Preventing unethical practices

Today’s headlines are filled with scandals that challenge corporate integrity, such as Enron’s deceitful accounting practices, the Erika and Prestige oil spills, the use of child labor by Nike, contaminated Coca-Cola cans in Belgium, etc. In each case, these scandals wreaked considerable damage, ruined many careers and sometimes destroyed the company. The loss of reputation has become a very real risk in business today.

However, such transgressions are not always caused by the misconduct of a few unscrupulous individuals. Very often, companies drift astray as a result of poor knowledge management, where those who commit reprehensible acts are unaware of the potential impact of their actions, and executives are oblivious to the practices in question.

“Managing Corporate Reputation and Risk” shows how better knowledge management can minimize the risk of irresponsible behavior. Based on our analysis, three messages appear to merit particular attention:

– Don’t underestimate the risks: unbeknownst to you, reproachable practices may exist for many different reasons.

– Clarify the rules and values you would like to see applied, and set the example in implementing them.

– Organize reporting on reprehensible practices and actively manage this risk.