Seven Traits of the Ethically Challenged Organization

Are you approaching an ethical gray area? If you need to ask, it’s probably too late.

Marianne Jennings (pictured), a professor of legal and ethical studies in business at W. P. Carey School of Business, frets about the subprime mess.

Back in the day, the author of “The Seven Signs of Ethical Collapse,” notes that scandals cropped up about once a decade. Now, she says, “Enron and the Sarbanes-Oxley Act of 2002 — which tried to reform American business practices — were only five years ago, so we are seeing scandals more frequently and the same pattern over and over.”

In her book, Jennings lists seven warning signs that a company culture is unethical:

1. pressure to maintain numbers;
2. fear and silence in the ranks and leadership;
3. young and inexperienced executives;
4. a bigger-than-life CEO and a weak board;
5. conflict;
6. pressure to produce constant innovation; and
7. a penchant for philanthropy that assuages guilt for questionable decisions.

If you’re already in what feels like a gray area, it’s probably too late. Ask yourself, Jennings says, “Why is this area gray to you? If you are there, then you are probably already in trouble, looking for a way around a rule.”

UPDATE: This post was revised April 14.

Posted on April 13, 2008