Do the right thing. This is an elementary concept, yet many businesses have deviated from this basic principal. We in the credit union community need to bring this elementary concept back into our consciousness and become ethical leaders. The recent experience with sub-prime lenders and predatory lending demonstrates this need.
The word “ethics” is defined as good or bad behavior. Ethical leadership and business ethics has remained a staple of conversation in the news media since the 1990s. Business schools expel students for cheating, books are written to expose questionable behaviors and stories of extravagance appear frequently in the media. Major universities have set-up institutes to debate ethics in their business and medical schools. Organizational policies define what is unacceptable and provide an avenue for reporting it. If it was that easy, we should be done with the subject and move on. But the tragedies seem to continue. Why? Does the lack of ethical leadership strike to the heart of these matters?
Say the word “Enron” and everyone understands how having no ethical leadership will lead to your demise. With Enron came new laws such as Sarbanes Oxley that legitimatized ethics into our graphic understanding. Terms such as “whistleblower” and “plagiarism” pepper our conversation. Corporations and charitable organizations have embraced its demise through their newly created policies. We have laws that hold regulated businesses accountable in the marketplace. However, now is the time to be proactive to ethics rather than react to what is happening around us. We need to step up and bring integrity to the forefront and back into our lives.
Starting From The Beginning
To accomplish this, let’s start from the beginning and discuss the concept of good and bad behavior. Laws are usually sculpted to prevent us from doing something bad. They tell you “what not to do.” But is telling someone what not to do as effective as telling someone what to do? For example, which is more effective? “We do not allow discrimination against women.” Or, “Everyone in our organization is treated equally with respect and dignity.” The first example tells you what not to do, but the second example explains how everyone should be treated. Ethical leadership should tell us “how to act,” not “how not to.” Ethical leadership directs us down the path of what to do and how to act in the workplace.
A recent New York Times article reported, “The opposing sides appeared to agree that the mortgage industry got carried away in the recent housing boom but disagreed sharply on the scope of the problem and what should be done. The nonprofit housing advocates attacked no-documentation loans, in which lenders do not verify that borrowers earn incomes listed on loan applications; prepayment penalties, which make it more expensive to refinance; and underwriting practices that overlook whether borrowers can ultimately repay their loans.
“There are folks that do this business the right way,” said Pablo Sanchez, a national mortgage production specialist with JPMorgan.” Do you think he may have been thinking about the credit unions? Hopefully, you think this way.
We need to become leaders in ethical behavior and never let our guard down like so many other financial institutions. As leaders we need to speak out in the market place and not just keep our values to ourselves and sit idly by on the sidelines. We need to show others how to act ethically, not react to newly created laws.
Instead of watching our neighbors go through financial purgatory, we need to help them see acting with integrity pays off.
Ron Schmidt is president of CBS Certified Public Accountants, LLC and Credit Union Business Solutions, LLC, Solon, Ohio. He can be reached at rschmidt<at>cbscpasllc.com. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com