Ethics In Times Of Crisis – Article by Andrijana Bergant

*Author's note: I am applying the article 'Ethics in times of crisis' to the so-called 'Masks’ affair in Slovenia. I wrote it for one of the recent newsletters of the Managers' Association, for company managers and executives. At that time, the circumstances of potentially unfair pressures and systematic irregularities in the purchase of protective equipment were not yet known. But the same applies to this situation!

I have made authorial additions with minimal adaptations, indicated in brackets with (*note), so that what is said also applies to practices in public sector bodies and organisations. In the face of the specific situation, the risks of corruption and other types of abuse are even more critical than otherwise for the public sector, in connection with public officials and their influence in high-value procurement procedures (not forgetting, of course, the role and responsibility of private companies and their existing or non-existing compliance and integrity programmes). I will present in more detail the typology of corruption and the warning signs in a separate article, specifically for the case of the procurement of protective equipment in the so-called ‘Masks’ scandal.

Ethisphere’s data for the last economic crisis (2008) shows that ethical companies had lower losses in the recession and emerged from the crisis earlier and better than other companies (5-Star Leadership Integrity Handbook, 2009, page 6). Ethical companies, according to the World’s Most Ethical Companies methodology, operate according to the principles of good corporate governance, with well-organised and efficient processes, living corporate values, and an established system of compliance and ethics management. Ethical companies, according to the World’s Most Ethical Companies methodology, operate according to the principles of good corporate governance, with well-organised and efficient processes, with living corporate values, and an established system of compliance and ethics management. Together with leadership integrity, the above represent key factors for the strength and resilience of a company (*op: or any other organisation or body), even in crisis situations.

However, in times of economic and societal turmoil, such as we are witnessing as a result of the corona virus, it will be difficult for companies, authorities and organisations to establish a corporate integrity programme. But at the same time, this is a critical moment when it certainly makes sense to build in reinforcements to our ethical foundations and pillars. Managers and leaders have a critical role to play in this. The turbulent situation and the current uncertainty may push many people, including our colleagues, contractors and business partners, into a purely self-preserving mode of action. In such a situation, personal gains usually take precedence over collective gains, and the struggle for personal survival (*note: or war-like predation) can overwhelm the higher mission and values of the company, of the community as a whole. In the familiar triangle of deceit, the element of rationalisation, when people justify their actions in a given situation through the necessity and emergency of the situation, will easily push many over the edge. Not to mention the element of motivation or pressure. But with the loosening of control mechanisms, the bending of rules and, in particular, of the values that apply in normal situations, there is a third element, opportunity. And so the triangle, which provides an extremely fertile breeding ground for all sorts of scams, is complete.

It is not the case that in a crisis the otherwise evil and corrupt nature of the masses of people suddenly comes to light (*note: it can happen sometimes). It is simply a psychology of survival (*note: or war-like looting), where people become more primitive than ever, focused on more or less ruthlessly satisfying personal needs, even to the detriment of the company (*note: body, organisation) and their stakeholders. However, management and leaders (*note: and control bodies) can and should have a significant influence on these factors. Therefore, in a crisis, management (op: and supervisors) should be focused on quickly identifying and alleviating the multiple pressures (op: pressures and opportunities) of employees, colleagues and others who have an impact on the performance of the business (op: bodies and organisations). In balance with this, we must be aware that any necessary omissions from normal procedures and rules, and therefore control mechanisms, must be replaced by other forms of control and prevention in order to protect the company (*note: bodies and organisations) and its stakeholders (*note: and public funds) from abuse.

In this context, the following activities are worth considering, as appropriate to the situation and the time:

  • Establish clear rules of conduct in emergency situations, including user-friendly illustrations, e.g. at home, as well as on company premises during the period of validity of restrictive measures; promote employee responsibility and also spell out in advance the consequences of any breaches (it is not enough to simply refer to the authority measures taken, without translating them in the company’s own way into internal acts and procedures);
  • Modify or restrict, if necessary, certain limits, powers; if, in order to react effectively to the situation, it is necessary to centralise powers and decision-making in your company, be transparent about this, make the arguments and announce in advance the subsequent audit for this part of the business;
  • In addition to the obvious risks to human health and safety, financial risks, business continuity, etc., assess at least three of the most important risks for you in terms of business compliance and ethics in the changed environment and take management action on them, with the help of the professional services;
  • In your various communications to employees and partners, which cannot be too much in a crisis and in a situation of social isolation, remind people also of your corporate values, say how your responses and actions relate to them;
  • Remind or set up a direct line for professional assistance to your employees and partners also on issues related to compliance with the Code of Conduct, and remind internal and external colleagues to report any perceived violations or anything they see that is unusual in the business through this channel; (op.: communicate specifically and, if necessary, activate whistleblower whistleblower protection measures to the maximum extent possible); (op.: communicate specifically and, if necessary, activate whistleblower whistleblower protection measures);
  • If you don’t already have it, provide on-line training for your employees on topics related to the Code of Ethics, conflicts of interest, corruption risks, protection of personal data and confidential information…

More than usual, you should also submit your actions and decisions on critical or important matters to a second or even third opinion of your peers, and if possible to an outside independent eye. As leaders and managers, we are also subject to all the human factors described above and bear the greatest burden and therefore responsibility. Although we have to make decisions and take action in times of crisis, when time is not our best friend, our decisions will be judged later, in different circumstances. Therefore, once the crisis is over or has eased, retrospective decision-making is judged against a higher standard and under more favourable conditions than were available to us (think of the Tom Hanks film ‘Landing on the Hudson’). The following questions for (self-)scrutiny and (self)reflection can help us to judge our own decisions and those of our fellow employees against an ethical yardstick:

  1. How will a specific decision or business conduct, including omissions, in times of crisis be judged after the emergency is over? How would this look if it were disclosed to all, including the media?
  2. Is the specific decision, conduct or business practice lawful and in line with your own rules and procedures (you may also find that certain existing rules and procedures cannot be followed during a crisis, which you need to change temporarily and communicate immediately)?
  3. Is the specific decision…, in line with the company’s values and universal ethical principles (such as honesty, respect, dignity, integrity, courage…)?
  4. Am I willing to accept personal responsibility for this decision?

Crisis situations expose many veils and really demonstrate, through the direct response of the company and management, what our values really are. Of course, companies and managers will be affected differently by the crisis, depending on the diversity of our activities and financial foundations. In any case, our primary focus is, of course, on being operational at all in the face of the increase in working from home, the imposition of waiting times, and the constraints on production, logistics, etc. We want to optimise costs as much as possible and try to do what is necessary to maintain the work and the organisation itself. But let’s not neglect the ethical lesson. In the absence of tone and action from top management, even in the light of ethics and business compliance, a company can suffer the secondary consequences of degraded integrity, in addition to the obvious and immediate threats of the crisis.

This approach not only protects the interests of the company and its stakeholders, but also gives management a tremendous amount of credibility and genuine personal authority, which is all the more necessary in times of crisis.

Andrijana Bergant
EICE President

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