Seven Signs Of Ethical Collapse (Jennings)

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How to spot moral meltdowns in companies... Before it's too late. Explanation of the Seven Signs Of Ethical Collapse of Marianne Jennings. (2006)

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  3. Best Practices
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Ethical CollapseWhat are the Seven Signs Of Ethical Collapse? Description

The Seven Signs Of Ethical Collapse from Professor of Legal and Ethical Studies Marianne Jennings can help boards, executives, employees, analysts and investors to evaluate those company traits that, while not measurable, control the content of the financial reports and whether executives will move into fraud.... Before it's too late.


After Enron, we remain poised with reporting systems, ethics officers, ethics codes, ethics training, and a host of other best practices. And we continue to arrive on the scene just a bit too late to prevent the crimes, constantly in mop-up, contrition and PR-nightmare mode.


Jennings identifies seven factors (signs) that predict ethical crashes and she provides the following antidotes against them:

  1. Pressure to maintain those numbers. All companies and organizations have goals and feel the pressure to meet the numbers. A company with a poor ethical culture, however, has graduated meeting those numbers into a zone of perversity. Employees in these companies start with the number they want to report and work backwards, making things fit using accounting interpretations, and eventually just making it all up to reach the predetermined number.

    • Antidote 1: Surround (numeric) goals with ethical values (borders). Compare: Ashridge Mission Model

    • Antidote 2: Fire those who cross the lines you have established.

    • Antidote 3: Watch the nonverbal and nuanced communication and signals.

    • Antidote 4: Encourage your employees to use a time-out: a period of time given to employees to use when they find themselves in an awkward situation on the job.

  2. Fear and silence. A type of culture wherein employees may see the issue, but they remain silent. If they do share their concerns, they are either terminated or flatlined in the organization. Compare: Leadership Styles

    • Antidote 1: Tell employees to speak up and provide the means for them to do so (hotline).

    • Antidote 2: Don't fire, flatline, transfer, reassign, trample, muck up or malign employees for speaking up.

    • Antidote 3: Reward employees who speak up and point out ethical and legal issues.

    • Antidote 4: Tell employees bad news happens.

    • Antidote 5: Tell employees that you trust their wisdom and that you are counting on them.

  3. Young ‘uns and a bigger-than-life CEO. Surrounding bootlickers, yes-men and other useful idiots. Iconic, adored CEOs.

    • Antidote 1: Beware of the iconic CEO. Compare: Charismatic Leadership

    • Antidote 2: Always question even the most outstanding performers when it comes to CEOs. Compare: Core Group Theory

    • Antidote 3: Monitor who is hired and who is fired and who replaces them and how much they are paid.

    • Antidote 4: Conduct in personal lives matters.

    • Antidote 5: Mold and shape the young 'uns

  4. Weak board. Boards may be lacking experience, consisting of friends, showing conflicts of interest, not spending enough time.

    • Antidote 1: Get yourself a strong board. Dig deeper on conflicts and do not fall for the governance myths.

    • Antidote 2: Get information from employees.

    • Antidote 3: Challenge officers, managers, and their claimed results.

    • Antidote 4: Pay attention to perks.

    • Antidote 5: Walk around.

  5. Conflicts. A distinct atmosphere of back scratching exists. Favoritism and nepotism.

    • Antidote 1: Believe in conflicts of interest.

    • Antidote 2: Establish definitive conflicts policies and enforce the rules.

    • Antidote 3: Delineate what belongs to the company and what belongs to the customer and never the twain shall meet in employees.

    • Antidote 4: Do not waive your conflicts policy.

    • Antidote 5: Review ownership and interrelationships.

    • Antidote 6: Keep it simple! Remember there are only two ways to manage a conflict: get rid of it or disclose it.

  6. Innovation like no other. A belief that we are so brilliant and innovative that the mundane rules of accounting, corporate governance, and even basic economics do not apply to us.

    • Antidote 1: Recognize limits on ability and that truth cannot be managed.

    • Antidote 2: Keep in mind the basics of economics, and economic cycles and business history. Beware of EBITDA.

    • Antidote 3: Honesty and Candor.

    • Antidote 4: Resilience to Pressure. Beware of Groupthink.

  7. Goodness in some areas atones for evil in others. The consistent perception of both managers and companies of themselves as good citizens. Philanthropic, environmentally sound and diversity-dedicated, these companies were recognized for their good deeds and contributions. Their noblesse oblige benefited many.

    • Antidote 1: Shift attitudes on social responsibility in business. Compare: Intrinsic Stakeholder Commitment

    • Antidote 2: Investigate your company and explore the depths and interconnections of social responsibility and community involvement.

    • Antidote 3: Be (very) skeptical of philanthropy and social responsibility.

Origin of the Seven Signs Of Ethical Collapse. History

In 2003, professor Jennings participated in a symposium on corporate governance and ethics. Her paper was called: Restoring Ethical Gumption In The Corporation: A Federalist Paper on Corporate Governance - Restoration of Active Virtue in the Corporate Structure to Curb the 'Yeehaw Culture' in Organizations. This paper was the basis for her 2006 book: The Seven Signs of Ethical Collapse.


Usage of the Seven Signs Of Ethical Collapse. Applications

  • Avoid investing in the next Enron.
  • Predicting companies at risk.
  • Prevent working for the next WorldCom just before the crash.
  • Identify and solve problems in your own organizations before they cause a disaster.
  • The 7 Signs apply to government agencies and nonprofits as well.

Strengths of the Seven Signs Of Ethical Collapse concept. Benefits

  • Gives 7 clear signals to watch for to detect (potential) ethical problems.
  • Provides antidotes to prevent them from happening or to cure them.
  • Deals with the underlying source of unethical conduct: company culture, rather then treating the symptoms, or fixing the legal system or paying to settle the charges.

Limitations of the Seven Signs Of Ethical Collapse. Disadvantages

Book: Marianne Jennings - The Seven Signs of Ethical Collapse: How to Spot Moral Meltdowns in Companies... Before It's Too Late -


Seven Signs Of Ethical Collapse Forum
  Careful with Teaching "You Can do All…"
As a parent, partner, as older brothers, as teachers, tutors, mentors, leaders, managers, and generally any role in which we are responsible for the welfare of someone else (at least in some area of your life), we endeavor to convey the certainty she...
     
 
  Being Ethical is a Trait and Requires Practice
Ethics in our broader life cannot be inculcated or professed to any human, but it's a trait which mutates between similar genes and needs to be practiced at any situations and moment in order to bear fruits and give finite results....
     
 
  Ethical Conduct in our Personal Lives
Conduct in personal lives matter." I like this best. Doing the right thing even when no one is looking is the best gauge of character. And ethics is about character and conduct whether in public or private, in business or in the home....
     
 
  All the Tips are educative
Thank you very much for all materials and TIPs which are of great importance to me where reading materials are not available....
     
 
  Chief Fraud Strategists
Very interesting. Most of the antidotes assume that the employees are the responsible party and tends to offer advise to the CEO and leaders of the institution. There are several cases abound in Africa, especially in Nigeria where the CEO in concert ...
     
 
  Ethical behaviour's role?
Where does ethical behaviour, with particular reference to IPR protection come into play here? Certainly those companies that blatantly steal other's IPR are sending a message throughout their entire organisation that they are in meltdown status. He...
     
 
  Peter Drucker on Business Ethics
Peter Drucker once said: There is no such thing as business ethics – there is only ethics....
     
 

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Best Practices - Seven Signs Of Ethical Collapse Premium
  Antidotes Against Ethics Collapse: THEIRS
Antidotes to the ethical collapse. Follow the THEIRS principle:
T = Truthfulness
H = Honesty
E = Equity
I = Integrity
R = Rationality, these would lead to
S = Sustainability.
Anyone wishing how THEIRS is impl...
     
 

Expert Tips - Seven Signs Of Ethical Collapse Premium
 

The Role of Management in Establishing Ethical Behavior

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The United Nations Global Compact

The Global Compact, launched by the United Nations in 1999, is a strategic policy initiative for businesses that are committed to align their operatio...
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Resources - Seven Signs Of Ethical Collapse Premium

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Usage (application): Ethics, Information Technology, Information Age, Moral Dimensions, Privay, Opt-in, Opt-out, Data Protection, Cookies
 

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Compare with Seven Signs Of Ethical Collapse: Clarkson Principles  |  Core Group Theory  |  Ashridge Mission Model  |  Moral Purpose  |  Charismatic Leadership  |  Groupthink


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