Ethical Lapses Forcing Out More CEOs

CEOs getting oustedIf it seems like incidents of CEOs getting ousted because of ethical lapses are on the rise, that’s because they are. According to a recent study on CEO departures by Strategy & PricewaterhouseCoopers, the number of CEOs forced out for ethical lapses went up from 3.9% to 5.3% from one five-year period to the next, an increase of 36%. This contrasts with a 55% drop in CEOs forced out for other reasons.

But is unethical behavior among executive officers on the rise, or is high-level visibility and accountability increasing? Our experience leads us to conclude the latter. The trend is toward more organizations working to build and sustain an ethical culture.

As we noted in a previous blog, Fox News and Bill O’Reilly, social media have become the new regulators, applying pressure on corporations and advertisers to hold violators accountable. Plus, the 24×7 news cycle and the expansion of digital media is a multiplier of negative exposure. The importance of developing a top-down emphasis on a culture of values and ethics has never been greater.

The executive suite, particularly chief ethics and compliance officers (CECOs), should take note that the casualties aren’t restricted to CEOs with questionable ethics. The attrition numbers include “the removal of the CEO as the result of a scandal or improper conduct by the CEO or other employees; examples include fraud, bribery, insider trading, environmental disasters, inflated resumes, and sexual indiscretions.”

In the 21st century, the buck stops at the top, as the former CEO of Volkswagen AG can attest. A CEO can’t afford to be asleep at the wheel when it comes to ethics.

Think you can’t afford to build and maintain a company culture of ethics and values? You’re asking the wrong question. Can you afford not to?