5 ways to keep scandals at bay

The past decade made a mark for record U.S. auto sales and profits. On the flip side, there was a much darker tally: a stream of scandals and malfeasance that scarred some of the industry's biggest players.

It kicked off in 2010 with a price-fixing probe that ended up snaring some four dozen parts suppliers.

More recently, a bribery and corruption scandal reached the very top of the UAW. In between, General Motors' ignition switch fiasco and Volkswagen's diesel cheating saga exposed deep cultural flaws inside the automakers. Dramas surrounding misstated fuel economy figures made it into the unsavory mix as well.

Each episode was unique. Some cost lives, others jail time and careers. Yet each was alike in bringing shame and untold costs to their respective institutions. They were also embarrassments to anyone who takes pride in being part of a great automotive community.

Now, as if to prove the 2010s were no fluke, we have this month's indictment of Bob Brockman, CEO of dealership services provider Reynolds and Reynolds, on allegations of tax evasion and money laundering.

Brockman has pleaded not guilty. But when the chief of the IRS' criminal division says the case disgusted him so much he flew to California to join the press conference announcing the 39 charges, you can sense that Mr. Brockman is facing a long day in court.

As for the other scandals, there have been plenty of apologies and "never again" vows. Some have even served as touch points for new beginnings, such as GM CEO Mary Barra's stirring "I never want to put this behind us" address to thousands of employees in 2014.

What we don't see much of is companies actively taking steps to avoid such disgraces in the first place.

It can be done, says Nien-he Hsieh a professor of business administration at the Harvard Business School and a member of the faculty committee at the Edmond J. Safra Center for Ethics.

He says he hasn't systematically tracked whether the number of cases in the business world is on the rise. But he feels safe in saying that competitive pressures and a weakening economy increase the risk.

Hsieh shared with me five thoughts on how companies can better control their fate:

1. Being proactive goes a long way. Companies can cultivate an awareness on the part of employees so they know where, when, why and how they should speak up. There's a bonus beyond nipping scandals in the bud: "People want to work for a company where their values are openly reflected," he says.

2. Being honest about the potential for such issues to surface gives employees permission to have difficult conversations. Companies should further empower workers by providing training on how to have those conversations.

3. People need to feel safe in speaking up. They have plenty of reasons to not come forward. It can be time-consuming, for one. What's more, the scrutiny can bounce back to the person waving the flag of concern. Companies need to understand that as they seek to create trust.

4. Companies need to battle the notion that speaking up won't make a difference. This can get complicated because any investigation of a complaint must be done privately. Action can be demonstrated, however, without getting into specifics. For example, companies can communicate how much time is being spent addressing such issues. This builds goodwill by revealing a concern for everyone's ethical well-being.

5. Building an ethical workplace can help fight worker apathy. "A lot of work is not seen as meaningful," he says. Giving people a reason to see their jobs in the context of a broader mission can help diminish such feelings.

Like any corporate mission, it needs to be sustained to be effective, Hsieh says. Regular maintenance and inspection are critical. And there has to be a demonstrated commitment on the part of senior management.

Yes, there will be mischief as long as there are humans and money and competition at play. But given the toll of this industry's reputation-shredding messes, preventive steps would be a small price to pay for some insurance.