Lessons Learned From the IMF’s Unethical Corporate Culture

The arrest of the IMF’s managing director, Dominique Strauss-Kahn, has resulted in a wave of attention directed at the corporate culture at the IMF.

Posted by Joe Gerard in Corruption, Ethics, Ethics & Compliance on June 6th, 2011

The arrest of the IMF’s managing director, Dominique Strauss-Kahn, has resulted in a wave of attention directed at the corporate culture at the IMF. Strauss-Kahn was arrested for allegedly sexually assaulting a hotel housekeeper, but denies the charges. Strauss-Kahn resigned from his position at the IMF shortly after the arrest. Since then, the floodgates have opened. An article in the New York Times, “At I.M.F., Men on Prowl and Women on Guard,” discusses the IMF’s unethical corporate culture:

“Some women avoid wearing skirts for fear of attracting unwanted attention. Others trade whispered tips about overly forward bosses. A 2008 internal review found few restraints on the conduct of senior managers, concluding that ‘the absence of public ethics scandals seems to be more a consequence of luck than good planning and action.’”

Corporate Culture at the IMF

At the IMF, many say that they don’t have rules, they have guidelines instead. In the NY Times article mentioned above, Binyamin Applebaum writes:

“Interviews and documents paint a picture of the fund as an institution whose sexual norms and customs are markedly different from those of Washington, leaving its female employees vulnerable to harassment. The laws of the United States do not apply inside its walls, and until earlier this month the I.M.F.’s own rules contained an unusual provision that some experts and former officials say has encouraged managers to pursue the women who work for them: ‘Intimate personal relationships between supervisors and subordinates do not, in themselves, constitute harassment.’”

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In another article in the New York Time, “At I.M.F., a Strict Ethics Code Doesn’t Apply to Top Officials,” Graham Bowley writes about the two sets of ethics codes at the IMF – one for regular employees and another for top executives:

“Over the last four years, the fund has tightened internal systems for catching ethical misconduct among its 2,400 staff members, establishing a telephone hot line for complaints like harassment; publishing details of complaints in an annual report; and empowering an ethics adviser to pursue allegations, which last year led to at least one dismissal. But the fund’s board members remain largely above these controls. The ethics adviser, for example, is not able to investigate any of them.”

According to most reports, the news of the culture at the IMF isn’t shocking. Hopefully the new leader at the IMF will be able to turn things around.

Lessons Learned

Here are 3 main lessons business leaders can take away from the events at the IMF:

1. Policies Must Apply to Everyone

Every employee should be held responsible for complying with a uniform code of conduct. No one should be above the law. Policies need to be updated regularly and enforced at all times in order to have an impact on the workplace.

2. Sexual Harassment Isn’t Welcome

There’s no room for sexual harassment in any workplace. An environment where sexual harassment is rampant and employees feel intimidated can result in high rates of employee turnover, inability to attract top talent, reduced productivity, increased number of sick days and other stresses that cause employees to leave the organization or perform below their abilities. Employers have a duty to provide employees with a safe workplace, free of any harm – this includes sexual harassment.

3. Every Allegation Should be Investigated

Regardless of who the investigation involves, every act of misconduct should be fairly investigated. That being said, every employee should also face the same consequences for the same violation. No employee should be let off the hook or given a lighter consequence just because of who they are in the company. When employees are treated differently based on their title, it creates an undesirable culture where employees fail to take management seriously.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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