by Jean-Claude Kihn and Norbert Majerus

In a corporate world where seemingly every improvement effort has been called Lean, it’s hard to find a new application for the term, let alone an important one. Yet the concept of “Lean ethics” does just that and at a time when many companies need it most.

But, before you can understand what Lean ethics is and what it can do for an organization, you need a clear understanding of both Lean and ethics.

It’s been decades since Lean emerged, so most companies believe they have a pretty good idea of what Lean means, especially if the organization has pursued waste-elimination, pull, flow, mistake-proofing, and the many other fundamental tools. But that’s not really all that Lean is and what it involves (although it certainly consists of those and many other process-targeted principles). To capture the full benefits of Lean, it must also include people-related principles and management systems that change the culture of an organization—as evidenced by respect for people, collaboration, teamwork, mutual trust, and unquestionable ethics. Companies running on technical Lean alone have little influence on the behavior of their workforces.

Ethics are the laws, moral standards, and environmental, social, corporate, and other expectations upheld in the greater interest of an individual, company, or society in general. Behaving in an ethical manner means adhering to these expectations at all times. It means putting all other interests ahead of personal gain, even when the likelihood of getting caught in bad behavior is miniscule. Most people become aware of ethics only when there is an absence of ethical behavior, such as when a new high-profile scandal breaks. Here are a couple examples:

• Volkswagen diesel-emission deception: VW engineers ingeniously rigged the car software system to recognize if the vehicle was being tested for emissions testing or was being driven on the road, and the system would then respond accordingly. This allowed the vehicles to meet emission standards and outperform competitors on the road, while their actual emissions were well beyond the standard. Although it is not clear how much VW leaders knew about the deception, they faced prosecution and the company paid billions of dollars in fines, penalties, repairs, and settlements. (Footnote1 1)

• Boeing 737 Max conspiracy: The well-known aerospace company admitted to conspiracy to defraud the United States, concealing information about the jet’s operation from the Federal Aviation Administration. The consequences were several airplane crashes and many fatalities. Boeing has paid out billions, and it will be a long time before the company will reestablish its good name and confidence among travelers. (Footnote 2)

The VW and Boeing ethical problems were rooted in technical issues, but corporate chicanery really knows no bounds: consider the years of misinforming the public by the tobacco and sugar industries; financial cheating and accounting violations; bribery to legislators; and sexual harassment and discrimination. Many companies caught in ethics scandals not only suffer financially but are even forced into reorganization or bankruptcy.

Sadly, most of us only see the outcomes of publicized ethics violations. But the consequences of unknown unethical behaviors can be just as damaging or even more so to companies, with many employees in an organization unaware that they’re even a victim.

For example: A corporate team tells a compelling but only partial story to get their recommendations accepted. Team members get promoted and move on but the stakeholders never associate the diminished financial result with the team’s work. Leaders looking to solidify their power blindly promote their agenda by recruiting and rewarding managers to turn a blind eye, their years of flawed decisions and weak performance taking decades to overcome. Test data is doctored or misinterpreted to fit the expected paradigm, to support a poor decision, or to please certain people in power so the firm’s goods or services become a bomb waiting to go off. The temptations found in finance and procurement are nearly limitless as are their impairments on organizations. These subversive behaviors also result in financial loss, tarnished images, missed opportunities, poor people engagement, and much more.

Might a Lean company—one in which empowered team members have more authority to independently take action—make this situation worse? After all, we’ve heard about the Lean practices at Volkswagen and Boeing. Or can a truly Lean culture be a remedy? The answer is found in the reasons unethical behavior occurs.

Unethical behavior, unfortunately, is part of human nature. It can result from fear of failure, reprisal, demotion, dismissal, ridicule, or any other potential outcome that causes one to obsess about their standing in life. Another major contributor is greed, or personal gain in the form of money, promotion, power, reputation, etc. Sometimes it comes from people following a bad example: greed begets greed. Other times an opportunity for unethical behavior is too great to resist: a system is flawed and allows someone to act in ways her or she may not even recognize as unethical, helping themselves or another in need because they can rationalize that their behavior is necessary.

The root cause of these types of unethical behavior is temptation, which spurs individuals to act on their fears, greed, or opportunistic ways. Knowing this root cause, many organizations have developed countermeasures to prevent unethical behavior:

• Training and awareness: Most people want to do the right thing, but they first have to know explicitly what the right thing is (as opposed to being imitating others or being told by a colleague what you can and cannot do). Mandatory ethics training typically serves two purposes: 1) awareness (what not to do) and, 2) compliance (how to adhere to the rules). But the training is only partially effective because it is vague, considered an obligatory nuisance, and/or too generic.

• Compliance: By controlling, auditing, and inspecting whether the rules are followed, organizations let everyone know that there is a chance they’ll be caught doing something wrong. By implementing layers of control and policing, many companies do quite well at avoiding small ethical violations like cheating on expense reports, taking kickbacks, or using company resources for personal applications. Yet this conventional approach has several drawbacks: 1) if people want to cheat, they will and then they’ll try to hide their misdeeds, 2) in a Lean sense, policing is non-value added, like quality control at the end of a production line, and does not add value to the company, its customers, or society in general (the customer pays for quality, not for its control), and 3) command and control are associated with fear and mistrust, which is an environment that harms more effective countermeasures.

We know that these traditional countermeasures are only partially effective, which means that big and costly consequences lay latent in these organizations. All they need is the right environment to grow, such as a poor example from leadership or a win-at-all-costs culture that encourages the breaking of the rules to get something done. In a Lean transformation that has not truly embraced good Lean management and focused on changing organizational culture, this is dangerous. The same people who have behaved or would behave unethically before the transformation probably haven’t gone away. Without establishing a culture of trust and respect, the organization’s systems likely have not exposed employees’ propensity to do harm, and may, in fact, present them more opportunities and temptations than before.

What’s needed instead is the development of a Lean management system that eliminates fear, illuminates and amends undesirable behaviors, and replaces commands, controls, inspections, supervision, and oversight with real empowerment, trust, and a reliance on personal integrity and accountability. In Part Two of Lean Ethics, we’ll show you principles that will inspire ideal ethical behaviors. Some principles can be found under the umbrella of Lean and others are inspired by successful processes in the corporate world:
• People Focus
• Lean Leadership Model
• Respectful Oversight
• Ethics Andon
• Trust the Process

Not only will the application of these principles build a management system that can eliminate the potential for unethical behaviors, they will also establish a powerful culture in which everyone in the workforce act as one in the continuous pursuit of satisfying all company stakeholders.

In Part Two, we’ll provide details of the five groups of principles and how they can be applied to improve companies, careers, and personal lives.
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(1) “Everything You Need to Know about the VW-Diesel Emissions Scandal,” Clifford Atiyeh, Car and Driver, Dec. 4, 2019.
(2) “Boeing Charged with 737 Max Fraud Conspiracy and Agrees to Pay over $2.5 Billion,” United States Department of Justice, Jan. 7, 2021.