By: Marcy Maslov
You receive an email from Big Boss requiring you to complete mandatory supervisor training by the end of the month. You reply you’re exempt since you’ve been a supervisor for more than 20 years. Big Boss exempts you but nobody else can skip the training. How does this action affect the internal controls and ethical reputation of your organization? -e-Factor!® scenario
I chose this ethics scenario because it relates internal controls to ethical values. This issue was on my mind as I watched the events of the New York prison escape unfold in the news. As usual, I see current events in a different light than the average person. I see the ethical dilemmas in each news report and wonder how or why people do the things they do.
This situation showed how quick-to-judgment we can be even though we do not have all the facts. However, there is also a larger lesson for us to learn about management’s responsibility to establish and enforce sound internal controls systems. The weakness of internal controls in this situation created opportunities for these prison workers to take actions that ultimately helped two prisoners escape and that cost the State of New York tens of millions in the ensuing manhunt. This is an issue that could apply to all organizations, not just this particular prison.
Trying to understand how prison workers could aid inmates and not fully understand the consequences of their actions led me to think about the conditions of the prison and how prison policy and procedure created the environment allowing these workers to “get into trouble.” Both prison workers took actions that indicated they knew they were doing something wrong. But there also appears to have been procedural red flags like failure to rotate staff, allowing prison workers to give or accept gifts from inmates and allowing prison workers to avoid metal detectors.
So let’s explore the internal control weaknesses of the e-Factor!® ethical dilemma and perhaps this will help you identify weaknesses you might have in your own internal control system.
First of all, the stakeholders in this dilemma are not only the supervisor and the Big Boss, but technically all employees including supervisors and staff. Supervisors generally are expected to model the behaviors the organization wants to promote. If we see an exemption for a supervisor (or any person, really), someone could interpret this as “rules are meant to be broken, or at least bent,” and this opens the door for us to ask for preferential treatment ourselves! After all, we have this supervisor as a model! So the ethical issues and their potential consequences have now grown significantly in importance and cost.
What exactly is the ethical dilemma here? In my view, one ethical dilemma is the supervisor’s lack of accountability. I’ve been through a fair amount of supervisor training. There is always something new to learn about how to work with and lead people. Failing to recognize this responsibility says something about the character of the supervisor, even if he or she is hugely popular with staff and colleagues! And as I’ve already said, supervisors are models – part of their responsibility is also to train future supervisors.
Another ethical dilemma is management’s selective exemption of policy enforcement. In other words, management is appearing to play favorites and by doing so is weakening the internal control system. Only the supervisor is exempt from the training; everyone else is expected to complete it. What makes this supervisor special appears to be his or her length of service, not leadership skill or knowledge although this might be implied by the request to be exempted from the training.
This is not only an ethical issue but could also be a legal issue if the supervisory training is required by law. Allowing one person to skip training, especially if it is something like sexual harassment training or FMLA-related training required by law could result in significant fines and penalties for an organization.
In addition to this consequence, the appearance of playing favorites could impact employees by diminishing their trust in management and failing to prepare them for specific situations or emergencies that supervisor training usually contains. Allowing special treatment could increase the risk that supervisors are less prepared for handling unethical or even fraudulent behavior. I recently watched a webinar where the presenter mentioned a study that showed a direct correlation between training and improvement by employees for spotting, managing or reporting misconduct.
Ultimately, we get the performance we measure and reward. In the New York prison break, prison management has certain responsibility for creating and enforcing a system of internal controls. It appears from all the hoopla and media coverage that the prison’s internal control system was weak and not enforced properly. Prison management failed to remove the classic elements of the fraud triangle – opportunity, motivation and rationalization – that allowed these prison workers to do what they did. The prison workers certainly had to know they were taking great risks; the public has judged them and condemned them for their actions, with or without knowing all the facts. However, they are pawns in the game that exposed the weaknesses of this particular prison, and possibly many others across the U.S.
Management’s responsibility for implementing and enforcing a strong internal control system is not just for the prisons. It applies to all businesses, small and large. Perhaps now would be a good time for all management teams to review their internal controls systems and find the weaknesses in their own organizations.
After watching companies and clients struggle with ethical dilemmas, Marcy J. Maslov invented a business ethics board game to provide a practice arena for solving real-life ethical dilemmas. Marcy is founder and CEO of Empowerment Unlimited Coaching, LLC, a business coaching practice devoted to building strong, ethical leaders and entrepreneurs. She has extensive Fortune 500 and entrepreneurial background including implementation of Sarbanes-Oxley programs, creation of corporate ethics courses, forensic accounting and public speaking on business ethics. Marcy has lived or worked in over 20 countries, including France, Mexico and Canada. She is a Certified Professional Coactive Coach, CPA (Illinois), and MBA (Duke University). Contact Marcy at marcy@e-Factorgame.com or www.e-Factorgame.com.Published by Conselium Executive Search, the global leader in compliance search.