5 Ethics and Compliance lessons from the Houston Astros cheating scandal

Plus one bonus Astros ethics and compliance takeaway

News of the Houston Astros sign-stealing scandal hit the public late last year. For Astros fan and Compliance Evangelist Tom Fox, the connections between sign stealing and corporate compliance were undeniable. After all, the same things that cause unethical behavior in the corporate world—toxic culture and a failure of management—led to this breakdown in sportsmanship.

We sat down for a webinar with Tom to hear his take on the situation. Here are the five corporate ethics and compliance lessons from the scandal that he shared with us, plus one bonus takeaway. Scroll to the bottom to watch the webinar.

5 Ethics and Compliance lessons from the Houston Astros cheating scandal

1. Management must communicate ethical standards

For the Astros, it wasn’t enough that the League had a rule against technology-aided sign stealing. The players knew that what they were doing was against the rules, and they did it anyway. In fact, players told MLB investigators that they would have stopped if team management had stepped in and told them to.

Ethics have to be demonstrated from the top, and management should lead by example. Your E&C team can write as many policies as they want and post them on the company intranet—but unless management is reinforcing and incentivizing those standards, they’re utterly meaningless. In order to be effective, the ethics message has to permeate the entire workplace, and employees have to engage with it on a regular basis.

2. Management must take action to stop unethical behavior

Astros manager A.J. Hinch was aware of the sign-stealing scheme, and twice registered his disapproval by taking a baseball bat to the monitor that players used to cheat. However, he never took direct action to stop the sign stealing from continuing.

It’s not enough for management to disapprove of unethical behavior. Leadership has to step in early and take action to end the behavior—otherwise, it can easily balloon into a scandal that management can no longer control. During the webinar, Tom pointed out the parallels between the Astros sign stealing scandal and the corruption at Airbus. In both situations, knowledge of corruption was widespread, but never addressed head-on—and the eventual punishment was severe ($4 billion in the Airbus case).

3. Discipline must matter

Speaking of taking action: the MLB fined the Astros $5 million and banned manager A.J. Hinch and GM Jeff Luhnow from all MLB facilities for a full year.

Not only must discipline be serious and proportionate to the unethical action, it also must be applied consistently and fairly across the board. As Tom pointed out in the webinar, employees won’t take compliance seriously if punishment is meted out differently based on seniority, performance, or other factors.

4. Know your reporting system

The Astros’ cheating was revealed when former Astros pitcher Mike Fiers warned his new teammates on the Detriot Tigers and the Oakland As about the scheme. If the Astros had used an effective reporting system, they may have been able to handle the situation internally before it got out of hand. Instead, they faced a formal investigation, fines, months in the news, and further punishment.

Reporting must be accessible to employees, from top to bottom. It’s the only way for compliance teams to reliably check the pulse of their organization, identify areas that need improvement, and catch issues well before they get out of control. Check out our infographic with OCEG to see how an effective helpline can positively impact your entire organization.

5. Understand the subcultures

In the context of baseball, the players’ clubhouse may have an entirely different subculture than the front office. In business, you can often find the same pattern. Think of different business units or different regional locations within your own company. Do you know which teams or offices may be contributing to greater risk than others, and are you managing them appropriately?

Bonus takeaway: What can we learn about culture from the Astros scandal?

What can we learn about culture from the Astros cheating scandal?

The Astros’ sign-stealing scandal points to a broken culture. At every point throughout the scheme, a more robustly ethical culture could have prevented the sign-stealing behavior from escalating to the level it eventually reached. E&C practitioners, take note: culture is hugely important when it comes to your compliance function. How does your culture stack up? Think about conducting a culture assessment to measure where your culture stands today, so you can more easily manage it going forward.

Want to hear all of Tom Fox’s takeaways from this news-making compliance scandal? Check out our webinar recording to learn more about the whistleblower who revealed the entire scheme, the role the MLB played, and how the League managed to conduct an effective investigation in less than 60 days.

Watch the Webinar