Don’t be Afraid to Act In some companies, there can be risks in situations where unethical behavior comes to light: If you do the right thing, you might lose your job or wind up a blacklisted pariah. Tat risk makes it tempting to lay low and hope the storm passes. While it’s true that being a squeaky wheel comes with some risks, doing the wrong thing—in this case, sitting back and not speaking up—can be more damaging to your career. Remember that taking a stand isn’t just a matter of personal integrity, but a critical part of your job. It’s your responsibility to make sure that leadership isn’t an echo chamber. “Don’t be afraid to act,” says Jack Lazar, longtime board member
and former chief financial officer (CFO) at several public companies. “Nobody ever gets in trouble in the long run for doing the right thing.” I believe most people try to do the right thing in a public company
environment. Remind yourself that everyone else (or just about ev- eryone else) is trying to get to the bottom of the situation—to uncover the truth and evaluate the risks. You’re not alone in seeking the truth.
Tap Your Resources Ethics violation is a touchy topic and in some cases it›s not straight- forward. “Ethics can be a very challenging concept because you’re not always talking about legality, which is—or should be—black and white,” says Rahul Mathur, CFO, Alphawave Semi. “If it’s an ethical situation, it can be personal, societal, or cultural, and these norms change over time.” Having relationships you can tap when the going gets rough
is essential. When you begin a new position, connect with your counterparts and stakeholders within the company—typically in the disclosure committee, finance and legal departments, and the board—so the basis of trusted communication and relationships are already in place. It’s important that you identify the right people to involve or at least turn to as a sounding board. Generally, the CFO and/or general counsel are key people to consult when raising any issues. Te NIRI Ethics Council was also put in place as a resource to NIRI members who face potential ethical dilemmas. (See the sidebar, “Te NIRI Ethics Council.”) Even if you have relationships, there may still be situations in which you want to remain anonymous. If your company has an eth- ics hotline, use that to report your concern. Companies have a legal obligation to look into ethical concerns reported using ethics hotlines. “Reporting anonymously has no downsides, and it’s always better to do the right thing and report a possible ethical issue than it is to quietly stew about it, hoping it goes away, or just letting it go,” Lazar says.
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Sticking to the facts, being transparent and truthful, expressing compassion, and shining a light on the path forward can build credibility and bolster your company’s reputation in the investment community.
Refer to the Company Code of Conduct If you’re unsure of where to start or are not sure you have a potential issue, refer to your company’s code of conduct. To address the evolu- tion of publicly traded company responsibilities, listing standards and codes of ethics have become more robust and require that com- panies encourage reporting of violations and potential violations. IROs, officers, and boards are obligated to uphold these standards; never forget that it’s a moral imperative. Remember that the code of conduct typically includes an amalga-
mation of legal requirements, depending on which exchange you’re listed on, and many companies roll all the requirements into one document that’s easy to digest. Te U.S. Securities and Exchange Commission requires that companies disclose whether or not they have a code of conduct. “It’s important to remember that the code of conduct is a guide- line and cannot consider every possible situation. If you ever have any doubts, that’s when you know it’s time to escalate,” Mathur says. One thing to never forget: Failure to report something that you find dubious is often a violation of the code of ethics in and of itself. You certainly don’t want to compromise yourself in any way at any time.
Make Peace With It It’s a constant theme in IR: You have a seat at the table, and you’re a trusted advisor to management and board members…so what happens if you strongly disagree with how they’re handling an ethical issue? Learn to live with it. You’re not always going to agree with what company leaders decide, but you have to trust that they’re making the right call—and know that what’s “right” can be subjective. Lazar notes that this demands getting into the classic “disagree and commit” mindset. “If leadership is listening to you but lands somewhere else than you’d like, the important thing is that they’re listening,” he says. However, if you find yourself in a situation where again and again you feel strongly about something and the company heads in
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