Releasing the names of those people who had registered their interest in having an extra marital affair following a hack of the Ashley Madison data base caused much vicarious interest. While it no doubt embarrassed those who were exposed and possibly excited some divorce lawyers, it raised the question as to whether someone who deceives their marital partner is more likely to deceive their business or their business partners and shareholders.
It prompted research in the USA by authors John Griffin, Samuel Kruger and Gonzalo Maturana, who then published their work Do personal ethics influence Corporate ethics?
They had cross matched some of the names revealed with corporate information available from Lexis Nexis and other sources, and against the US’ Financial Industry Regulatory Authority’s BrokerCheck and the results revealed a correlation between those financial advisers exposed for marital infidelity and those with a record of serious misconduct revealing that they were twice as likely to have committed an offence.
A similar correlation was revealed when they checked revealed names for chief executives and chief financial officers.
Is ethical behaviour the same whatever the context?
The authors argued that there is plenty of research that shows that the behaviour of CEOs influences others in a company: “other employees perform better if they think the top management is trustworthy and ethical”.
I recall being asked by owners of a nightclub in Greek Street to investigate its lack of profits with view to improving them. I quickly discovered that significant amounts of cash were disappearing from the tills. It turned out that the owners were popping in to take cash, the managers knowing this were also taking cash and so were the staff. Everyone was at it and it was clear that the business was morally and culturally bankrupt with no one interested in it being successful. Theft had become part of the culture where knowledge that others were stealing made it OK. I closed it down and sold the premises on the grounds that a cultural transformation was required based on changing all staff and the behaviour of the owners.
There is a debate to be had about whether some behaviour is acceptable in the corporate context that would not be acceptable in private or social life.
Businesses are largely results and profit-driven and these days investors expect results in a much shorter time than they would have in the past. While outright cheating, deception or breaking the law would not be condoned, aggressive pursuit of corporate goals is arguably a much greyer area.
According to the website ethical systems.org “Research suggests that people’s moral compasses are malleable and that various factors influence them. People do differ in their levels of personal integrity, but everyone is susceptible to environmental influences.”
It argues that the behaviour of leaders can therefore have a critical influence on the behaviour of those they are leading. My example of the nightclub supports this.
It makes sense, therefore, that leaders should demonstrate a balance between a focus on outcomes and goals and the means by which they are achieved and that it is important to also focus on people’s efforts to improve and to reward them.
There is also the argument that if a business is receiving bad publicity for the way in which it treats customers and addresses their customer complaints such that it is perceived to be entirely profit-driven and paying scant attention to the quality of service then ultimately the business will be damaged.
So logically, if such behaviour is damaging the bottom line, then the return to investors will also be damaged, and it therefore makes sense for investors to pay attention to the ethics of CEOs both in their private and their corporate behaviour.