Ethics. It’s a common yet elusive topic. And, the higher up you get in an organization, the more important – and perhaps trickier – ethics can get. Ethics in the C-Suite was one topic that was covered on the final day of the Women, Influence & Power in Law Conference in Washington, DC.
During the session “Ethical Dilemmas in the C-Suite,” Julie Anne Preng, managing director, Korn/Ferry International and Robert E. Bostrom, shareholder, Greenberg Trauring, discussed the topic.
Bostrom talked about how the culture of high-level executives was, quite recently, not one that encouraged ethical behavior. Now, though, with the regulatory trends that are prevalent these days, that is no longer acceptable.
Preng pointed out that general counsel must facilitate conversation and awareness of compliance and integrity across the entire company. She pointed to new and more complex regulations, and higher costs of insurance and penalties related to rick and compliance, stating that each GC at each company must chart her or his own course through the mazes and landmines.
There is a difference between inadvertent and advertent behavior, said Bostrom. Not all companies are crooked and knowingly committing fraud. He stated that it is important to focus the senior executive team on “gray area issues,” and keeping ethics at the top of their minds, educating and reminding them that issues can and will come up.
Fortunately, there are some best practices that GCs can keep in mind as they consider risk and senior executives. The primary responsibility, Bostrom stated, was to get the senior management – and the board -- on the same page as to what their risk tolerance should be. The GC works with the chairman and CEO to set the agenda, so risk tolerance should be placed on that agenda right away.
As for tips on striking the right balance, Bostrom delivered several. He said that GCs face a difficult job and must work on the balance between being a facilitator and a risk manager. GCs must deal with difficult situations, especially when they become aware of misconduct by execs. One way to avoid a direct conflict is to get outside counsel, but that could be viewed harshly, so he said that this is the time to leverage the trust that exists between the GC and the CEO.
And, really, trust is perhaps the biggest commodity available to GCs, and building that up – and earning it – will go a long way toward making these inevitable difficult situations as easy as possible.