Where to Look for Ethical Risk Inside a Company

"Some cases of bad corporate behavior that are now so infamous, just saying the company's name evokes the costly scandal: Enron...Wells Fargo...Volkswagen. But there are also all kinds of smaller white-collar crimes that happen every day. The truth is every sizable organization has pockets where things like offensive language, overly aggressive sales practices, or conflicts of interest are overlooked or even silently approved of. If those lapses are not caught, they can grow into real threats to the company."

"Today's guest researches these so-called "integrity gaps". And he has practical tools for managers to flag potential issues quickly and prevent them from becoming big problems. Eugene Soltes is an associate professor at Harvard Business School and he's the author of the HBR article "Where is Your Company Most Prone to Lapses in Integrity?" He also wrote the book Why They Do It: Inside the Mind of the White-Collar Criminal."

Organizations frequently harbor pockets where offensive language, overly aggressive sales tactics, or conflicts of interest are overlooked or tacitly approved. Such integrity gaps often begin as small lapses and, if uncaught, can escalate into serious reputational and financial crises exemplified by high-profile corporate scandals. Managers can identify early warning signs by monitoring sales incentives, conflict-of-interest indicators, complaint patterns, and local leadership behaviors. Practical steps include flagging potential issues quickly, creating reporting channels, auditing high-risk units, adjusting incentives, and fostering a culture that discourages tolerated misconduct. Early detection and targeted interventions prevent localized problems from ballooning into systemic failures.

Read at Harvard Business Review