Installment 1, Ethics in Practice: Why it Matters

Throughout my career, I have observed organizations that seemed to be struggling just a bit on the ethics front, which led me to explain here why I am compelled to write about some of these and related dilemmas.

For this series, I will share what I and others have seen, in the form of six stories, changing the details, and merging stories enough to protect the identities of those involved.

None of the good people who led the real organizations of these stories ever set out to be less than transparent, and all would describe themselves as having impeccable moral character. I admire many of them. They all work hard towards mission achievement. As we all have seen in our experience, human ego, selfishness and short sighted thinking all can get in the way of good leadership. In nonprofit settings, I believe that additional specifics factor in:

  • low salaries can lead to resentments and entitlement issues.
  • The many demands can overwhelm the moral directional systems unless boundaries are always visible and self care is a priority.
  • The pure intensity of the passion for mission is blinding, just like quest for profit can be in the private sector. I am left with the impression that there can be an underlying code of conduct that says: “If our end objectives are pure, just and good, how we get there is of little consequence. If our behaviors and actions are damaging along the way, while the end result is on target, then the end is the more important measure of performance.” It is the classic End Justifying the Means argument, and honestly, I don’t think much of this happens at the conscious level. Which is why I believe we need to look at these and other case studies, and keep our human foibles at the forefront of our thinking.  Strong leaders must have Ethics strongly implanted at the strategy and execution levels at all times.

For this installment we will look at:

Organization A:  Community Housing Association

The CEO, Ms. Carol Ashton (not her real name) of a Community Housing Association (CHA) served in the role for 30 years. CHA had been started by a group of three churches in the city, and she was a member of one of the churches, The Community Church (TCC). One of the early board members recommended her for the position. From the very beginning there was an attitude among the board members, especially those from TCC of this posting as a gift to Carol. something she was owed. She had been the victim of some bad luck and extreme financial difficulty, not of her own making.  Her church rallied around her, and as a result, her posting at CHA seemed to be an unspoken lifetime role.  She had no experience in nonprofit management, nor in property management. The board of CHA did not encourage her to pursue continuing education, nor was she expected to build community relationships or partnerships in the Housing sub sector.

Carol chose a close friend from her church (the same church remind you, that appointed her) , a local CPA to be the auditor for CH. While it is a well known standard that nonprofits should change auditors every 5 years or so, this auditor stayed involved for her entire tenure. When Carol took salary advances, it was not noted in the board minutes, the CH policies, nor in the Notes section of the annual audit.

As time went on Carol became less and less interested in her job, more and more combative with the residents. She was seen as a tyrant by her tenants, while members of her church saw her as a saint for doing the work at CHA. She became more and more protective of her staff, developing a two-way club (between her and her favorites) of providing mutual cover. Her property manager was not subject to real performance appraisals or expectations, and neither was she. The continuous revolving door at the Board of Directors table contributed: Each of the three churches would rotate directors in and out, with never an expectation that performance would be strictly managed.

As a consultant to this organization I could see the following:

  • Because the tenants were living at poverty, they had very few other living options. Carol created an atmosphere of fear among the residents, so that when they submitted surveys, even anonymous ones, they were inclined to sugar coat their experience in fear of retaliation. As a result, the Board never received honest feedback.
  • On more than one occasion, members of Carol’s immediate family held staff positions at CHA
  • The board was never inclined to seek truth. They were very comfortable believing things were running well, seemingly because this meant their job was easier. Their appointments were sometimes merely another community service note to add to their resumes and church record of service.
  • As a result of bad management, maintenance on the property declined, improvements were deferred, and the endowment funds were depleted. After her retirement at age 77, new leadership were burdened with the challenge of re-financing the property. The prognosis is grim. The property sits in a high value area, so if it is eventually sold to a developer (a likely scenario), the accessibility of affordable housing in this county will be dramatically reduced.

This case study is largely an illustration of simple bad leadership on the parts of both the directors and the CEO, in this case it led to unethical treatment of the residents, unethical fiduciary oversight and the lessening of the organization’s sustainability to provide affordable housing, which was its core mission. By putting the welfare of the CEO above the welfare of its constituents, ethical violations are apparent.

The events described here while fictional, are derived from several real events I have observed (none of which are listed as clients or employers in GHC or R Magee’s public materials). A more detailed case study is forthcoming. Stay tuned!


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