It's Rarely One Bad Apple: Getting to the Real Cause of an Ethics Crisis How leaders can stop toxic cultures from destroying their companies

Following allegations of sexual abuse against former owner Mohamed Al Fayed, Harrods Managing Director Michael Ward wrote of his "personal horror" that Al Fayed "presided over a toxic culture of secrecy, intimidation, fear of repercussion and sexual misconduct".

While admitting that Harrods had "failed its people", Ward defends his own approach to the allegations, saying: "While it is true that rumours of his behaviour circulated in the public domain, no charges or allegations were ever put to me by the police, the CPS, internal channels or others. Had they been, I would of course have acted immediately."

The entrepreneur and writer Margaret Heffernan's book Wilful Blindness addresses exactly this phenomenon. How, Heffernan asks, can we fail to see – or admit to ourselves or our colleagues – issues and problems in plain sight that can ruin lives and bring down corporations?

In more than a decade working with companies and other organisations to repair and rebuild after serious ethical scandals, I've heard one explanation surface again and again: the "bad apple".

Executives I speak to will often insist, despite a weight of evidence to the contrary, that illegal and unethical conduct is simply the product of so-called "bad apples", unethical individuals that an organisation can only hope to identify and dismiss.

But as academic and author Alison Taylor points out in her essential Higher Ground: How Business Can Do the Right Thing in a Turbulent World, the point of the metaphor is that bad apples spoil the barrel. Toxic behaviour is systemic, endemic, and the responsibility of every leader to root out. Al Fayed's reputation was well-known; executives simply chose not to consider the impact that his behaviour may have had on the broader organisation.

But what can entrepreneurs do within the world of start-ups and scale-ups to understand and address the root causes of unethical conduct?

To some degree, the challenge is more straightforward compared to the decades of entrenched attitudes and norms that dominate the cultures of long-established corporations. But individual leadership is also more critical; the smaller the company, the greater the influence of its leaders.

For founders and entrepreneurs appalled by the stories of systemic abuse at Harrods, don't just be horrified; use it as a salutary lesson, and commit to these things:

1. Create an environment where human dignity is respected and valued: Too often, founders and high-growth companies use ambition as an excuse for disrespect. The glamorisation of the "hustle" and the "grind" provide a veneer of justification over a systematic disregard for humanity, whether applied to employees' working conditions, employment rights, or the company's impact on the environment or human rights. And this fundamental respect can never be replaced by legalistic systems that purport to protect the interests of the employee: whistleblowing hotlines and legalistic grievance procedures are more often designed to protect the interests of the company than to ensure its regard for human rights and dignity.
2. Hire women, trust women, believe women: The entrepreneurial community is still disproportionately dominated by men. Until we collectively solve the fundamental unfairness of a funding environment that regards men as visionaries and women as dreamers, men will also bear a disproportionate responsibility for ensuring that the sector improves.

What can men do? First, hire women. Too many startups and scaleups are still dominated by alpha males drawn straight from central casting.

Next, trust women. Don't become one of those executive teams where women are trusted only to look after HR and communications while the men take care of the money. Too often, women are left to do the hard labour of building the organisation before being cast aside like Edwardian ladies asked to leave the dining table before the arrival of brandy and cigars.

Last, believe women. When women tell you about their experiences in your organisation, don't rationalise, don't belittle, don't defend. Listen to them, believe them, and act. And please don't "imagine they were your wife or daughter"; women don't have to be related to us to be worthy of respect.

1. Consider your company's impact on humans today as much as its possible impact on tomorrow: Above all, don't fall for the temptations of a Silicon Valley-inspired "Founder Mode". If a reliable sign that a revolution is gathering pace is when the old guard starts to squeak, we may be making progress: much of the discourse on Founder Mode is an insipid defence of alpha, authoritarian leadership in a world that is demanding more. Your mission may be important; it may even be vital to the continued survival and prosperity of humanity. But so is the impact you have on people today.

But the lessons of the Harrods debacle are not lessons for corporate structures or compliance programs. This is a story of women who were abused, and people who did nothing to prevent it. It is a reminder that every leader bears a moral responsibility for the standards they set, the behaviours they accept, and their willingness to truly understand what's happening on their watch.

Ignorance – whether through wilful blindness or simple incompetence – is never a defence.