Addressing the Root Causes of an Ethics Scandal

Context

 

A large, multinational organization was confronting the aftermath of a public ethics scandal involving misconduct that had gone unreported for years. While an internal investigation confirmed violations of policy and values, senior leaders increasingly recognized that the scandal was not the result of a few “bad actors,” but of systemic cultural failures.

Employees expressed deep skepticism toward leadership’s commitment to change. Fear of retaliation was widespread. Speak-up channels existed, yet were rarely used. Managers avoided raising concerns, believing that doing so would damage careers. The board made clear that addressing root causes—not just remediation—was a strategic priority.

Assessment and Diagnosis
The work began with an organizational values assessment, conducted globally to understand how leadership and culture were experienced across levels and regions. The results showed very high cultural entropy, driven by fear, blame, hierarchy, and short-term pressure. While senior leaders articulated values such as integrity, accountability, and transparency, employees experienced leadership behavior as punitive, defensive, and risk-averse.

Parallel leadership values assessments and confidential executive coaching sessions revealed a critical disconnect: many leaders believed they were acting ethically and decisively, yet were unaware of how their responses to bad news—tone, timing, and follow-up—actively discouraged candor.

Leadership and Organizational Interventions
Rather than focusing solely on rules, controls, and messaging, the work shifted toward mensch leadership behaviors—how leaders show up in moments of discomfort and risk.

Executive team sessions examined real decisions made before and during the scandal, surfacing patterns of ethical correctness paired with human failure: avoiding difficult conversations, shutting down dissent, and prioritizing reputation over responsibility. Leaders practiced responding to concerns in ways that signaled curiosity, humility, and protection of dignity.

Coaching focused on helping leaders:

· separate accountability from blame

· acknowledge harm without defensiveness

· invite challenge explicitly

· model vulnerability and ownership

· reinforce safety after issues were raised

· Training framed ethics not as compliance, but as lived leadership behavior.

Organizational Outcomes

Follow-up assessments showed a measurable reduction in entropy and early signs of cultural recovery. Employees reported greater confidence that concerns would be heard without retaliation. Use of speak-up channels increased, not because of policy changes, but because leadership behavior had shifted. Leaders gained earlier visibility into risks that had previously been hidden.

Key Insight

Ethics scandals are often not rooted in fraud. Instead, they stem from cultures where leaders may see themselves are honest, but are unaware of how they behavior thwarts speaking up and psychological safety. Lasting recovery begins when leaders replace fear with trust and authority with humanity—making it safe to speak before silence becomes systemic failure.