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|In: Business Ethics|Last Updated:

“Device giants shed integrity agreements” read the 9/27/2014 StarTribune business section headline.

As explained in the article, an integrity agreement is a signed commitment that a corporation will, while the agreement is in force, obey the law.

Temptation is, for us Sarcastics Anonymous members, so, so hard to avoid. After all, we natural persons have to obey the law even when we haven’t signed an integrity agreement.

But it turns out that while integrity agreements really are evidence corporations aren’t people, too, this isn’t why. U.S. government agencies make use of integrity agreements, not to give corporations an obligation to obey the law, but in recognition that just because its CEO and board of directors want a large corporation to do something, that doesn’t mean it will.

Integrity agreements specify that signing corporations will implement organizational structures and processes designed to ensure they do obey the law — a compliance officer and committee; written standards and policies; a comprehensive employee training program and so on.

They’re recognition that corporations are different from us “natural persons” in a deep and fundamental way. Our brains don’t need committees or organ training programs to get our bodies to do what they’re supposed to do.

A few billion years of evolution have resulted in systems that let the brain control things because for us natural persons our tissues and organs all share a common set of interests. More or less.

Anyway, unlike us the “organs” and “tissues” that make up a business … its departments and employees and please don’t push the metaphor! … have very different versions of what self-interest means. Reducing the gap is one of the most important responsibilities business leaders have, and reducing the extent to which employees and departments act on the gap that remains is one of the most difficult.

What’s the solution? Processes and organizational structures, according to the federal agencies that require integrity agreements. Were we to be unkind we might call it bureaucracy, or perhaps the Compliance Police.

Not that we should sneer. In the turn-executive-intent-into-organizational-action game, business pundits and consultants of all stripes tend to converge on these answers, usually adding metrics as a critical element.

And all of these, with the possible exception of metrics, are important. They just aren’t the lead story. But first, a few words about the futility of metrics, in the form of a question: How exactly might a corporation measure its current level of law-breaking?

Not the number of lawsuits, indictments or prosecutions. These measure the number of times the company got caught, and even there the metric will lag the infractions by years.

Internal Audit? It has its hands full looking for accounting irregularities.

We’re talking about something that’s difficult and expensive — choosing a random sample of decisions and actions in all parts and at all levels of the company and digging into them to see which ones fail to adhere to the letter and spirit of all relevant laws and regulations.

Good luck with that.

Which gets us to the lead story: Culture change. It’s the lead story for most business changes — your takeaway from this tale of superficial absurdity.

Culture change is usually relegated to business change management — a follow-on complement to business process change whose role is reducing resistance to the desired change, whatever it is.

Business leaders need to change their thinking on this (me too). Culture is “how we do things around here.” According to ethnoscience it’s “the learned behavior people exhibit in response to their environment,” as my anthropologically-educated business partner explained it to me.

It’s a set of unwritten, socially enforced rules that determine how executives, managers and employees make decisions and act on them. It’s the lead story for most change, or should be.

Some companies rely on controls. But controls mean the answer is always no until you can persuade the controls committee (the word is “governance”) to change the answer to yes.

Controls are why corporations are slower than entrepreneurships. They’re why “I’d rather ask for forgiveness than for permission.”

In a very real sense, controls exist to prevent the corporate culture from taking charge of things.

How sad is that?

But what’s the alternative? In the case of obeying the law, it’s to bake compliance into the corporate culture. This make compliance the lines painted on the pavement and not the guardrails at its margins.

Which do you prefer to rely on to keep your car on the road?

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|In: Business Ethics|Last Updated:

When business writers use sports metaphors it’s usually to illustrate the value of such staples as teamwork, persistence, and steroids.

Vikings star running back Adrian Peterson’s indictment for child abuse doesn’t really lend itself to metaphor. Direct, useful guidance? That’s a different matter.

Some facets of the situation are directly relevant to business leaders no matter what their specific role. Here are some that occur to me … and I promise to do my best to avoid empty moralizing, as plenty of other commentators have already filled that niche:

  • The past explains. It doesn’t justify. Peterson’s apologists, and I include Peterson himself in this category, point out that his father raised him the same way.

So what?

If you believe in the concept of progress, a logical consequence is that no matter what the subject, the world has learned more about it since your parents did their learning.

  • Never use yourself as a positive example. Sean Hannity shows why (skip to 1:45). In explaining that he was raised the same way and that he came out okay, he appears to be anything but okay. Seriously disturbed seems to be a better description.

Even if he’d maintained his composure, it wouldn’t matter, because neither Sean Hannity, nor you, nor I are qualified to evaluate our own wonderfulness. That’s why we provide references instead of explaining to a prospective employer, “Trust me — I’ll make a marvelous executive.”

And besides, saying “I was raised this way and I came out fine” is semantically equivalent to a combat veteran who isn’t suffering from PTSD claiming his outcome as evidence that combat doesn’t cause PTSD.

  • Don’t give credit for moral luck. After Peterson’s indictment, Nike, Target and Wheaties severed their ties to him. A principled stand? Well, it wasn’t an unprincipled stand, but that’s different. It isn’t principle unless it hurts, and what would have hurt these companies would have been continuing to associate themselves with him.

Radisson severed its sponsorship of the Vikings for their handling of the situation — arguably a more difficult call, but not by much. Some people will approve, some will disapprove, many won’t care, and Radisson’s marketing has plenty of other places to spend its budget. Not enough pain to be principle.

  • Due process and all that. The Vikings first public response to this mess was that Peterson has a right to due process, and it would have been improper to punish him before he was found guilty in a court of law.

There’s something to be said for this point, even though as a society we’ve already rejected it in its entirety.

Rejected it? Yup. Many businesses avoid hiring ex-convicts, even though they’ve theoretically paid their debt to society. School districts … and private schools as well … discharge teachers who violate their codes of conduct, even when their code of conduct is more restrictive than what’s legally required of a citizen.

Military officers, along with quite a few CEOs who aren’t named Larry Ellison have been discharged for having affairs with subordinates.

No court of law was required in these cases. “Due process” is understood to include internal HR-led investigations. This is the flaw in the Vikings’ argument: Zygi Wilf and company had the option of launching an internal investigation so as to give Peterson the benefit of due process.

  • Who’s running the show? Unlike Nike, Target and General Mills, Zygi Wilf was emphatically not the beneficiary of moral luck. I say Zygi Wilf because the Minnesota Vikings is a privately held corporation which he owns. As such, the team’s choices were expressions of his personal principles — it’s his show.

Unlike the Vikings, Nike, Target and General Mills, which owns the Wheaties brand are publicly held corporations.

That means everyone in management, up to and including the CEO, aren’t acting as or for themselves. In an important sense they aren’t running the show, merely acting as agents for the companies that employ them. Their operative moral metric is whether they’re acting in their employers’ best interests. Often, operating within the law is included in this framework.

One might argue that if General Mills was a “natural person” and really wanted to “do the right thing” — to make a principled rather than economic decision — it might replace Peterson with Kent Brantly or Nancy Writebol on its Wheaties boxes.

In case you don’t recognize their names, they’re the first two WHO doctors to contract Ebola while working in West Africa.

Associate Wheaties with real heroes, that is, not just sports heroes.

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