Tone, Culture, and Conflicts of Interest

In 2016, I was asked to write a chapter for a new British book titled Conduct Risk: A Practitioner’s Guide, on the root causes of conduct risk and how it manifests itself.  I was writing primarily about financial institutions from an operational risk perspective, but my conclusions about those questions apply equally to governance issues in both the public and private sectors.  Here, I want to identify what I saw as the root causes in 2015-2016 and provide several current examples that are destabilizing our country.

The first root cause of such risk is usually tone at the top.  If integrity and ethics ae modeled by executives at the top of an organization, employees will generally follow the example they observe.  But here, as in the second root cause, “monkey see, monkey do” becomes the norm.  If a corporate website espouses values, employees watch to see if their leaders model those values.

The second root cause of conduct risk is workplace culture.  If there is a mismatch between tone and executive behavior, an adjustment is in order but does not happen overnight.  Consider Wells Fargo or Washington Mutual as examples of companies whose histories reflected strong values and remarkable employees, but for whom growth meant a deterioration of tone at the top rather than an amplification. If we look at examples of large companies struggling with both tone and culture right now, we see particular examples in Starbucks and Boeing, each of which is tasked by shareholders with growing revenue while reducing errors, improving customer perceptions, and in employees and regulators regaining trust in leadership.

I identified conflicts of interest as the third cause of conduct risk.  Like the first two, it is tightly woven into examples of other misconduct.  Upper management in the private sector is exhaustively trained on “insider trading,” which is regulated by the Securities and Exchange Commission, but perhaps not as fully as other conflicts of interest.  A “conflict of interest” definition from the Oxford English Dictionary reads:  “A situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity.” 

Now, let’s look at the situation in which we find ourselves with our government where these root causes of misconduct are concerned:

The administration has removed thousands of senior employees in agencies and departments because they are a mismatch for the newly revised values that manifest in Trump’s  tone at the top.  Removing experts, particularly in nuclear weapon management or the Pentagon or the Centers for Disease Control so as to put inexpert loyalists in charge of agencies with this type of impact is short sighted and can only be interpreted as a fix also for “DEI” or “woke” values that has been derided.  Some agencies, like the Department of Education, are scheduled to be closed, a set of decisions that it will take at least a century to recover from if implanted.

Conflicts of interest abound in the current administration, where certain ventures serve the president and his family as much as they serve the country.  There are other conflicts of interest which are a result of the president’s interference in matters outside the powers that the Constitution gives him, but which tie directly to his hubris and sense of entitlement.  A good example here is the imposition of tariffs across the world, currently under review at the Supreme Court.  Or consider the ever-growing list of Trump swag being offered to his supporters, which long ago surpassed embroidered hats and autographed photos.

The President has been busy outside the United States as well.  He needs to focus media attention on his achievements, not on resistance to his governance like the “No Kings” event in October that drew over seven million people at 2700 different events. He has traveled widely, not only to Europe but to Asia and the Mideast as well.  He is not only signing contracts on tariffs, but he has also inserted his family into the rebuilding of the Gaza strip.

As states worry how to handle SNAP benefits that have not appeared yet this month, volunteers are stepping up to fill the shelves in Food Banks so that those in need can keep going.  That this program as well as the ACA health care supplement have become the sticking issues to opening the country back up and putting our Congressional representatives back to work on a longer term budget is a crying shame, especially when the administration can send monies to other countries without tapping reserve funds.

Finally, like the “No Kings” protest, last week’s local and state elections were another indicator for President Trump that the vote still has power and that perhaps labels don’t matter as much as integrity and passion.  The pragmatism, goodwill, and energy displayed by newly elected senators is telling:  it is time for a newer generation of leadership in the Congress and in the Executive, and we can all do something about that.  The midterm elections are not far away, and it’s time to start working for candidates that will undertake a revision on tone at the top, culture, and conflicts of interest.

This is, in fact, more important than expectations of corrective actions in courts, where the huge risk lies in the increasing use of the strategy commended, evidently, by the president’s favorite past lawyer, Roy Cohn: “deny, delay, delay.”  It has so far prevented manifest impropriety on legal grounds from ever arriving at effective court trials. The practical weight of actual electoral campaigns is enormous and stands now as the most vital means of reclaiming lost integrity at the highest levels of government.

Originally published in ASA News & Notes November 10, 2025