When corporate scandals emerge, the tendency is to blame the executives: the CEO, CFO, vice presidents or accountants. But to what extent does the CLO play a role, not in assuming culpability but rather in guiding the company?
The right learning message can help a company avoid financial missteps and successfully face ethical challenges. When a company finds itself in a scandal, a learning department can guide its overall response and adjust its culture going forward. In fact, it’s uniquely poised to do so.
According to Stephen M.R. Covey, author of The Speed of Trust: The One Thing that Changes Everything, a CLO should do three things: guide, educate and reinforce.
“[CLOs] have a role to guide or to influence, particularly before there’s a problem,” he said. “The prevention role is really the first thing that we’re trying to focus on as opposed to managing what happens after the fact.”
After that, CLOs should move into educating and look closely at the tactics to deliver the ethical message, striving to set a tone at the top that cascades downward in the organization. “How do you educate?” Covey said. “How do people become clear and familiar with what the company stands for, what its values are, what is significant [and] what it means to be part of this organization?”
Answering these questions will allow learning leaders to define for employees how they should behave within the organization as well as the overall mission, vision and values, code of conduct and business policies. “And the third piece is they need to reinforce, so it is seen as not just a platitude,” Covey said, adding that employees should see the company’s ethical message in everything it does, including reward systems and promotions.
The Why Behind the What
According to Covey, the most critical element in crafting a company-wide ethical message is declaration of intent, or, as he calls it, “the why behind the what.” He said when employees first encounter an ethical message from their company, they likely ask, “Why are we talking about this? Why does this matter to our organization? Why is this important?”
Defining this helps ensure employees recognize an ethical message as relevant to the company’s goals. “In going into the message itself, connect and tie that to the mission, vision, values and principles of the company that have already been identified, so that this is not seen as another thing to do, another add-on — ‘OK, now we got this new ethical thing they’re throwing at us,’” Covey said.
Emphasizing values also focuses organizations on their long-term sustainability, said Ed Cohen, author of Riding The Tiger: Leading Through Learning in Turbulent Times.
“If companies will get back to being values-driven, where they hold their leaders as accountable for their alignment to values as they do their profitability, then I believe that you would have a system that would reward the right behaviors,” he said. “However, today, so many businesses have been pressured into short-term profitability and poor decisions as a result of that — many times unethical or even illegal decisions. Each time you make one of those decisions, it creates a gap that you cannot close.”
Cohen knows this all too well. He was serving as CLO for India-based IT firm Satyam in January 2009 when Ramalinga Raju, the firm’s chairman, announced the company’s financial accounts had been falsified, overstating cash reserves by $1.5 billion. Raju was subsequently arrested. Cohen quickly found himself moving from administering learning to doing damage control.
“The first thing is that you have to figure out how you’re going to keep the lights on in the organization, so that’s where the learning organization can play a key role,” he said. “We stopped all learning that was happening in the organization [other than] what we absolutely had to do because contractually these were skills that our people had to have in order to deliver. What we focused our learning on was how to get through crisis.”
Within 30 minutes of Raju’s confession, Cohen’s team in the U.S. and India got together on a webinar to discuss the situation. They then began broadcasting a Web video program three times a week called “Weathering the Storm,” which gave Satyam employees examples of how other companies had gotten through similar situations.
“The learning group has more touch points with the organization than any other part of the HR group,” Cohen said. “Because of that, leveraging its ability to gain access to people and consistently and continuously put information out is key.”
Ideally, this creates what Cohen called calm in the storm. To illustrate this, he referred to the Satyam learning team’s initial reaction to Raju’s confession.
“Even though we were all panicked and worried about losing our jobs — and 95 percent of our team did lose our jobs — at that moment we had to focus on what was the most critical thing, which was calming people down, giving them ongoing access to information and helping them to learn how to get through it,” he said.
The Time and Place for Top-Down
Ron Garrow is another CLO familiar with guiding a company through crisis. From May 2004 to March 2010, he worked for Bank of America, taking on the CLO role in September 2008 just as the meltdown of the financial services industry was gaining momentum.
“When that occurred, the whole perception of the industry [was bad],” Garrow said. “Stocks were plummeting; people were pulling money out of banks. We saw that happen with Wachovia, where they were afraid the banks were going to collapse.”
Faced with this type of a situation, Garrow said the first thing a CLO must do is drive transparency, both inside and outside of an organization.
“The whole financial services industry was just plagued with everything in the news media and you had to have your personal bankers and your tellers all equipped to be able to talk to the ultimate consumer,” he said. “It becomes a real issue of then how do you lead from the front and what are the communication vehicles that you need to use to be able to really drive that transparency?”
Some companies aren’t transparent when faced with a crisis. To maintain morale, there’s no substitute for openly stating a problem.
“You’ve got to put the problem out on the table, be open with your employees about it and then share, ‘Here’s what went wrong; here’s what we did do wrong,’ and then ensure that employees are committed and bought in and say ‘Yup, we made a mistake, now how do we help ourselves recommit, re-engage to the organization?’” Garrow said. “That [has to] happen because ultimately if the employee is not feeling good about the company, how can they feel good and represent the company in the external world?”
Similar to Satyam, when Bank of America found itself in the midst of the financial collapse, the bank began pushing out what Garrow called “video vignettes.”
These were “being very transparent about an issue but also educating and communicating [with] 300,000 people on ‘Here’s the issue, here’s how we’re dealing with it,’ and embedded in that was even some messaging for those that were on the front line, dealing with the consumer, what needed to be said,” he said. “And then behind that there was very specific training events, whether it was a huddle in a banking center or some type of quick Web-based virtual delivery, where then we would further develop that muscle or that skill in the organization and how you address this with the consumer.”
But this is, again, how a learning team can react to a crisis once it is taking place. To craft a learning message that guards against ethical crises, Garrow echoes Covey’s emphasis on reinforcement.
“For some companies, because of what happened with Sarbanes-Oxley and a number of things years ago, it became a check-the-box,” he said. “Let’s dunk sheep dip all over our employees and some type of education and training and boom, we’re done. Well, that’s a part of it but you [have to] ingrain it in the culture.”
In recent years, learning and development has moved away from top-down learning initiatives for a variety of reasons. But top-down is the way to go to ingrain ethics in an organizational culture, Garrow said.
“It’s our job as the CLO or the chief talent officer to not make it all about learning,” he said. “If we’re really in a strategic place in our role, what we should be doing is really helping guide the executive or senior leadership team. How does that role really get in there and get those leaders first involved, engaged [and] talking about the whole responsibility and ethics in the workplace and how do they start to really have those open conversations and dialogue?”
Once a CLO answers that question, learning enters the picture. “If they’re talking about it and you’re hooking them into it, then the business takes ownership of it, and we then get in behind it and put in the right mechanisms behind training [and] communications,” he said. “It’s on us to examine [if] we have the right processes in place from a training perspective to support that and to ensure that all employees and the organization really [are] all in tune.”
In hindsight, Garrow, now global head of talent acquisition, management and development at MasterCard, has a positive view of his experience at Bank of America. “For me it was great,” he said, “even though I hope I never deal with that again, nor do I hope I’m with a company that has an ethics violation. But if I were to, the beauty is that experience at Bank of America doesn’t mean I’m going to be an expert, but at least I’ll have some experience that I can draw from as the chief talent officer. It also causes me to be more proactive.”
One Bad Actor
Chief learning officers have a responsibility to define and communicate a company’s ethical message, but efforts to teach ethics can sometimes backfire and wind up aiding the very behaviors they’re meant to guard against.
“When you teach anything, you’re teaching both sides of the coin,” Cohen said. “Looking back on it, some of the work that I did with the leaders [at Satyam] had the potential to actually help them perpetuate the scandal, unfortunately.”
When he was at Satyam, his team brought in consultants to teach the company’s top 25 leaders about organizational integrity and ethics. Cohen later realized that in teaching these leaders how to detect deception, his team may have been inadvertently teaching them the opposite — how to hide deception.
“In the midst of this program that we ran, the chairman of the company got a call that his oldest [son’s wife] had given birth to a baby and he didn’t even stop the session to call a break — that’s how fascinated he was with the topic,” Cohen said. “And I had never seen him sit through a topic and pay attention so thoroughly. I think his interest may have come from the fact that he was trying to figure out how he was going to keep all this hidden.”
Covey acknowledged that all it takes is one ethically challenged person to take an organization in the wrong direction. “Sometimes it may be that there’s one bad actor,” he said. “Even in a strong, high-trust culture, one bad actor can damage the whole organization.”
Regardless if it’s one person or many, the organization overall still loses the trust of the public and its employees, so the required response is still the same. Covey cautioned against wasting time assigning blame.
“If we just blame and point the finger or say ‘Everybody else is doing this and we just got caught,’ then you don’t learn and you don’t take responsibility and you’ll have a hard time restoring trust in the marketplace,” he said. “The only way you get it back is to take responsibility, confront reality and then you need to right the wrongs.”
Here again, CLOs can play a vital role as organizational guide. “That’s what I think the learning officers and learning organizations can help focus on is to make sure that we are behaving in ways that are going to enable us to earn the trust back and not just trying to spin our way out of it,” Covey said.
