I interview Charles Morgan, former General Counsel for Bellsouth and Chiquita Brands, and former Deputy GC for Kraft Foods, about creating an ethical culture on the Everything Ethics Talk Show.  He comes from a position of authority when talking about the impact that ethics have on a major corporation.  These are the highlights from the interview:

What is your experience of trying to build ethical culture?

The most important thing about building an ethical culture is support from the top because the whole organization will be watching to see if it has support from the top.  And if you don’t have that, the compliance officer and the general counsel will be very frustrated.

The CEO has to lead the way to make sure that the other top managers, such as the chief financial officer, are all strongly backing it, not just with words with by their actions and their attitude and so forth.  In other words, it’s something that senior leadership has to convince everyone else in the corporation that it’s a serious thing that we believe in. It’s not a joke. It’s not something that you have to do to tick off the box is you’ve got to internalize it.

People can’t be expected to remember lots and lots of rules. If you’ve got another job in marketing or communications, your job is not to know precisely what the rules are, because that’s why you have lawyers.  But if you have a sense of what the rules are and have a firm grounding about ethics, that will stand you in good stead and make you realize when you might be facing an ethical issue, and you might need to talk to someone else.

You realize when you take a look at the instances of ethical lapses that people should have known better. Just their moral compass failed them.

There are all sorts of examples where the CEOs, very top officers, were violating the corporations’ ethics codes.  I think it’s very tough to see.  It’s also essential that training in the ethics area is crucial because it’s not just second nature what’s ethical or not in terms of business?  It may or may not be intuitive to some people.  It’s not always easy to spot, so you have to have your antenna finely tuned for ethical issues,

Executives need to understand what the various rules are entirely and the traps are.  It’s not a simple as whether you run a red light or not.  Frequently, an executive who hasn’t been through something like this thinks it’s academic. But if you talk to anybody who’s been through it, they will tell you that it’s not like a bolt of lightning, in the sense that it can happen to you.  And it happens a lot more frequently than a lot of executives may realize.  And that is particularly true with FCPA.  Many of these executives work in different cultures where bribery is perfectly acceptable and do not understand American laws.

What keeps GCs up at night are employees who are doing things that may be unethical or illegal thinking they’re benefiting from the company. 

People need to be fully aware that committing unethical or illegal acts is not beneficial to the company.  It is not helpful to their career because there’s too high of a risk, and you’re not thinking about all the consequences of those decisions you’re making unilaterally.  You’re putting the company into great financial and reputational harm.

There’s a strong inclination among the corporate boards, which are oversight bodies, to ensure that the CEO, the CFO, and the company’s top management operate with a very ethical and compliance-focused sort of culture.

None of this stuff happens in a vacuum.  And people who are lower in the company’s ranking know what’s going on with those executives.  People talk.  They have eyes. They can see.  They know.  So they’re going to take their cues from their managers or their executives.  So if the managers don’t think it’s that big of a deal, why should the employees think it’s all that big?

There’s just a lot of executives that think they’re doing good for the company.  But they ended up hurting their career and ruining the company’s reputation by taking actions that they should not take.

The bottom line on here that we need to focus on is the importance of creating an ethical culture, getting everybody talking the same language as to what is ethical, what is not ethical.

I think that’s not just true with the executives. I think all of us want to work for an ethical company that we are proud of.