Reports of new or brewing ethical scandals are a regular feature in our daily newspapers and business magazines. Sometimes - regrettably not always - the perpetrators have to face the costs and penalties for their misconduct - whether the loss of their position or even jail sentences for individuals, or fines or damage to reputation or share price for companies. In addition to these consequences, affected organisations also face the challenge of how to recover from ethical failure (assuming the misconduct is not so serious that it threatens their continued operation).

Familiar responses include adopting an ‘ostrich’ approach of pretending nothing has happened, attacking the media for inaccurate reporting or passing the blame onto others. However, these approaches neglect to re-establish a measure of confidence in that organisation. This is critical to getting back to a situation of some trust, which is an essential ingredient for a successful – or even for a functional - relationship with the company’s stakeholders.

An approach which helps a company to recover from ethical failure is what I call the A4 approach. This entails four steps, namely: admit; apologise; make amends; and don’t do it again.

Admitting as a first step is crucial. This may well be detrimental for the company, but when the facts are surfaced by someone else, such as the press, it is almost certain to cause more damage. If a business leader admits to the problem as soon as it comes to his/her attention, the admission can even be positioned positively as being transparent.

Apologising is a critical step, ideally done in conjunction with admitting. It will not right the wrong, but, to the extent that it reflects the guilty party’s acknowledgement of the wrongdoing, it can create a platform for moving forward. Delaying the apology, such as Rupert Murdoch did to the family of Milly Dowler for phone hacking, will erode any potential benefit.

Refusing to speak to the press once the misconduct has been exposed is also a poor response. It loses the opportunity to express regret and ask for forgiveness, allowing others to speculate about the company’s intentions.

Making amends is an important third step, clearly this should not be a token gesture, but should recompense those negatively affected appropriately. An oil spill, for example, should not only entail cleaning up the environment, but also include the losses suffered by affected people and businesses.

Ensuring that the ethical failure does not happen again is the final step. But, this is easier said than done because it’s not a single action - it necessitates addressing the ethics in the whole organisation. Taking on-going action to improve and maintain the organisation’s ethical status is a great solution to rebuilding trust and confidence with internal and external stakeholders.

This entails an ethics strategy in terms of which ethics is managed proactively and regularly, rather than reactively and on an ad hoc basis. Using a tool such as the Ethics Monitor survey is helpful to accurately identify the company’s current ethical reality and what actions should be prioritised to improve the organisation’s ethical status.

Collectively these steps can start the process of recovery by building confidence and re-establishing trust. However, optimally, organisations should pursue the effective management of workplace ethics as a conscious strategy to realise a sound ethical culture and to avoid having to deal with the recovery from ethical failure.

By Cynthia Schoeman
Published in The Star & Pretoria News Workplace, 2 May 2012.