The inability to identify and address ethical failures within an organization begins slowly but may result in that organization’s undoing. The author suggests reasons for this inability and ways to remedy it.

The saying that “from an acorn grows a mighty oak” could apply to the genesis and growth of an institution’s ethical lapses. If someone sees something that could be unethical, he or she should say something. Yet, there are reasons why many fail to do so. The author identifies six reasons.

• Activities that could suggest an ethical fault line in an organization might in isolation be ambiguous, and the pursuit of such activities might be questionable.
• What the author calls “motivational blindness” may hinder an objective viewpoint. Self-interest is often behind this flaw.
• Conflicts of interest also affect objectivity. A real-world example is the business model of auditing firms; their job is to conduct an arm’s-length review of their clients’ operations, but at the same time, they often consult for those same clients to generate an ongoing revenue stream.
• Questionable ethical judgment may often begin with small missteps designed to correct a relatively small issue. Executed with good intentions, the “remedy” may lead to disaster, such as occurred in the trading sides of investment banks. The author cites the examples of Jérôme Kerviel at Société Générale and Kweku Adoboli at UBS. Nick Leeson’s similar transgressions at Barings led to that bank’s demise.
• More malicious is the practice of misdirection, in which one or more individuals make a request for the inclusion or exclusion of a particular service or provision in a client engagement under the guise of ordinary business conduct. Such a request may, in fact, be a ruse to cover unethical behavior. The author gives the example of a simple client request to use intellectual property that was outside the scope of the specific relationship and to which the owner acceded, but it turned out to be illegal.
• Most insidious is indirect harm that results from ethical oversights by multiple parties. In isolation, some may appear trivial, but when put together in mosaic fashion, they point to failure on a larger scale. The fire at a garment factory in Bangladesh a few years ago is a case in point, offering up a patchwork of missteps—from a lack of safety improvements on the part of the owner to lax governmental enforcement of safety standards to retailers trying to cut costs by purchasing clothing from the factory.

If the sources of ethical slips are many, the solutions are simple and few. To become what the author calls a “first-class noticer” entails increased and ongoing self-awareness and criticism, the heightened objectivity of an outsider, and the building and maintenance of such traits throughout an organization. There must not only be a process but also an expectation of everyone’s unconditional adherence to it.

An organization’s ethical culture can be its success or failure. Examples of the latter are too many, and there are fewer successes than there should be. The author’s process of identification and remedy is quite simple and adaptable to most any organization.