Do Ethics Matter? Yes!

Our job as PR practitioners is to build connections and trust, so ethics ought to be top-of-mind for us at all times, whether we work for corporations or public relations/investor relations firms.

We’ve already experienced the consequences of ethical lapses on the corporate side. And once the U.S. Presidential Election really gets underway, I have every confidence that we will be subjected to the inevitable array of charges and countercharges that range from dubious to patently untrue.

Even small sins can lead to big evils, according to Stanford Professor of Psychology Philip Zimbardo, the author of The Lucifer Effect: Understanding How Good People Turn Evil. (Zimbardo is famous for creating the Stanford Prison Experiment, in which normal college students randomly selected to serve as “guards” in a simulated prison, became so brutal so quickly that the experiment had to be shut down after only six days.)

A speaker at this year’s TED conference in Monterey, CA, Zimbardo presented the “Seven Social Processes that Grease the Slippery Slope of Evil”. They include “blind obedience to authority,” “uncritical conformity to group norms” and “passive tolerance of evil through inaction or indifference.” Zimbardo concludes that we need to foster a culture of heroism as the antidote to evil.

In its list of professional values for our profession, PRSA lists “honesty” as the #2 value, after “advocacy.” I think “honesty” warrants a promotion to the #1 spot.

An Unintended Side Effect of the Subprime Fiasco

Since our public relations firm is based in New York — a world center for banking and financial services — we’re following the ins and outs of the subprime mortgage crisis with more than average interest interest. In fact, our president, Ken Makovsky, has written about it on his My Three Cents blog.

One of the more interesting side effects of the scandal was reported by Bloomberg News: “Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages.”

The article goes on to report that a man named Joe Lents in Boca Raton, FL, hasn’t made a single payment on his $1.5 million mortgage since 2002, when his mortgage bank, Washington Mutual, first tried to foreclose on his home. The efforts ceased when WaMu couldn’t find the paperwork!

“If you're going to take my house away from me, you better own the note,” said Lents.

He’s one of the lucky ones. Millions of other subprime homeowners are on the verge of bankruptcy and foreclosure. If the banking industry doesn’t address its own shortcomings, it better be ready for the inevitability of regulatory intervention if we want to protect consumers and the U.S. economy.

Microsoft + Yahoo: Another Perspective

There’s been lots of coverage in the mainstream media about Microsoft’s proposed acquisition of Yahoo. Those in favor say that the merger could strengthen both companies and create more shareholder value than each company could create on its own. Those against it say that Microsoft’s offer substantially underestimates Yahoo’s worth.

If you believe that the success of any merger depends to a significant extent on the willingness of employees to embrace it, then Microsoft has some problems ahead of it.

On his “Tech Your Universe” blog, Yahoo employee Nick writes, “I estimate that 1 in 10 Yahoos will refuse to work for Microsoft.” After giving three reasons why the idea of working for Microsoft is “awful,” Nick goes on to say, “I’d be embarrassed to admit that I worked for Microsoft, and having it on my resume would be detrimental to my career.”

Apparently he’s not alone in his sentiments.

This is a public relations battle that is likely to be fought in the boardroom, the courtroom and the vastness of cyberspace.

The Court Rules in Favor of Wikileaks

Last week, Federal Judge Jeffrey S. White withdrew his earlier order disabling Wikileaks, a website that allows the anonymous posting of documents to discourage unethical behavior in governments and corporations. He’d originally shut down the site at the request of Bank Julius Baer & Company, a Swiss banking company that serves the ultra-rich. They charged that Wikileaks had posted confidential information about some of its customers.

Wikileaks is designed to enable whistleblowers to leak documents, without fear of censorship or the risk of the political repercussions. Its founders contend that Wikileaks will “civilize corporations by exposing uncivil plans and behavior. Just like a country, a corrupt or unethical corporation is a menace to all inside and outside it.”

It’s still in its infancy, but Wikileaks is worth a careful look if you’re at all concerned with the possibility of adverse publicity or if you are involved in issues or crisis management.

Only 6% of corporate frauds are revealed by the SEC and 14% by the auditors, according to the Center for Economic Policy Research. More important monitors are media (14%), industry regulators (16%), and employees (19%).

As it develops, it’s likely that Wikileaks will become a useful source for the mainstream media … so it’s worth keeping it on your radar.