One of the most important aspects to keep in mind during the assessment of crises, and the avoidance or minimization of their impact, is the immediate and ongoing impact on the organization's reputation. Decisionmakers can make choices that benefit all stakeholders (at a high cost, though) and often enhance the organizations reputational capital or shorten the period of diminishment.
Texaco's discrimination against black worders ended up costing a $300 million fine and lost respect.
Texaco's response included six steps including visits by senior exectuives to company locations to apologize to employees, expansion of its Diversity club, and a renewed emphasis on company core values. Offending employees were cut off. (Good!)
But why did Lundwall say if he could do it all over again, he would "slip quietly into the night with his benefits and let the system stay as screwed up as it is"? This is why we need to protect our whistleblowers.
Thursday, May 29, 2008
Tuesday, May 27, 2008
Personal Dilemma
I shared a personal ethical dilemma with my class today.
If I had taken this class before the decision was made, I know I would have made a better choice, or gone about my actions in a way to protect the "stakeholders" involved.
I'm uncomfortable posting my specifics of my dilemma on the blog. It was hard enough to share it with my class. Especially since some people in the class probably know who the key players are.
The class really helped me understand different ways to approach the situation.
I felt a little ashamed as I unfolded the story before my peers.
Today was the best day in ethics class so far.
If I had taken this class before the decision was made, I know I would have made a better choice, or gone about my actions in a way to protect the "stakeholders" involved.
I'm uncomfortable posting my specifics of my dilemma on the blog. It was hard enough to share it with my class. Especially since some people in the class probably know who the key players are.
The class really helped me understand different ways to approach the situation.
I felt a little ashamed as I unfolded the story before my peers.
Today was the best day in ethics class so far.
Tuesday, May 20, 2008
Discussed in class in response to 1986 Challenger explosion:
When you cannot guarantee safety, you shouldn't shift the burden of proof to prove unsafe conditions.
Yet
In court,
When you cannot prove your innocence you should not shift the burden of proof to prove your guilt.
However, NASA is such a huge organization with so many stakeholders that they must assume responsibility to create controls and policies to check for safety. It would be unethical not to. It would be negligent and irresponsible to ignore these protocols.
I believe an organization must hire good people -- good in both skills and ethics -- and implement controls that do not yield like employees might yield under pressure.
When you cannot guarantee safety, you shouldn't shift the burden of proof to prove unsafe conditions.
Yet
In court,
When you cannot prove your innocence you should not shift the burden of proof to prove your guilt.
However, NASA is such a huge organization with so many stakeholders that they must assume responsibility to create controls and policies to check for safety. It would be unethical not to. It would be negligent and irresponsible to ignore these protocols.
I believe an organization must hire good people -- good in both skills and ethics -- and implement controls that do not yield like employees might yield under pressure.
Whistleblowing
The "Persons of the Year" honored in 2002 by Time magazine (Dec. 30, 2002) are called whistleblowers. That issue of Time provides comprehensive coverage about those whistleblowers and the organizations they blew the whistle on: Sherron Watkins, Enron; Coleen Rowley, Federal Bureau of Investigation; and Cynthia Cooper, WorldCom.
The fate that awaits whistleblowers is tough. They are unlikely to be called diligent CPAs, but rather "snitches." They will not likely be portrayed as "team players," but rather disgruntled employees. They often lose friends, lose careers, and endure significant personal stress. Some might argue that whistleblowers such as Sherron Watkins, of Enron, have benefited in lucrative speaking engagements and book deals, but Sherron Watkins' situation is atypical.
If CPA employees follow interpretation 102-4, there is a significant possibility that they will be labeled snitches for doing their jobs and will suffer as an employee. But if they choose to be silent, CPAs violate their consciences and the ethical standards of the accounting profession.
The AICPA has provided guidance to whistleblowers in the form of a decision tree. The decision tree is useful in that it gives guidance on what party to talk to next. But providing the current decision tree to a CPA who finds misrepresentations in financial statements is like handing a tourist a map of New York City and wishing him luck. A tourist needs more than a map; he needs practical advice on how to negotiate the city, and warnings of possible pitfalls. Likewise, CPAs need practical advice on how to negotiate the decision tree and how to be alert to the possible dangers, before they begin this monumental task. Their careers and personal lives are at stake.
By providing CPAs with guidance that properly balances their personal welfare with their professional responsibility, and working to change an unfair characterization of loyal employees as whistleblowers, the AICPA would promote fewer ethics violations and encourage more transparent reporting in financial statements.
FindArticles - Professional Responsibility and the Fate of Whistleblowers
CPA Journal, The, Apr 2006, by Gabbin, Alexander L,
Richardson, Robert C
The fate that awaits whistleblowers is tough. They are unlikely to be called diligent CPAs, but rather "snitches." They will not likely be portrayed as "team players," but rather disgruntled employees. They often lose friends, lose careers, and endure significant personal stress. Some might argue that whistleblowers such as Sherron Watkins, of Enron, have benefited in lucrative speaking engagements and book deals, but Sherron Watkins' situation is atypical.
If CPA employees follow interpretation 102-4, there is a significant possibility that they will be labeled snitches for doing their jobs and will suffer as an employee. But if they choose to be silent, CPAs violate their consciences and the ethical standards of the accounting profession.
The AICPA has provided guidance to whistleblowers in the form of a decision tree. The decision tree is useful in that it gives guidance on what party to talk to next. But providing the current decision tree to a CPA who finds misrepresentations in financial statements is like handing a tourist a map of New York City and wishing him luck. A tourist needs more than a map; he needs practical advice on how to negotiate the city, and warnings of possible pitfalls. Likewise, CPAs need practical advice on how to negotiate the decision tree and how to be alert to the possible dangers, before they begin this monumental task. Their careers and personal lives are at stake.
By providing CPAs with guidance that properly balances their personal welfare with their professional responsibility, and working to change an unfair characterization of loyal employees as whistleblowers, the AICPA would promote fewer ethics violations and encourage more transparent reporting in financial statements.
FindArticles - Professional Responsibility and the Fate of Whistleblowers
CPA Journal, The, Apr 2006, by Gabbin, Alexander L,
Richardson, Robert C
Monday, May 19, 2008
Rededication of the Role of a Professional Accountant
The scandals have made clear that professional accountants owe their primary loyalty to the public. We work in a profession of real value where trust is particularly important. We are resonsile and able to discharge our duties to memers of the public propertly. If we're ont being fair, then the government will step in, and we will lose our ability to manage our affairs efficiently.
Thursday, May 15, 2008
SOX. Costs and Benefits
How Much Did Sarbanes-Oxely Impact Markets?
Market Action Leading up to the Legislation's Debate and Passage (1/99-12/02)
Market's Performance Since Sarbanes Oxley (7/02-6/05)
Source:
How Much Is It Really Costing To Comply With Sarbanes-Oxley?
Carl Bialik
WSJ, June 16, 2005
http://online.wsj.com/article/0,,SB111885041027560378,00.html
Wednesday, May 14, 2008
Objectivity and Independence
What does it mean to be objective? Is it possible to be truly objective? Or is everything we see, do, or say affected by our values, beliefs, and our preferences for certain outcomes? When someone says, “I’m going to be totally objective …,” how many of you, like me, prepare for an expression of personal feelings, prejudice, or interpretation obviously (at least to us) meant to persuade us to the speaker’s subjective point of view?
We must protect the public first because doing so protects the reputation of our profession.
Whether working internally as an accountant or externally as an auditor, an individual’s most powerful potential incentive to be objective and independent, as well as the most powerful potential protector of such an individual when exercising objectivity and independence, is a strong profession. A strong profession, however, thrives only when membership in it outweighs the demands and rewards of current employment.
We must protect the public first because doing so protects the reputation of our profession.
Whether working internally as an accountant or externally as an auditor, an individual’s most powerful potential incentive to be objective and independent, as well as the most powerful potential protector of such an individual when exercising objectivity and independence, is a strong profession. A strong profession, however, thrives only when membership in it outweighs the demands and rewards of current employment.
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