The Chief Ethics Officer?

Do we really need to formalize ethics in the C-suite? Yes, we do. This article addresses the why and the how of the Chief Ethics Officer.

In the past, certification companies formed to guarantee your “trust” on the internet. But, as time went on, trust became an overused term. I don’t really know why, but I suspect because trust is only built upon a foundational relationship, which wasn’t happening online. Trust is not easily given and many of these certification companies depended on the notion that a consumer should trust them to make sure the certified company was trustworthy. Sort of a, trust me that you can trust them. But how do you trust the certification company? How did you know their certification process was robust enough for your business? Then the Target breach happened and, all of a sudden, trust became too strong a word and breaches were becoming inevitable.

So, as clever marketing tends to do, it changed the word. Suddenly, “integrity” became the most used buzz word in privacy. Since a business cannot guarantee that they won’t be breached, they resorted to telling their customers what they were doing to prevent a breach i.e. how much effort they were putting in. Companies started putting together security statements to market their efforts to keep personal information safe. But, alas, integrity is hard to actually implement company-wide.

Craig Spiezle wrote in a great article, recently, entitled “Time to Elevate Trust & Safety to the C Suite.” He makes the point that doing the right thing in business for consumer privacy was not always at the top of the business agenda, often losing to more “powerful” departments, like advertising.

Even companies that have integrity will have competing departments shifting those priorities. Product or marketing teams may not want too much security because it makes it more difficult for the consumer to engage with the platform. For example, asking a consumer to check a box often results in the consumer dropping out of the sign up.

But that’s not the only reason that integrity throughout the corporation is unattainable. Since we cannot have privacy without security, and security is expensive and harder to build, many companies, especially startups, can’t afford the hire.

Yet, the marketing department insists on showing customers how great the business is at caring about their customers, and so it distributes material that makes promises the business may not be able to keep. Consumers have caught on and are losing trust. Trust in a company’s integrity is dying.

So that brings us now to corporate ethics, which is really just more of the same thing. This time, we need to learn from the past and change our strategy. Companies should form an ethics department that has the power to influence other departments. The ethics department should be responsible for building ethos for the whole company built around their company’s core values and be responsible for implementing it. That’s easier said than done. We know how to spot severe lack of corporate ethics such as in characters like Jordan Belfort from the Wolf of Wall Street and Gordon Gekko from Wall Street, but often times the decisions that require the application of ethics are subtle. It’s hard to take a stance when we aren’t sure what the consequences will be. Design decisions or even the decision whether the product should be built at all can spark massive debates internally by those who see the good and those who see the bad. Today, the side that wins is the one who convincingly argues the business purpose, which is why we need an ethics department with a strong voice.

I was fortunate to have worked for a CEO who refused to bring on customers unless they agreed in writing not to buy or sell email lists, which was a very common practice in marketing and one way that consumer data is shared without permission or knowledge. It was not an easy position for him to take but it certainly was the right one. And the business suffered because there were many companies who simply could not agree to these terms. But he was right. Today, with the new regulations in place, that practice is no longer encouraged. He is a pioneer in seeing the long-term business benefit of doing the right thing.

Sure, ethics needs to come from the top, but it should not be the sole responsibility of the CEO. Companies need someone else to do the actual work on ethics, such as building out a framework, keeping pace with market conditions and competitors, finding metrics and reporting components and applying ethics to the company’s culture. It is no small job.

That is why the Chief Ethics Officer is a good idea. This person can report to the Board, establish a living framework, educate, learn and oversee. But the Chief Ethics Officer is not the final arbiter of ethics for the company; that should never be in the power of one person.

So, yes, we need a department dedicated to ethics because what gets measured gets managed. We tried trust and we tried integrity. Trust did not work because businesses were hacked anyway. Integrity did not work because no one internally really owned it thereby letting it fail to other competing business priorities. Let’s try building a department that can give an organized, managed voice to what we should have been doing all along. And since not every company can afford a dedicated role and a team committed to ethics, the office of the General Counsel should take on this responsibility in the interim.



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