Codes of Conduct Don't Always Protect Reputation

Article excerpt

The term "appearance of impropriety" invariably arises in the context of conduct and ethics. Federal employees by regulation are required to avoid conduct that creates the appearance that they are violating the law or ethical standards.

FAR provisions covering the government-contractor relationship set out the general rule that appearances of impropriety, in the form of conflicts of interests, must be avoided, and company ethics codes typically warn about appearances of improper conduct. Preventing, detecting, evaluating, and addressing "appearance" problems is difficult, particularly when no clear violation of law is present. Nevertheless, whether it is viewed as a normative goal or a mandatory rule, "appearances of impropriety" can result in devastating consequences to a company's or government agency's reputation.

Alone, ethics codes will not protect an organization's reputation. Leadership is required. CEOs, boards, and every level of management, must vigilantly endeavor to steer their organizations clear of even "appearances" of questionable behavior by emphasizing the reputational risk associated with "appearances of impropriety" at every opportunity, by adopting best practices, by bringing to life ethics codes and policies and procedures, by promoting ethics and legal compliance education, and by communicating effectively within an organization and without.

For the Defense Department and the uniformed services, reputational risk is associated with conduct and events that undermine the public trust. For industry, reputational risk is associated with conduct and events that undermine the trust of its customers as well as the public.

Any loss of this trust based on even just one event or one employee's conduct may have ruinous effects on a company's reputation, impacting profits and taking years, if ever, to overcome. Many of you read about the tragic death of retired Air Force Lt. Col. Charles Riechers, who was slated for the Air Force's number two acquisition position.

Two weeks before he died, the Washington Post ran a story about Riechers' pre-appointment employment by a contractor. The New York Times, in reporting Riecher's suicide discussed the scrutiny that his employment relationship was under. The Air Force defended the arrangement as routine.

The procurement community debated whether any unethical behavior actually occurred in his employment. No one ever alleged that Riechers committed a crime. While no one will ever know for certain, news reports attribute the story as a cause of his decision for taking his own life. …