Unethical People, Bad Apples & the Effect on Corporate Compliance

A couple of years ago, I wrote an article for CCI titled “Everyone Wants to Do the Right Thing. Really?” In the compliance world, we want to believe this, but as the generations evolve, my view is this is less of a reality. Why? Because compliance is based on ethical behavior and ethical behavior is dependent on people.

Compliance folks do not have it easy. Whether your organization is large or small, people have a fear of compliance. It is this mystical requirement that they know they must comply with but often don’t really understand why or what it is about.

I recently wrote about whether we should educate or train employees. The premise here was that moving away from traditional forms of training and embracing compliance education, rather than feeding information and hoping for the best, will breathe new life into your compliance program. Educating rather than training provides employees with the opportunity to develop skills in compliance interpretation is part of a forward-thinking and progressive company.

This will work for the “good guys,” but as we all know, it only takes one bad apple to spoil the whole barrel. Workforces are made up of people, and not everyone wants to do the right thing. For many people, behaviors are already formed before they enter the workforce. Trying to change their mentality to conform to a company policy or not to bribe or corrupt others adds another complexity, as bad behavior is already their habit.

A few examples from everyday life that exemplify the poor ethical behavior of some people (especially many of those in younger generations):

• People who deliberately speed. They know there is a speed limit and consciously (not accidentally through a momentary lapse of thought) and deliberately speed.
• People who walk straight past a sign that says no dogs allowed or no fishing but do it anyway, because they can’t be bothered to find an appropriate area to fish or walk their dogs.
• People who park in a disabled spot at a supermarket because they have less distance to walk, and it is more convenient, presumably thinking, “Why should disabled people get all the good spots?”
• People who take their dog for a walk and don’t pick up the animals’ droppings.
• People who can’t be bothered going to a trash can, so they throw litter or cigarette butts out of their car windows.

 These examples are mostly minor, granted, but they are indicators of people who already have a disregard for compliance and the rules of society.  Somehow, their behavior has to be magically changed when they enter corporate life with the expectation of following policy or procedures.

What can be even worse is when those bad apples are seen as pack leaders. Case in point, a group of young men are lined up with their hot cars, causing a general public disturbance with loud swearing, drinking and harassment. The pack leader has the ability to escalate the bad behavior of the others who are keen to elevate their dominance in the pack by being the hero and doing something none of the others will do. Such people do not care about their impact on others or about the various laws; they just want to do what they feel is right for them at the time.

These people have a significant and detrimental effect on corporate compliance because they have the ability to instill a “follow the leader approach” that they have learned during their private lives. As my colleague Mary Shirley has pointed out, the days when we were a society at least trying to be ethical and considerate during the height of the Covid-19 pandemic are long gone, and on the roads, in public spaces, our workplaces and sometimes even within our own households, we’re brusque, impatient and it in many cases just plain selfish.

Selfishness contributes to unethical behavior and is the source of many cases of non-compliance. Two examples from recent times:

• Many readers may be following the story of Elizabeth Holmes, the disgraced Theranos founder who was recently sentenced to more than 11 years in prison after being convicted of multiple fraud charges. The coverage makes for interesting reading. There is some evidence that the roots of her unethical behavior were already there before she became a CEO. She gave herself moral license to tell the lies she deemed necessary to reach her goal. She desperately wanted to believe her own hype, which at some point became contorted. There was a huge breach of ethical principles and standards like honesty, integrity and credibility, reinforced by firing those who spoke up and raised the red flags.
• Similarly, Martin Shkreli who was convicted of defrauding investors and is serving seven years in prison, may well have been a very innovative and intelligent human being, but it is hard to imagine that any part of his decisions to increase a drug price by 5,000 percent is in any form ethical. When asked what he’d do differently if he could go back in time, he said that he would put the price even higher to make more profits for shareholders of which he was a major one. He used his leadership position to achieve personal material gain and tried to justify it as if he had no choice.

Ethical behavior is based on shared principles and the values of society. This permeates into corporate compliance and can influence others. As compliance officers, if we drop our guard and let bad apples proliferate, the effects on compliance are significant. If these bad elements go unchecked, many employees will take the attitude of, “Nothing happened to them, so why should I try to be ethical and compliant?” Others will be fearful to tell anyone about bad behavior they witness for fear of retaliation. This fear factor is well-known and presents a problem, not only in the corporate world but also in society. In a lot of cases people would like to do the right thing but don’t because they fear retaliation.

I don’t have the answers to this problem, but recognizing there is one surely has to be a step in the right direction. It would be nice if we had a magic HR tool to use during interviews that could detect a person’s present level of ethical behavior in an interview. That is what we try to do with references, but as we all know these are not foolproof, either. As trained investigators with the ability to be vigilant, an employee’s true nature can be gained to some extent by listening to their exploits in general conversation with others. How employees interact with colleagues can further provide insight into their innate behavior and regard for ethics. This is why compliance people should be out of their offices, mixing with employees.

If we accept that not all people want to do the right thing and that this can translate into employees who do not want to do the right thing, perhaps we stand a better chance of instilling a positive compliance culture. Paying special attention to the bad apples before the rest of the barrel gets rotten has to be a good thing — doesn’t it?