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The Cost of Integrity


Last week, there was a Global Ethics Summit in New York, and the opening keynote address was by Alex Dimitrief, general counsel of GE. Dimitrief was quick to note that GE had placed itself on the Most Ethical Companies list for 10 years in a row and that the company’s culture of compliance has a lot to do with it.

He noted that GE makes a significant investment in compliance, both by creating compliance programs for each of GE’s many satellite operations, but also by creating a centralized compliance function that ties them all together so that the whole is greater than the sum of its parts. With a company like GE, there are a lot of parts—more than 300,000 employees in 165 different countries—so Dimitrief’s job is hardly an easy one.

For him, and for GE, it all begins with integrity. He noted that when he looked back at the great business failures of the last 10 years, none were for a lack of a code of conduct and great compliance; it was because people had lost their way. They failed to stay true to what he called “an overriding obligation to integrity.” Or, he said, they showed very bad judgement under stress circumstances.

But it wasn’t because of rules or training or beautiful handbooks (like the ones Enron is no infamous for producing … and not following). It was about how serious people took the notion of integrity, and how serious the leadership was about extolling its virtues. It would be a mistake, he said, to treat an ethical failure as a failure in process. All too often, the reaction to a failure in business ethics is a call to create another workflow or another approval, but that just excuses misbehavior. The key, he said, is to call things for what they are: lapses in integrity. And the best way to create solid integrity is to talk about it openly, honestly, and often, not pay lip service to it with a 125-page code of conduct nobody really reads.

Dimitrief also traced major failures in integrity to failures in open reporting. VW was a great example of this, he said. Employees have an uncanny sixth sense for when things aren’t right, Dimitrief said, and GE really relies on that and encourages people to speak up against something they think is fishy. The tragedy of what happened at VW, Dimitrief said, was that it would have only taken one or two people to raise their hands and be taken seriously by their manager, to stop what has become one of the greatest compliance fiascos in recent auto making history.

Integrity doesn’t mean nobody ever makes mistakes, but it does mean a serious commitment to doing business the right way. Dimitrief said that he makes 10 mistakes a day and, in a world moving at lightning speed, “there are no immaculate conceptions.” But as a leader, it is on him to acknowledge when he does make a mistake, to learn from it, and to recognize the opportunity that arises from it. GE, he says, really encourages that as a company. One imagines that as a result, the temptation to sweep problems under the carpet diminishes by quite a bit. Practice good integrity, and that does a lot of the heavy lifting for a successful compliance program.

It all comes back to simply doing the right thing, which isn’t always the easy thing to do, but is always the right thing to do. And as Dimitrief made this point, I looked around the room and saw a lot of people in attendance silently nodding their heads in agreement. For some, doing the right thing is easy because they have never been truly tested. For others, it is the kind of thing that has come from seeing up close and personal what happens when one strays from the path. But however one comes to understand the true value of integrity, one also appreciates the steep cost that comes with failing to live by it. It is a cost that always, always, always exceeds the perceived value in trying to pull a fast one somewhere along the line.

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