InetSoft Webinar: Number Two – Lack of Measuring Ethics and Corporate Culture

This is the continuation of the transcript on "Top Ten Business Intelligence Mistakes” hosted by InetSoft. The speaker is Christopher Wren, Principal Consultant at TFI Consulting.

Number two, nobody is measuring ethics or their corporate culture. We all know that by the time your executives get carried away in handcuffs you don’t need any metrics. Your CEO is in jail so you know you have a problem with ethics but do you think that there could have been some things that a company, like Enron, could have measured before they got into big trouble? What could they have measured that would have told them we’re having a little bit of an ethics problem before people got arrested? How about minor cheating like somebody cheating on their expense report or somebody calls in sick while he/she wasn’t really sick?

Ethics problems usually happen where they escalate. It starts out with something small, like charging a $100 bottle wine in his expense report and the boss approves it and nobody says anything. From there it escalates, it escalates, it escalates, and pretty soon we’re falsifying financial data.

So I've barely ran into many big companies, including several major banks that I've worked with, that have a measure of ethics on their dashboard. That seems a little strange to me that they wouldn’t measure ethics.  Is that something that can put you out of business just as quickly as a lack of financial results can? 

Look at the Arthur Andersen and some of these other companies that were doing fine.  They had a balanced scorecard, Arthur Anderson was making good profit, their employees were happy because a lot of them were making a million dollars a year, and their customers were happy because they were making up the numbers for some of them. So their balanced scorecard all said everything’s green. Now they are gone. The company is pretty much disappeared.

The thing that was missing from their dashboard was a gauge that told them how we are doing on ethics. Like I said, by the time you figure out you got a problem with it, it’s probably too late. So there are things you can measure.

Berkeley Laboratory is an organization I worked with up in Northern California and they have an ethics gauge on their dashboard. One of the things that they measure is people’s knowledge of right and wrong.  Do they know the rules?  Do they know the grey areas where it’s not black and white? You have to make a decision or what are their perceptions about what really happens in the company. We may know the rules right from wrong but people don’t behave that way. So they are measuring things like perceptions and knowledge is the leading indicator of ethics problems.  

Another related thing within my number two stupid measurement mistake is culture.  We're with this big medical device manufacturer, a huge corporation, and they’ve been in the process of buying all these small companies. It’s become very popular.

They are going to buy another company and I was working with one of their divisions that they bought recently and their CFO told me he was going to quit next week. I asked, “why are you quitting” and he said, “well, I am going to retire.” I responded with, “what? You are 42-years-old. How are you going to retire?” He said, “Well, although I made a lot of money when they bought our company that’s not why I’m retiring. I am retiring because I don’t like working here anymore.” And I said, “Why not?” He said because this big corporation has pretty much ruined our culture. They have come in and they have put in all these controls, so everyone is looking over their shoulder all the time, and nobody trusts anybody anymore. We don’t have any fun anymore.  I haven’t seen anybody smile or laugh in a long time, we don’t have any parties anymore because we are so busy, we get a 150 emails a day we have to answer, we are in meetings all the time, and we don’t take risks anymore because we are so afraid of failure.  So we’ve lost our innovation, we’ve lost our sense of fun, we’ve lost our trust that we used to have and he said so, I hate working here.

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You think that this big company has a gauge on their dashboard that tells them that no, they don’t know. All they know is Joe quit.  And somebody else quit.  And somebody else quit.  But those are lagging indicators.  When you lose some of the key people in a company you just bought, that’s a big part of what you bought and they are all going up the door.

Do you think he told them I left because our culture sucks? No. He said I have another opportunity and I wanted to retire. He wasn’t honest about it. So it is possible to measure soft fuzzy things like culture and ethics but I don’t find most organizations doing it. They talk about it, they spend money on training, they spend money on nice little wallet cards and brochures and plaques about their values and things like that, but they don’t measure whether or not those are really things that we live up to.  So that’s something to think about.

I still see a lot of lack of alignment between where the company says it’s going for its direction and what they are measuring on their dashboard. In other words they are strategic measures. Part of the reason I think that’s a problem is that many organizations don’t have a clear vision to begin with.  Typical scenario in creating a vision is having an offsite meeting, hire an expensive consultant or get one of your own people and get a flip chart up on the top of the room and brainstorm what you think your vision ought to be. It’s got to be a team process.