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Follow the Leader: Ethics and Responsibility


October 21, 2011

The scandal rocking Rupert Murdoch’s News Corporation underscores many lessons for C-suite executives as well as those PR professionals who advise them. This is an important one: A company’s cultural and ethical standards come from the top down, not from the bottom up. Employees will almost always behave in the manner that they think management expects from them, and it is foolish for management to pretend otherwise.  

When testifying before Parliament this past July 19 about illegal wiretapping and other criminal practices at his now-defunct News of the World tabloid, Murdoch unsuccessfully pointed the finger at his underlings. He told astounded legislators that he didn’t have any knowledge of criminal and unethical activity going on at his company, explaining that he was “betrayed by people he trusted.”

Murdoch said he was “shocked, appalled and ashamed” to learn that his employees had hacked the phone of a missing 13-year-old girl and hampered the police’s investigation of her murder. But because of his lack of credibility, Murdoch’s testimony only made the ill will against him and his company worse.

Knowing your role

One of a CEO’s most important jobs is to create, foster and communicate the culture of the organization. They can do this through words and through actions. The PR practitioner’s job is to communicate the message and explain the culture — both internally and externally. Wrongdoing or malfeasance rarely occurs in a vacuum. Leaders invariably know when someone is compromising standards.

Here are the key questions: Does the corporate culture encourage addressing problems head-on, reporting them, taking responsibility and initiating steps to fix them? Or does it reward cutting corners and covering things up? Employee behavior will follow the culture that management creates.

Leaders of large organizations can’t know everything that is happening in the ranks. But employees tend to have a clear understanding of what is acceptable and what is not, and how much deviation is permissible.

Most people know the boundaries of acceptable behavior at their organizations, just as the employees at News of the World did. For Murdoch to blame his tabloid reporters and editors for engaging in practices that the company has long tolerated — if not encouraged — is disingenuous at best.

Government leaders also shape the culture and behavior of their organizations. When Atlanta investigators found a disturbing pattern of public school teachers changing students’ answers and inflating their scores on standardized school tests, Beverly Hall, the Atlanta Public Schools superintendent at the time, expressed “shock and dismay” in media reports.

She shouldn’t have. News reports indicated that she absolutely demanded much higher test scores from teachers and students who lacked the tools to achieve them by normal means. She did not do anything to ensure that the astounding improvements in test scores were, in fact, genuine.

Holding people accountable

Here are some of the factors that can cause even honest and decent people to break the rules:

  • Intense pressure by management to reach unrealistic goals or targets (like the situation with the Atlanta public school system)
  • Demands that they must consistently beat the competition (as was the case with News of the World)
  • Management’s willingness to overlook small but persistent breaches of policy or ethics if the employee gets results
  • Fear of job loss or internal competitive disadvantage

There are situations where people can’t reasonably hold management accountable for moral or legal breaches by an employee. This is the case when a single employee or small group goes outside the company’s clearly established boundaries and norms — especially if they do it for personal gain rather than to meet their superiors’ demands or expectations.

This happened a few years ago at an online brokerage. A rogue employee lost $140 million of the company’s money in one night of frantic futures trading. He had hoped to get rich by engineering a path around the software system that limited the number and dollar amount of his trades.

Here, management did the right thing. The company fired the broker and filed charges. The company did not accept moral responsibility but acknowledged and apologized for its software deficiencies while moving promptly to fix the system.

News Corporation and the Atlanta school system, however, suffered serious reputational damage that will linger.

Creating an ethical environment

So how can a PR executive help management avoid a News Corp. or Atlanta public school system type of disaster? Frankly, the options are limited, and perhaps hopeless, if the leader wants to run an operation that is dishonest.

But if management cares about the organization’s behavior and reputation, then here are some steps that PR professionals can take to help create a more ethical environment:

  • Reveal the hazards of having lax ethical standards or enforcement, and use examples to highlight your points.
  • Encourage management to set up a “whistleblower line” so that employees can report serious violations anonymously.
  • Suggest bringing in an outside firm to look at standards and practices periodically and indicate any possible vulnerability.
  • Promote the development of a clear set of standards and practices that the organization can convey and post on its website.

Most CEOs would not have survived the kind of situation that Murdoch faces. Perhaps he was just too big to fail. Murdoch and his organization wield great power. But the damage to his empire is significant, and it could be long lasting.

Virgil Scudder Virgil Scudder is the author of “World Class Communication: How Great CEOs Win with the Public, Shareholders, Employees, and the Media,” which received an Award of Distinction as one of the best business books of 2012. He is president of Virgil Scudder & Associates, based in Miami Beach, Fla.
Email: virgil at virgilscudder.com



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