Lazy Leadership and Compliance: Lots of Codes, Little Conduct

Code of Conduct


Better than magicians, some managers conjure magnificent materials on demand. Such as cost saving projects every quarter. Kaizen proposals monthly. New barriers after a breach of compliance.
Instead of dopamine dumping pats on the back which draw blood to glow the faces, senior management should scratch their somewhere and ask the right question, “Why the need to be asked?” It’s similar to having a crisis, like being diagnosed with cancer, before seeking a life purpose. Do we only think or look out for the company only if we have to? Or are asked to? Lazy thinking is not limited to the entry level manager. Senior managers can be as guilty.

Instant Insight

Even more. Some think their most important role is as cheer leaders. “You got something! Roll out the beer barrel, let’s celebrate.”  Win-win. I asked. You answered. We celebrate. Life is short, sweet and simple.

With Kaizen, be a little careful. “Oops. We spent $3000 to take out that platform. Let’s put it back. It’s meant to reach that seldom used lever.”

Code of conduct program, like cost management, continuous improvement, risk taking, safety, performance indicators and others can be gamified and has been gamified. After a breach has been found, the oversight person, procurement and the direct report manager have lengthy discussions. Another barrier will be erected. Announced. The way of doing business is made more complex. Another breach. Another big rollout. Another big campaign. It’s like playing ‘this is the latest system to beat.’

From filling more papers to get a purchase done, to complex configurations of which supplier team to use for specific dollar threshold, and engaging international suppliers at multiple times the cost. The company assuming accountability? Sometimes, I wonder how it gets the okay up the ranks. This is lazy leadership. This is abdication.

More papers and layers mean a willing sacrifice of efficiency and productivity, the competitive tool. This decision will be reviewed, rectified when the company launches a simplification or productivity program. Back to square one. To observers, there is no overarching leadership strategy across the company.

Multiple quotes entice collusion. If it is one to one, the two can agree to share the gains. It takes one to quote out of orbit. The margin can be adjusted. The company forces itself into an A/B equation. Sometimes it is even better for the bidding suppliers. One can quote much above the market and the other can quote even higher. The split from the winning bidder is factored in. 

With multiple suppliers, it can lead to the formation of cartels. Ethically, the result is the same. There is manipulation. Except, the bidders have more resources and muscle power to work within the customer organization. A low quote may lead to scope creeps. Even addenda for administrative costs. It is just shifting the goal post, wider. 

Code of Conduct


Deep pocket allows the engagement of listed giant European companies, at four to five times the cost, not inclusive of administrative charges, for attending meetings. Lazy leadership thinks that giant listed companies are more ethical. It should be harder for ethics breach by the supplier employees and their own. Harder, yes. But impossible? Never. Siemens. Toshiba. Volkswagen. Enron. WorldCom. 

It is just shifting the goal post. Wider. Easier.

Let the managers manage


Internally, companies pressure their managers. Managers whose departments have breaches and found to not exercise due diligence; close gaps will be punished with a poor performance review. That’s it. Even with a stellar performance for all areas, that credit is wiped out if your direct manager, the oversight person and HR agree that you fail “to detect inappropriate behavior or identify the employee was at risk.” Employee was at risk? At risk of what? If he is honest. At risk of what? If the employee is a dishonest soul to start with.

More gaffes. “The manager must show the right behavior to show how a right-thinking employee would have got the message that the behavior in question was not only inappropriate but forbidden by the manager.” Someone must have written this during a long business in the toilet. It smells of it. Right thinking employee must be told to be honest? Let’s do a fMRI to see if the message got embedded in his head. “Sir, he is excused. He is not in the right- thinking group. " Any inappropriate behaviors that are not forbidden? Do managers need to spell that out? Would any appropriate behavior be forbidden? This is responsibility dump. Lazy inappropriate leadership.

Gaps? There will always be gaps. The gaps match the number of employees with intent to cheat. Slating the manager is an easy way out. It’s like punishing the police chief when crime rate increases. Poor analogy. It is like disciplining the mayor for crime rate hikes.

The poor manager has this COC thing thrown into his rice bowl. Then there is the ‘Lean' focus. The safety performance. The risk- taking initiative. Very soon, he becomes a full time program manager. If the gods allow, he will bloat his staff organization by 50%. If not, he will be chasing his own tail. Until he collapses with exhaustion. Or quit before that happens.

Agreed. The manager must account for something. But not for detecting all risky behaviors . Not everyone can read a person like a book. It’s not the manager’s specialty. Unless you are summoning for a large scale, morale squashing witch hunt. Every employee is accountable for thinking right. Every employee is responsible to read himself like a book.
Every employee should know if he harbors the intention to steal.

The company must have its code of conduct and ethics expectation lucidly spelled out. Good enough! Share and refresh. Share and refresh. Every employee is accountable. Period. Read it. Calibrate. Understand. Comply. Make employees accountable for their behavior. No one should baby sit, share that burden. You lock the petty cash box because of strangers and intruders. You keep confidential documents locked up because of statutory requirement. It should not be, because there are employees around.

How do you keep your kids honest? Lock up everything?

Managers oversee the fundamental processes of doing business effectively and efficiently, sustaining the company’s market competitiveness. Keeping the business running. That's their job. Not policing employees.

No. I am not recommending a total hands-off approach. Certain programs that enhance employee awareness, promote healthy, intelligent discussions and improves clarity must be installed.

Code of Conduct

Expect honesty, not reward it


Let’s use a process that is simpler than ABC. It’s the AAA model that I designed while in service.

The first A is prompt for the most important step of the process; Awareness. Your exquisitely written code of conduct and ethics expectations must be patiently communicated to the masses. It is the setting expectation stage. I recommend small group settings to encourage better interaction and more efficiency. 

Each working group will face a specific exposure. To conduct sessions with large, company-wide audience result in inefficiencies such as relevancy of discussion, ‘rat-holing’ and domination by people who want to be seen engaging.

While encouraging free discussions, formal training materials should be used as reference. Clarity on ‘grey areas’ and formal definitions of violations such as fraud, bribes and kickbacks, as examples, are critical components of the event. This session should be the lead to regular refresh sessions, to wire in the awareness. Again, violations must be clearly articulated. Employees own managing their risks and mitigating exposures.

After the awareness creation phase, active reinforcements are conducted by volunteer from employees. This is the Assessment phase. It can be a formal work team or a task force. A risk assessment helps to ascertain the awareness level of the group. Another focus area would be the compliance to existing processes. Gap closure plans should be monitored by peers, not an officious corporate battalion. This, to ensure working level ownership. It spells ‘trust’ and ‘accountability’ clearly. 

Please do not use this assessment to make operations cumbersome with more barriers and layers of scrutiny and approval. Leadership won’t win the battle with barriers and rules. There are smarter, more conniving people lower in the organization. It is not because you are at the top, you are smarter or smarter because you are at the top. The best bet is self-management, driven by peer pressure.

Instant Insight

The final A is for affirmative actions , 'Affirmation' for brevity. The core engagements in this phase are the compliance dialogues. Two-way discussions among employees with the manager as catalyst and observer. Employees are encouraged to discuss on the job experiences, relevant to code of conduct and ethics expectations. An important tool is case studies. Deep examination of case studies results in clarity over grey areas and behavioral concerns. These are opportunities for managers to gauge the depth of understanding, not only of the terminology but the spirit of compliance. Awards are presented at this phase. Not for zero breaches. Total compliance is a basic expectation. It is a job requirement. Don’t reward basic expectation. Recognition and awards are for effort, role modelling the AAA process or for leadership of specific events to inculcate the spirit of compliance. Lazy leadership promotes awards for compliance and even list it as accomplishment in performance reviews. Meeting a basic job requirement should not be overrated. It is a necessity for employment.

Bull Run and Bull Shit

Some companies, with almost monopolistic technologies are on a perpetual bull run. With the market in iron clasp, they enjoy margins that retailers can only dream. With deep pockets, some will engage in predatory procurement. Paying as much as 20% to 30% above market. They want the corner on the best suppliers. This makes them customers to die for. Suppliers will do anything to get in and everything not to get out.  My advice is to pay market, follow a standard rate. In my job, I used public agency rates. 

The premium for quality can be administered as performance bonus at the end of the project, phased rewards or non-monetary perks and recognition, such as a full page acknowledgement in the local news. Monetary rewards should be set with a range instead of a fixed quantum. Money is loose when you have easy excess money.

Compliance breaches are not exclusive to the rank and file. Senior managers can be guilty. Would these raise any eyebrows?

The faux role models: Managers who draw adoration by submitting claims on pieces of paper or napkins, signed by the vendors. This is supposed to role model the compliant conduct, “See I always submit my receipts.” This is bull shit. There is a compromise in character. If receipts are needed, if you are authentic and honest, you would not patronize vendors with no official receipts. Or, you don’t make a claim. (It is common in poorer geographies; some vendors do not have official receipts.)

                              Paying premium for contracted services with new vehicles or machines. New things will become old things. Unless the contracted fees are reduced accordingly, this is a red flag.

                           Developing local suppliers as a Corporate Social Responsibility. CSR is a convenient veil of deceit. This is “to contribute to the community in which we operate.” Good initiative. Make it community or industry driven program. Define the boundaries clearly, very, very clearly.

Code of Conduct

Compliance to code of conduct and ethics is a big deal, not just protecting company assets but also the company’s reputation. It is a waste of opportunity when lazy leaders just want to “get it done.” Often, very few want to think because they are always busy with something. Those who want to think might not be allowed to think. The only thing every lazy leader focus on is to ‘get it done’,meet the indicators. Sadly, people in ivory towers love indicators. For compliance, give good employees the honor to be role models. 

Deal with the breaching employee firmly and fairly. Don't be a lazy leader. Have the conversation. Find out what motivated them to take the risk. Your red flag compilation will help you be more effective over time.     
                           

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