When it Comes to Doing Right By Your Coworker, Forget HR

What does it mean to be a bystander in a toxic workplace? Sometimes it means being forced to decide between doing what you know is right and protecting your job. In this excellent installment of The Ethicist in the New York Times Magazine, Kwame Anthony Appiah discusses the quandary of an office worker who knows a young coworker was unjustly fired. The advice given is very sound and reflects the situation that many people face at work. In a perfect world, the correspondent should have been able to go to human resources with her problem. However, as I discuss in From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, in toxic cultures human resources is part of the problem, rather than being part of the solution—which is what makes Appiah’s advice in the column so on target.

Photo credit: BIGSTOCK

Frustrated Board and Shareholders Put Cash Flows Before Bros -- Finally!

Activist board members and shareholders can be a last line of defense when a CEO is bullying his entire company, which is why Uber CEO Travis Kalanick resigned today.  According to reports, investors demanded that he step down, in what New York Times reporter Mike Isaac described as an “outright rebellion.”

Some news sources were more cynical about the departure. The tech news site Pando said that Silicon Valley puts “cash flows before bros,” but whatever you believe, it’s about time. I’ve been calling for Kalanick’s resignation for months as this textbook case of a Silicon Valley “bro” who mismanaged the company he founded and allowed the regular abuse of his employees has dominated business headlines. It’s amazing how motivated people can be to stop abuse when their investment is at risk.

According to Adrienne LaFrance at the Atlantic, “It was ultimately concerns over the bottom line—not merely the toxic culture, or Kalanick’s trademark hubris, or explosive allegations of sexual harassment, or revelations about Uber’s secret software to evade of law enforcement—that forced Kalanick out. Well, out of his job as CEO, that is. He’ll still be on Uber’s board of directors, and he will retain his control of a majority of Uber’s voting shares.”

This doesn’t sit well with Benjamin Edelman at Harvard Business Review. He sees Uber’s troubles as deep and systemic: “I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.” For this reason, Edelman is calling for regulators to shut down the company.

I’ve discussed all of these issues at length in my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, and dedicated the entire first third of the book to the critical question—“Is Your Workplace Culture a Ticking Time Bomb?” The bottom line is that Uber was a ticking time bomb, but shareholders finally got it right. Investors and boards have a responsibility to employees to be responsible for a psychologically healthy, safe and fair workplace. I’m glad to see that they’ve stepped up at last. Maybe now we can have a news cycle without Uber dominating the business headlines.

Illustration credit: Jack Ohman/Sacramento Bee

Why Auditors Need to be Audited

It is deeply disturbing when those we rely upon to be watchdogs for the rest of us succumb to lying and corruption. It’s even worse when we need them to police our finances—something that too often seems arcane and impenetrable by the average person and requires the expertise only a trained professional can provide.

Wednesday,  the New York Times reported that accounting giant KPMG had fired six employees, including its head of audit practice in the U.S., for getting tipped off about audit inspections. This inappropriate warning gave the accountants time to polish the portion that they learned would be inspected until it was free of errors. According to an editorial in the New York Times, KPMG had failed at earlier inspections. Its 2014 deficiency rate was 54 percent and its 2015 rate was 38 percent. Perhaps the firm had reason to be afraid.  

The organization seems to have handled things properly. KPMG had been tipped off by a whistleblower and had engaged an outside law firm to investigate, then took firm and appropriate action—a series of events that I commend. However, good practices when dealing with a whistleblower doesn’t get KPMG off the hook.

The company has long been under scrutiny for giving the scandal-ridden Wells Fargo and the deeply troubled world governing body for soccer, FIFA, clean bills of health. Whenever I see a company’s employees act out in egregious ways, such as I described yesterday about United, or in my previous coverage of Wells Fargo, I have to wonder what is going on at the top and how bad things are for employees. I can’t state too strongly that people who are employed in psychologically healthy, safe and fair workplaces aren’t given to appalling behavior.

When the head of audits for the entire country is part of this conspiracy, I also have to wonder if he went rogue or if he was just passing on the unethical behaviors of his superiors—or of the industry in general. There have been warnings. Last year U.S. Sen. Elizabeth Warren (D-MA) sent a powerful letter to KPMG bluntly calling into question the quality of their audits of Wells Fargo. If our auditors aren’t minding the store, what are they up to?

In this disinformation era, we need solid accounting—both figurative and literal—to keep us on track. Numbers are in too many cases that only metric we have to measure performance in business. Auditors are supposed to be on the lookout for errors, not facilitating mendacity. It’s true at any time, but particularly now during the Trump administration that auditors need to be audited. Given the role they play in our capitalist system, not doing so could have dire consequences.

Photo credit: Reuters/Mike Blake