Before you decide to leave an employer or client because of their poor ethical standards, do the right thing by everyone and voice your concerns. It might help.
In 1970, Albert Hirschman published a rather thin book, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. It looks at what happens when an entity fails to behave in an ethical or legal manner from its stakeholders’ perspective.
While the book is old, the framework it presents can help professional accountants think about the situations they face and the options they have in relation to them. Refreshingly, the “exit” and “voice” approach is well-aligned with the framework of the Code of Ethics for Professional Accountants.
Hirschman’s basic premise is simple: when people find themselves in situations they find unsatisfactory, they have both voice and exit options.
- The “voice” option is about expressing their dissatisfaction to remedy the situation.
- The “exit” option is about terminating their relationship with the entity, and leaving.
Voice and exit are not mutually exclusive. People can speak up so that the situation is remedied, they can speak up and leave, or they can leave silently.
The voice/exit approach is aligned with the Code’s approach to circumstances that lead to non-compliance with its fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
"People can speak up so that the situation is remedied, speak up and leave, or they can leave silently."
The Code requires accountants to try to change the situation so that compliance is possible. They should raise the issues with the client or employer. If change is not forthcoming, then they must refuse to remain associated with an engagement, employer or client.
From the perspective of the employer we would expect that a workplace which encourages its people to voice their concerns and issues, and then hears and addresses them without reprisals, would experience fewer exits and more loyalty.
A silent exit seems the least desirable choice. The entity may not know exactly what is wrong and so cannot fix the problem, though a high turnover of employees gives a strong signal that problems exist.
Exit and voice are mechanisms that professional accountants are called on to use to resist unethical behaviour by clients or employers. They also provide the measures that enable professionals to act with integrity.
Voice is an important aspect of professionalism. The Code states that resigning (exit) is the appropriate option after exhausting all possible means of resolving an ethical conflict. It is not, however, the first and only option.
Exercising voice and exit can be costly to the professional accountant. Despite more awareness and regulatory protection, voicing concern about suspected unethical or illegal activities may not always be welcome. Nothing may be done about such disclosures or concerns, or it may not be easy for the accountant to find a comparable position that ticks the required boxes. Sometimes a mortgage and dependent children are part of the mix.
Of course, these are not easy situations and I am not suggesting for a moment that these decisions are easy to make.
Yet what is the alternative? Should professionals be part of and contribute to activities that taint their reputations and do not comply with the principles of the profession?
Dr Eva Tsahuridu is CPA Australia’s policy adviser, professional standards and governance.
This article is from the September issue of INTHEBLACK