The route to ethical resilience needn't be this bumpy
Another car company, this time Mitsubishi, acknowledged that it tampered with fuel consumption tests on some of its cars, going back to the early 1990s. As yet, they are not sure how many cars this has effected, although at the last count is was over 600,000 cars in Japan alone.
What they do know, however, is that the value of their shares have plummeted since these revelations came to light –wiping almost 50% off the company's market value so far. Internal investigations suggest more irregularities might come to light. It doesn't stop there – Japanese transport regulators have swooped on the firm's offices so expect to see some hefty fines. And that's before the company makes any compensation to its customers.
Yet, like many other large, successful organisations, the Mitsubishi companies have a strong sense of corporate responsibility. They are guided by the values of the Mitsubishi Principles which were created in the 1930s by a former Mitsubishi president, Koyata Iwasaki:
"Shoki Hoko" – Corporate Responsibility to Society
Strive to enrich society, both materially and spiritually, while contributing towards the preservation of the global environment.
"Shoji Komei" – Integrity and Fairness
Maintain principles of transparency and openness, conducting business with integrity and fairness.
President Koyata was known to have repeatedly cautioned Mitsubishi managers against focusing blindly on profits and losing sight of the Group's adherence to a high standard of ethical behaviour amid unprecedented competition, urging them to respond to competitors' unscrupulous business practices with integrity and forbearance. He reminded them often of the importance of meeting the expectations of their customers and the public by exhibiting high ethical conduct in all their transactions.
"Ritsugyo Boeki" – Global Understanding through Business
Expand business, based on an all-encompassing global perspective.
Somewhere along the line, Mitsubishi lost its moral compass and in between 'right' and 'wrong' it enabled bad decisions to be made, no one was caught, and it gradually became part of the culture, 'everyone does it'. Although Mitsubishi is currently in the news for this breach of trust, no industry sector is untainted by unethical behaviour – from banks, to insurers, to supermarkets and manufacturing. The sins of the past are coming to the fore and given the immediacy of global communications, we know about it straightaway, giving the organisation in the news little time to think through its response.
Ethical resilience has always been a fundamental requirement of a healthy organisation, now even more so. It is the ability to do the right thing when the unexpected happens, to have the right leadership, behaviours, communications in place to withstand adversity, come out stronger, reputation (and value) in tact, or quickly regained.
To create this, organisations need to take time out to review their culture, their accepted behaviours, norms and processes. What was once acceptable behaviour may no longer be so (think of seat belts – years ago, drivers and passengers often ignored wearing them, something which would be seen as negligent now). Best to do this away from the glare of adverse publicity.
It starts with the Board. There's a huge investment of time developing strategies and business plans, but at the end of the day, to quote Peter Drucker, 'culture eats strategy for breakfast'. Boards need to take responsibility to review culture, values and behaviours through the lens of ethical resilience. Bringing in outside expertise adds value to ensure there is challenge and no 'group think'.
This isn't a 'nice to do'. As can be seen from the Mitsubishi example, there's a significant downside to the reputation and the financial health of the organisation if you don't get this right.
I am a founding member of The Stance Partnership, working with organisations to help them build ethically resilient businesses. I am also an Executive Coach and Leadership Consultant, helping leaders set the appropriate 'tone from the top'. Contact me to find out how I can help your organisation.