The (Bad) Dream of Integrity and Morality – And Its Role in Companies

by Markus Pohlmann and Sebastian Starystach

Imagine a world where integrity, morality and virtue rule the roost: would that be a better world? Companies, in particular, seem to be very occupied with this idea to steer their employees through the medium of morality. Would there really be no more crime in this world of saints though and would it be a better world?

source: Nick Youngson via The Blue Diamond Gallery

Durkheim already gave answers to this question early on: since there cannot be complete synchronization from person to person even among saints, there would always be deviations due to their individuality. In the meantime, however, in a world full of saints, even small deviations would become great crimes, and would be punished accordingly. In short, it would be a terrible world, not only because the execution of morality would be accompanied by the execution of dissenters. According to Luhmann, morality is always a double-edged sword: the communication between respect and disdain but also because, as with Calvin in Geneva, any freedom of movement would be lost for us, and companies would quickly go bankrupt in this moral world. Morality demands unconditional validity – no matter how high the costs and economic losses may be. The free-space-creating principle of legality that allows for what is not forbidden would be replaced by the tyranny of morality. How can anyone want this? So what’s the new emphasis on morality and integrity in the corporate world all about?

source: Pixabay

To answer this question, we need have a look at the role of compliance. Compliance departments try to ensure that companies formally adapt to changing legislation where it is necessary. That is why these departments are usually staffed by lawyers. They seek to limit corporate liability and avoid penalties and unnecessary risks. This is achieved by, among others, formally demonstrating that the company has taken the necessary formal measures and steps to avoid breaking the law and making it clear that this is not something to be trifled with. This is legitimacy through procedures. The second function is to organize individual accountability, liability or culpability in the case of detected offenses. That’s the crux of the matter! Because the concept of „moral self-governance“ is well suited for this task, it can then be said: we not only trained our employees and formulated a moral code, but also promoted individual moral autonomy. Those who are still breaking the rules are not only liable and culpable, they are also morally discredited. A decision against compliance with formal rules becomes a decision against the company and society. This means the bad apples are quickly identified and the company is clean if they are dismissed and, if necessary, handed over to the judiciary. This is a very old exercise to transform system offenses into individual offenses, just as old wine in new bottles.

However, the professionals in the compliance departments are usually not cynical, but assume that the talk of morality and integrity will take effect. The question is just which one.

In the world of petty wrongdoers, small deviations are not just part of everyday life but have the function of keeping the organization running. Often, not all internal and legal requirements can be met in day-to-day business without causing it to collapse.

The “zero tolerance” of individual behavioural prevention will not change the need for regular rule violations. It only leads to a greater number of undetected cases and a newly-gained significance of hypocrisy. The furthering of behavioural prevention and moralization make informal rules even more important – an informality that is increasingly beyond the reach of the compliance department. This is, however, not what is intended. It would not matter to the compliance department if it were not formally committed to a task of prevention – that it  actually cannot do alone anyway. The idea of socialization through training and the imparting of principles – that is, through education – is to count one’s chickens before they are hatched. The real socializing power lies in the operational business areas, not in a cross-section department like compliance. In the operational areas, informal rules play a central role. Here, there rule breakers are usually no calculating criminals, but rather organization-oriented employees who have grown up in a company with functional deviations. Everyone knows where the cultural boundaries for deviations in the companies are. „Crossing the red line“ is clearly marked and everyone knows when they are leaving the grey area to pave the way for major breaches of the law. And this is rarely tolerated and condoned. In this world of petty wrongdoers, the principle of legality is well placed, but the principle of integrity is out of place. So why destroy this world with its small deviations behind the facades of legality?

source: Matthew Pierce via Flickr

Nonetheless, compliance departments can and should think about prevention, and come up with ideas that need to be implemented by the operational business areas. For sometimes informal practices get out of control through the formation of deviant subcultures in which organizational or shared personal goals are pursued with deviant means and cause extensive damage not only to society but also to the company, as the VW case impressively demonstrates. Precisely for this reason, compliance departments could give structural prevention a try, i.e., initiate structural changes. Perhaps with the help of departments that are familiar with change dynamics in the operational business areas, such as Organizational Development or Personnel Development. What is meant by this we would like to illustrate with three simple examples:

  1. We know, for example, that women are more likely to refrain from serious deviations than men. The enhanced opening of career systems for more diversity, i.e., for women’s careers, could also be a structural contribution to crime prevention.
  2. We also know that insiders who have been with the company for many years are more likely to get into a loop where deviations self-expand, that is, they begin to move beyond the limits of the accepted deviations. When you bring outsiders into play, the rules of the game change immediately, and excessive deviations are often corrected. Here, too, opening up insider-dominated career systems for outsiders can make a meaningful contribution to structural prevention.
  3. In particular, many years of job tenure can also lead to the normalization of deviations. Therefore, one could consider resuming the old idea of job rotation and – in line with the much-vaunted „agility“ – making a structural contribution to prevention through more frequent changes of department and function. Specifically, the rotation of jobs has also proved successful in other areas, such as the diplomatic service, in order to prevent the emergence of informal relationships and ploys that can cause immense reputational damage to the country of dispatch.

These are just a few ideas, but they are, in our opinion, more apt to contain deviations that exceed tolerance limits than the emphasis on morality and integrity that magnifies grey area and hypocrisy.


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