PRACTICE WHAT YOU PREACH: WHY ETHICAL POLICIES ARE GOOD FOR BUSINESS

Alex Herd • February 26, 2026

Share this article

The failings of the Catholic Church and other similar institutions offer lessons not just for religious organizations, but any organization faced with issues that could result in potential scandal.


The Catholic sexual abuse scandal again came to light after a Pennsylvania grand jury found that over 1,000 victims had been sexually abused by more than 300 priests over 70 years and that many employees of the Catholic Church were involved in covering up the abuse. How was it that so much abuse was able to be hidden from the public eye for so long? The answer to this question holds lessons for all institutions who want to ensure they take the right steps in the face of allegations of misconduct.


The most likely explanation is that the Catholic Church was protecting its reputation and rather than deal with the optics of priests being investigated and convicted of sexual abuse against children, the church tried to cover up the details and deal with the problem internally. In other words, the church created a de facto policy that when allegations surfaced that its priority would be to ensure that the allegations were not made public and the abuse not reported. When details did surface in the community, the Catholic Church would simply transfer the priest to a new church where the parishioners would not know he was a child abuser. As the grand jury put it, the church followed “a playbook for concealing abuse.” That “playbook” was policy. More details about this policy may be coming to light after the New York State Attorney General’s Office issued subpoenas to every Catholic diocese in the State as part of its investigation into sex crimes committed by Catholic priests.


All businesses, especially churches, should have a policy “playbook” in place so that when something goes wrong, there’s a procedure to follow with a reporting protocol. While it makes sense to consider public image, there are legal, and often more importantly, ethical considerations that should go into those policies. An organization must have a policy in place that’s rooted in doing what’s right, rather than covering up shortcomings. Buy-in from the highest levels—including the general counsel—along with resources devoted to implementation of protocol, is the only way to ensure effective compliance with policy.


This is critical when the safety of children is involved. During the decades that this abuse was ongoing, it should have been obvious to the church employees that covering up sexual abuse raised serious ethical concerns and liability.


Willow Creek Community Church, a megachurch near Chicago, recently dealt with a similar issue when the entire leadership team resigned due to frustration with the response of church elders when allegations of sexual misconduct were made against the pastor. In 2013 and 2014 the church elders were made aware of a number of complaints of harassment during the prior two decades, including unwanted touching, kissing and sexual comments made to parishioners and church employees, according to the Chicago Tribune. The church was slow to bring any investigation or punishment against the pastor, exacerbating an already damaging situation.


The churches involved in these scandals would have benefited from policies that focused on identifying abuse, reporting the abuse to authorities and demonstrating transparency with the congregation. Focusing on the safety of the children and other parishioners would have, in turn, protected the organization from reputational harm and liability. Instead, these churches went to great lengths to protect their own employees, despite knowledge of the terrible acts they had engaged in. Even though many priests may be protected by the statute of limitations, it will take years for the organization to regain the trust of the community it depended on for charitable donations.


Putting safety first isn’t an issue unique to churches. For example, it didn’t take long for a lawsuit to be filed on behalf of the families of several victims of the July 19 duck boat tragedy in Branson, Missouri, where 17 passengers drowned. The complaint, filed in federal court, seeks $100 million for negligence, wrongful death and product liability from Ripley Entertainment, Ride the Ducks of Branson, Herschend Family Entertainment and other defendants.


This unspeakable tragedy could have been avoided entirely, the complaint alleges, if the defendants had simply not sent the boat out onto the water with the reports of a storm approaching or if they had required the passengers to wear life vests. The defendants are also alleged to have ignored safety recommendations made by the National Transportation Safety Board following a duck boat accident in 1991. The defendants weren’t required to follow these recommendations by law, but they had ethical obligations to protect the safety of their customers. The defendants’ failure to create critically important policies or follow their existing policies may be to blame for the tragic deaths of their customers.


Many businesses will likely face similar decisions, even if not on the same scale as protecting thousands of children from abuse. Businesses may be tempted to create policies with the goal of saving money or alleged protection of reputation. However, more often than not, prioritizing safety through sound policy is the best investment a business can make.


This article can be viewed on Corporate Counsel.


Recent Posts

By Alex Herd • September 28, 2026
How to avoid misclassification mistakes.
By Alex Herd • August 31, 2026
What you should know about personal guarantees
By Alex Herd • August 12, 2026
What makes a business purchase or sale so complicated?
By Alex Herd • July 31, 2026
The Rule That Almost Killed a Practice Sale
By Alex Herd • July 15, 2026
Why We Prefer Flat Fees
By Alex Herd • May 4, 2026
The Importance of Planning Ahead
By Alex Herd • April 10, 2026
New Title
By Alex Herd • March 16, 2026
Most business disputes do not begin with a dramatic betrayal or a screaming match in a conference room. They usually start with something smaller. A cost increase. A delayed payment. A vague agreement. A partner making a decision without full buy-in. A vendor relationship that starts drifting off course. A client who expected one thing and believes they got something else. In other words, business conflict often starts the way many business problems start: with ordinary pressure and unclear expectations. Rising prices are one common trigger. So are cash flow issues, shifting responsibilities, changing priorities, poor communication, and disagreements about who has the authority to make decisions. On their own, these issues may seem manageable. But when they are layered onto a weak contract, a strained relationship, or a lack of process, they can turn into real legal and operational problems. Common issues that lead to business conflict Conflict can grow out of all kinds of day-to-day business issues, including: increased costs or pricing disputes unpaid invoices or late payments disagreements between owners or partners vendors failing to perform as expected clients pushing beyond the original scope of work unclear contract terms one side changing expectations midstream unauthorized decisions or commitments misunderstandings about roles, responsibilities, or ownership What these situations have in common is that they tend to raise the same underlying questions. What was actually agreed to? Who had authority to act? What does the contract say? What was communicated? And what is the smartest way to respond now? Why these problems escalate so quickly A lot of business relationships function on momentum and trust. That is not always a bad thing. But when something changes, whether it is money, timing, performance, or priorities, the gaps start to show. That is often when businesses realize: the contract does not clearly address the issue the parties understood the arrangement differently internal decision-making was not as clear as everyone assumed important communications were never properly documented nobody addressed the issue early because they hoped it would work itself out Hope is useful in many parts of life. It is not a particularly strong dispute resolution strategy. The best move is to be proactive The most effective way to deal with business conflict is often to reduce the chances of it happening in the first place. That usually means tightening up a few fundamentals. Clear agreements A good contract should do more than capture the basic deal. It should help address what happens when things go wrong or change. That can include pricing terms, payment obligations, approval procedures, change-of-scope terms, termination rights, ownership rules, and dispute resolution provisions. The less clear the agreement, the more room there is for conflict when pressure hits. Clear internal rules Many disputes are not just external. They are internal too. A partner, manager, or owner acts without full authority, makes a commitment, moves money, or changes direction, and now the business has a relationship problem both inside and outside the company. Clear internal governance and decision-making procedures can help prevent a lot of unnecessary damage. Clear communication Business disputes often get worse because people respond too fast, too casually, or too emotionally. One poorly worded email can make a solvable issue harder to resolve. A more strategic approach is usually to pause, review the documents and facts, and respond with a plan instead of irritation. What to do when conflict has already started Once a dispute is underway, speed matters. That does not mean every disagreement needs to become a legal battle. In fact, many disputes are best resolved through practical negotiation, better documentation, or a carefully structured business solution. But waiting too long can reduce options and increase cost. Getting help early can make it easier to: evaluate the legal and practical issues preserve useful leverage avoid admissions that create bigger problems protect important documents and communications resolve the issue before positions harden Often the goal is not simply to “win.” It is to protect the business, contain the distraction, and reach the best available outcome under the circumstances. The visible problem is not always the real problem What looks like a simple disagreement about money, timing, or performance may point to a larger issue underneath. A vendor dispute may reveal a bad contract. A client payment issue may expose scope creep or poor approval practices. A disagreement between partners may uncover governance problems that have been simmering for years. That is one reason it is important not to look at these issues too narrowly. The immediate conflict matters, but so does the structure around it. A practical legal approach matters Not every business dispute should be handled aggressively from the start. And not every issue should be treated like a minor misunderstanding either. The right response depends on the facts, the documents, the business relationship, the amount at stake, and the client’s goals. Sometimes preserving the relationship is the priority. Sometimes the priority is getting paid, limiting exposure, or stopping things from getting worse. That kind of judgment is hard to apply when you are in the middle of the conflict yourself. Final thought Business conflict often starts with a common problem that was never handled clearly enough on the front end. The best thing to do is be proactive: use strong contracts, clear processes, and thoughtful communication to reduce the chance of trouble. The next best thing is to get help quickly once the trouble starts. Many business disputes can still be resolved effectively, but they usually do not improve by being ignored.
By Alex Herd • February 27, 2026
Your Business Partner Took Money or Signed a Deal Without You: What Now?
Show More