#Speak-up series 3 – Why coworkers do not speak up on ethical issues

Speaking up on topics of ethics and compliance is hard to do. Already speaking up when you disagree or have bad news can be difficult in organizations. It is even more difficult to speak up on sensitive ethics and compliance issues. Usually, we have not learned to say the unpleasant truth.

Already as children, we learn that aunt Betty gets hurt, if you tell her frankly that her new hairstyle is a disaster. You certainly do not tell cousin Mark that you think he is a cheat when he boasts about his clever «tax saving» strategies.

We have learned to lie. We have learned that candor about the unethical behavior of others (especially if they are more powerful as us) might ruin the relationship.

Furthermore, ethical problems are often not black or white, but grey. This makes it difficult to draw the line, which can make us more insecure.

Finally, people hesitate to rock the boat if they have the impression that nobody else seems to notice. This is known as the bystander effect – a social-psychological phenomenon that refers to the fact that if there are many bystanders in an emergency situation, the likelihood of one person intervening and taking action goes down. This is because everybody is expecting the others to react first (diffusion of responsibility) and nobody wants to stand out in the crowd. The effect is amplified if the situation is ambiguous and bystanders are unsure if an intervention is socially adequate. This is exactly what is often the case in situations where ethical judgments play a role. (For a great illustration and explanation of the bystander effect, watch this video with Philip Zimbardo and the Heroic Imagination Project).

Consequently, silence is contagious. You observe that nobody else is speaking up, so you do not do it yourself. That is why it is so important to create a corporate culture where speaking up is normal and where employees have seen others speak up without negative consequences.

Because it often does feel unpleasant to speak up, we come up with all kinds of rationalizations, why it is ok not to do it:

  • “It’s not a big deal.”
  • “I don’t have all the information.”
  • “This is someone else’s responsibility.”
  • “This must be the way these things are done (at our company, in this region, in our industry, etc.)”

In reality, this a sure sign that you should actually speak up.

A survey among European companies showed that only half of the people that observed ethics or compliance violations spoke up (Source: Daniel Johnson : Ethics at Work: 2015 Survey of Employees – Continental Europe)

We all know these fears are real and still there are often people who dare to speak up.

What do you think? Who are these people? What is different about them? Do they not have these fears? Are they maybe very brave heroes? Are they maybe in a more powerful position?

No.

People who do speak up on important concerns do this because they have spoken up before. The degree of fear, power or bravery play no important role. It is the practice that makes the difference!

Speaking up is an ability that can be trained like a muscle that gets bigger with exercise. Addressing sensitive issues is not something that comes natural to most of us. However, there are effective ways to do this without jeopardizing our career or our relationship with our boss.

How to prepare and conduct a speak-up conversation with confidence and courage will be the topic of the next and final part of this blog post series on speak-up.

Stay tuned and watch for the next episode of the speak-up series!
Prof.-Bettina-PalazzoAuthor: Dr. Bettina Palazzo
Professor at BSL

#Speak-up series 2 – How can leaders conduct effective speak-up conversations?

Scandals like Volkswagen or Fells Fargo made it clear again: Before a scandal erupts, many, many people in the company knew about the ongoing ethics problems for quite a long time. According to research about one year! So why did most of them not speak up?

In the first part of this series, Bettina Palazzo explored how leaders discourage that their team members address uncomfortable truths and what they can do about it. Now she will look at how leaders need to conduct speak up conversations that make it safe and worthwhile for employees to speak up.

Coming up in the next parts of this blog series on speaking up:

  • Speak-up post no. 3: Why employees do not speak up and who are the courageous people that do dare to speak up.
  • Speak-up post no. 4: How employees can prepare an effective speak-up conversation and how they can conduct this difficult talk with courage and confidence.

In part one of this series on speak-up we saw that leaders need to encourage their team members to speak up long before there is a critical thing to say : They need to create a culture of constructive feedback, where saying uncomfortable truths and keeping each other accountable for ethical behavior is normal. Speaking up is most of all a communication and relationship problem. If you have good communications and a good relationship with your coworkers, if they trust you, if you share responsibilities with them, speaking up is much easier.

Sounds easy and logical? Of course, but in practice it is not so easy to do. As with most leadership topics we often observe a knowing-doing gap: In theory we know what would be the right thing to do, but in practice there are many obstacles that keep us from doing them. It is a bit like living a healthy life: We all know what to do (no sugar, alcohol, cigarettes, lots of exercise, enough sleep etc.), but actually doing it in a consistent way can be so hard. It is like Chip and Dan Heath say in their bestselling book « Switch » : Your rational mind is just the tiny rider on the big elephant of our irrational behavior, desires and emotions. Our rational mind might decide that it is the right thing to do to go jogging every morning at 6 a.m., but the irrational elephant of our deepest emotions and desires throws the alarm clock in the corner, when we need to stand up to go running.

To overcome the inertia of our own inner elephant, we need a lot of practice, reflection and feedback. That is why good leaders need to invest in self-development work. If they find ways to effectively deal with their inner irrational elephant, they can also go ahead and create an environment that makes it easier for their followers to become better leaders themselves. Leaders’ influence on their followers’ elephant is always limited, but they can influence the path of their followers’ elephants.

In the case of speak-up, leaders need to work on their own intuitively defensive reaction to unpleasant feedback (elephant) and they need to create structures that make speak-up normal.

In my fist blog post I already spoke about the structures that can turn speak-up into a normal practice (e.g. integration in team meetings).

Now I will explore how leaders need to react to a team member’s voicing of ethical concerns.

Let’s imagine the following scene :

Your coworker Claire, an engineer, comes to see you and tells you that she thinks that the new promising product your team has been working on since one year will need an expensive safety check. She also thinks that without this safety check this product could create a lot of damage and might even endanger lives. You are infuriated: In your opinion, Claire has the tendency to over-engineer and is not enough business oriented. Furthermore, you are under a lot of pressure from your boss to finally push this product to market. It would be very difficult for you to explain another delay because of the – in your opinion – unlikely possibility of safety risks.

How should you react?

You natural tendency could be defensive. You really want to market this product soon and you are uncomfortable to explain this to your boss. After all, no product is without risk…and we need to earn money here. Consequently, chances are that you tell Claire that she should think business and stop over-engineering. This, of course, would discourage and demotivate Claire. She will maybe share her experience with colleagues who will conclude that speaking up about sensitive issues is not worth it and might harm your relationship with you as a boss.

The negative effect of this single incident of unsuccessful speak-up goes far beyond this single event. Responsible leaders have to be aware that their behavior is under constant observation and interpretation by their coworkers. That is why just saying, «My door is always open» or “Please tell me your honest opinion.” without constantly acting accordingly will not create an open speak-up culture.

You really need to be serious about your openness to critical voices from your coworkers. It has to be authentic and credible.

Consequently, when a coworker comes to you with unpleasant or critical feedback and you feel the urge inside of you to defend yourself, always mentally press the pause bottom before saying anything and follow this guideline:

  • When a coworker speaks up, always treat them with respect and openness.
  • Thank them for speaking up.
  • Watch out for your tone of voice and body language: Don’t look at your phone or computer, no aggressive or condescending tone of voice. No grim face. Be open and friendly.
  • Get to the heart of the matter, ask questions, be curious. Useful sentences could be:
    • “I have the feeling you are not telling me everything…”
    • “It is important to me to have your critical uncensored opinion…”
    • “Is there anything else I need to know?”
    • “What are your thoughts about this…?”
  • Do not judge or try to fix it, before you have understood the whole story. Practice active listening techniques: “If I have understood your right, you are thinking…”)
  • Do not get defensive. Feedback is always a gift.
  • Follow-up: agree on what should happen next.
  • Update you coworker in time.

Agreeing on what should happen next and update you coworker in time is key.

If your coworker took the energy and courage to speak up, it is crucial that you keep her updated. Otherwise, you enforce the message that speaking up is not worthwhile. And this is one of the main reasons people do not speak up. Why put yourself on the line, if nothing changes?

The importance of the leader’s role in speak up cannot be over-estimated.

Now we know that managers need to do, in order to encourage speak-up and how they need to react to coworkers who actually do speak up.

It is time to look at the other side: Coming up in the last two parts of my speak-up series:

  • Why employees do not speak up
  • How to prepare an effective speak-up conversation and how to communicate professionally during a speak conversation with a superior.

Stay tuned and watch for the next episode of the speak-up series!
Prof.-Bettina-PalazzoAuthor: Dr. Bettina Palazzo
Professor at BSL

How to negotiate for Ethics in a Crisis: The Greenpeace-Nestlé case

In March 2010 food-giant Nestlé had to learn the hard way, how to (not) react to a hostile NGO attack: Greenpeace had released a video that made the link between palm oil used in Nestlé’s Billion-Dollar-Brand KitKat and the destruction of rain forests in Indonesia that kills Orangutans.

http://www.greenpeace.org/international/en/campaigns/climate-change/kitkat/

The video was shocking and went viral in no time. Nestlé’s first reaction was to prohibit Greenpeace to show the video on the internet. A bad move in the world of social media, because this even multiplied the interest in the video. This was probably even wanted by Greenpeace because consequently the campaign gained an unbelievable momentum: Internet users kept sharing the video and as a sign of solidarity even used the logo of the Greenpeace campaign (the KitKat brand logo modified into Killer) as their Facebook profile picture.

Of course, Nestlé did not actively kill orangutans, like the video suggested. The problem was created deep down in their supply chain. Palm oil is cultivated in South-East Asia and it is an ingredient of about 50% of all products that we buy on a daily basis: Shampoo, cookies, lipstick, ice-cream. It is virtually everywhere. It is cheap, it grows fast, it does not have a strong taste, it keeps chocolate solid at room temperature. One hectare of palm oil will give you six tons of oil. In comparison: one hectare of soy only generates a yield of one ton of oil. No wonder the world’s hunger for palm oil is ever increasing. Consequently, cultivators of palm oil actually do cut down rain forests in order to set up huge mono-cultural palm oil plantations, thereby destroying the habitat of orangutans. However, they also lift people out of poverty and build schools and hospitals. Palm oil and deforestation is a classical « wicked problem », i.e. it is complex, controversial, value driven, concerns many stakeholders and spans many domains (economic, social, political, legal, ethical). This is why such problems are very hard to solve.

In my class « Business Ethics and Negotiation » I confront my students with this case and then they need to figure out in a group work what had gone wrong in this case and develop a strategy for what Nestlé should do next. I ask them to imagine that they are the top-notch Ethics and CSR consultant and that they need to convince the Nestlé board.

This spring we had the great pleasure and privilege to actually receive the debriefing for the group work form the real-life world class CSR consultant who had helped Nestlé to cope with the KitKat crisis: Scott Poynton from The Forest Trust, a non-profit organization, that helps companies to improve their supply chains.

Guest-speaker Scott Poynton

Guest-speaker Scott Poynton

Scott is a hybrid between an activist and a consultant: He had realized that fighting deforestation and other sustainability disasters was more effective with companies than against them. Consequently, he became a “critical friend” to corporations in environmental trouble. Scott has helped some of the world’s leading companies to transform their supply chains for the better.

That made him the perfect mediator for Nestlé: He understood the problems multinationals have in keeping their supply chains out of trouble and he also is a trusted person at Greenpeace.

Scott shared with us that companies when being attacked by an NGO like Greenpeace often have trouble understanding the issues. This certainly was the case when Nestlé was attacked. The Nestlé top-management tried to explain to the Greenpeace spokesperson of the campaign on the phone that the company was doing a lot for the environment. Greenpeace campaigners know this kind of reaction and they usually react by saying: « They do not get it. They need more pain. » And they did get more pain, when Greenpeace campaigners dropped from the ceiling and unfolded banners during the Annual General Meeting.

This is why Scott’s first lesson for companies under NGO attack is to really understand what the issue is and what your responsibility is.

The Forest Trust helped Nestlé produce and implement « Responsible Sourcing Guidelines » with the objective to avoid sourcing palm oil that was linked to deforestation.

It turned out that many of my students’ good suggestions for change were too long-term to really help Nestlé out of the acute crises they faced: Reforestation, finding a substitute for palm oil are all good ideas, but they take too much time. Nestlé needed to get its valuable brand KitKat out of the negative headlines quickly and reach an agreement with Greenpeace that they would give them a break in the campaign.

In order to do this Scott’s second lesson is: Find common ground. This is easier said than done. The worlds and mind-sets of NGos and companies are often quite contrary. A company fighting to save the profits of very successful brands like KitKat notoriously have trouble seeing the ethical issue hidden somewhere in the product’s supply chain. At the same time, for NGO activists it is very hard to understand how you could not see it. This creates tensions. Then just throw in some pride and ego and the fact that in a corporation nobody wants to be blamed for these kinds of messes and you have an explosive mixture for a first negotiation meeting.

This is why, for Scott, one of the most important things (yes, this is lesson Nr. 3) in negotiating in heated situations is to start with the values of the persons involved. If you want to mediate between conflicting parties, you always need to genuinely believe that your negotiating partner is a reasonable, rational, and decent person. If you enter a sensitive negotiation already convinced that your counterpart is mean and evil, they will sense this instantly and the necessary basis of trust cannot even be started to be built.

Scott’s stories show very nicely that if you want to negotiate for issues around ethics and sustainability, you cannot use the standard “I win – you lose” approach to negotiation. In this approach, we only divide the cake and try to get the biggest piece of it. This does not work, when you are dealing with “wicked problems”. In these cases, concentrating on positions only leads to impasse, misunderstandings, blaming, and zero-sum games that nobody can win.

If you want to successfully negotiate conflicts around wicked problems, you need to concentrate on interests and try to create a larger cake for all parties involved. Nestlé was not interested in deforesting Indonesia and killing orangutans. They are interested in having a well functioning supply chain for good quality palm oil. In order to find out the interests of the other party, you have to stay open and not judge the other side. You have to ask the right questions to understand them, listen carefully and then you can find common ground.

Thank you, Scott, for bringing to life what my students have learned in theory and negotiation role plays in class in a way that they will remember every time they will eat a KitKat.

Prof.-Bettina-PalazzoDr. Bettina Palazzo
Professor at BSL

Business as usual is dead

We see this statement becoming more and more popular amongst the community of emerging sustainable business leaders. However, it begs the question, if business as usual is dead, what is the new form of business that has been birthed in its place?

In the United States, a new legal classification of a corporation has emerged, the Benefit Corporation. In addition, a U.S. based non-profit has created a certification process that deems a corporation a B-Corp. The two, in tandem, have created a movement that is helping to transform business across the globe.

For BSL’s Ethics and Negotiations course for the M.A. in International Business the following presentation was given for the Business Ethics Case of the Week. The presentation outlines:

  • The prevailing legal definition and requirements of corporations (in the U.S.)
  • The negative externalities that these legal requirements have caused
  • A proposed solution to these problems (and how BSL’s mission is helping to facilitate the emergence of this solution)
  • The development of a certification for corporations, entitled B-Corp
  • The importance of this certification
  • The requirements and processes necessary to become a B-Corp, including attaining the legal status of a Benefit Corporation
  • The benefits of this certification from a legal and economic standpoint
  • A movement of prominent business leaders around the world working to help facilitate the aforementioned proposed solution
  • And finally a link to currently certified B-Corps around the world, for interested parties

B-Corp-Redefining Success in Business

Since November 2014, BSL has been an official representative of B-Corps in Switzerland. As an official representative, BSL supports the local community of B-Corps and helps new businesses to obtain the B-Corp certification. If your business would like to inquirer about becoming a B-Corp in Switzerland please contact: katrin.muff@bsl-lausanne.ch.

Business as usual IS dead. It’s time for something different, join us in our efforts to expedite the transformation of business across the globe.

Author: Michael Malara, BSL Student, Master in International Business 2015-16

“The just making money approach to business does not work anymore”

Guest speaker Anthony McQuillan, Vice President Legal & Compliance EMEA at Medtronic

Our guest speaker Anthony McQuillan, Vice President Legal & Compliance EMEA at Medtronic, is not a typical lawyer. He points out that being a Compliance Officer has more to do with psychology and politics than with law. And that is why he is the perfect speaker for the session on “How to manage ethics in a corporation” in our course in “Business Ethics and Negotiation”.


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