Good Business Ethics Require Good Training: The Innovators

The Dodd-Frank Wall Street Reform and Consumer Protection Act has finally been signed into law and President Obama has predicted that, because of the Act's new requirements, "the American people will never again be asked to foot the bill for Wall Street's mistakes." He may be a trifle over-optimistic.

History has shown time and again that, when the opportunity to grab quick profits presents itself, ethics can all too readily take a back seat to the entrepreneurial spirit. Unless the financial services industry fully commits itself to more ethical business practices, it will only be a matter of time before the wizards of Wall Street find a way around any inconvenient restrictions in the Act as they continue their quest for ever-higher profits.

Still, most CEOs, including those at Wall Street firms, are smart enough to recognize that it's bad public relations to openly thumb their noses at business ethics. Companies post lofty codes of conduct on their websites, train their employees on them once a year (maybe), then toss them on the shelf and turn their attention back to an intense focus on the bottom line. That approach only encourages unethical employee conduct, because it sends a clear if unspoken message that management may pay lip service to the importance of honesty and integrity in business but, at the end of the fiscal year, only profits count.

One way that companies teach ethics is by using training films. Some of them are very good - John Cleese did a notable series a few years ago, and the comic geniuses at Second City recently launched a new ethics training series that promises to be hilarious. Some companies balk at using funny training films, though, worried that they may be perceived as taking ethics too lightly. And then, there's the expense; the cost of buying or renting films produced with high-profile talent can quickly exceed the amount that companies are willing to spend.

Some companies try to save money by having their in-house executives deliver their ethics training. While that approach can demonstrate that management supports ethical practices, unless the executives are sufficiently knowledgeable about ethics and skilled at public speaking, the results tend to be mixed. Contrary to popular perception, the average business executive can't effectively teach an ethics course based solely on what he learned at his mother's knee; "say you're sorry when you hit Johnny" doesn't necessarily evolve into "don't defraud Johnny by selling him subprime mortgages without telling him that's what he's buying."