before they know what has happened, they are swept into a vortex of nefarious activity from which they cannot emerge. Often, when we get to talk to these people after the wrongdoing has come to light, they are relieved that it is over but frustrated that at that moment of panic, they took the wrong option.

We see the same behavioral trait when people find themselves threatened by criminal activity. They know that they should resist, but in a moment of vulnerability, they give in and open the door to a series of unforeseen consequences that quickly spin out of their control.

In these cases, we are not dealing with habitual criminals. These tend to be ordinary people placed in extraordinary circumstances who, in a moment of pressure and anxiety, make the wrong decision. As corporations spread their wings and take advantage of far-flung opportunities, the potential for these kinds of situations multiplies. So how do you stop an individual miles from home, in uncharted territory, where the pressure to succeed is intense and faced with an unfamiliar and maybe hostile situation, from making the wrong decision?

The answer is something that many companies struggle with: creating a culture that encourages the reporting of bad news. Many hugely successful companies are built on a culture that rewards strong, self-confident individuals who are willing to stand up and take responsibility. In the abstract, it is hard to argue that these are not fine qualities. Small, struggling companies tend to remain precisely that—small and struggling—without a strong dose of resourcefulness by individuals willing to take risks. But when these risks play out in some of the world’s more ambiguous and complex markets, they can be found wanting.

The macho nature of frontier capitalism, the “don’t bring me problems, bring me solutions” mindset, needs to be offset by something else. It needs a safety valve where the small voice at the back of your head that says “this is not right” will get a hearing. It is difficult to balance these two imperatives: a results-orientated culture that also allows bad news to come to the attention of senior executives quickly. It is difficult and it is rare. Still the norm is for bad news to be contained and often buried and so long as that remains the case, good people will continue to do bad things.

Author Biography:

Richard Fenning is Chief Executive Officer of Control Risks, the global political, integrity, and security risk consultancy.


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This article was featured in the Q3 2015 issue of Ethisphere Magazine. To subscribe and learn more about Ethisphere Magazine click here.