The Role of Ethics
in Organizations
The role that ethical principles play in business might be best appreciated when there are none—when there is a public credibility problem, for example, or when there is a huge scandal resulting in indictments. We do tend to assume that every company is on the straight and narrow and that the people we look up to are honest and morally courageous—that no matter what the situation, they will do the right thing, despite the personal cost. Unfortunately, this is not always a reasonable assumption to make. Our courts are filled with people who compromised whatever ethical principles they had for personal gain.
What an organization stands for is shaped by leadership— its current leadership, but also by past leaders whose principles and standards left a lasting impression on the next generation. But values and principles can only strengthen the organization when they are consistently applied and reinforced in real-life situations—when they are made part of company culture—the way we do things around here.
Changing the culture of an organization to reflect strong ethical principles begins only when the leadership makes corporate ethics a cultural value of the highest importance. This requires long-term commitment. Every leader must then become a role model for these principles if they want them to be adopted by the entire workforce, and emphasize that they exist on a higher plane than goals and short-term success. You might have to redefine your priorities and values and permit employees to question and challenge various perceptions about success. And, of course, it will call for some reprogramming, because some people still believe that winning is more important than how you play the game.
This is not to say that to embrace a policy of conducting business in an ethical manner means that you need to compromise your goals. Business ethics need not be an oxymoron! There are countless examples of successful ethical companies in business today. Ethisphere Magazine’s 2007 list of the world’s most ethical companies includes these recognizable corporations: Xerox, Texas Instruments, Toyota, Volvo, Sharp, Ikea, Nike, and McDonald’s. Aluminum producer Alcoa was singled out for its emphasis on safety and General Electric for maintaining strong ethical-compliance programs that focus on corporate citizenship and social responsibility. Kellogg’s was recognized for its emphasis on environmental concerns and on diversity.
Employees are constantly trying to interpret and understand the many messages they receive from their employer. Be very clear about what the company’s ethical principles are. Leave no room for doubt or confusion or contradiction.
Creating and Maintaining an Ethical Corporate Culture
How, then, should you go about trying to create a company culture based on ethical principles? There are seven basic steps.
Create a Corporate Culture
Based on Ethical Principles in 7 Steps
1. Assess. The first thing you need to do is to take an honest look at the current state of ethics in your organization. Are you and other leaders sending mixed messages? Do you reward certain behaviors considered questionable because they might achieve desired results? Respond honestly, and you will have a good idea about the level of ethical standards existing within your organization.
2. Set goals. Set the standards of right and wrong that you want people to live up to. You might have to create policy statements and outline what you consider to be ethical practices you expect from your employees. Explain them clearly, distribute them, and review them with all employees on a regular basis. These goals should be treated with the same importance as any other business goal you set. Progress toward these goals should be a regular topic at staff meetings and included in your business updates throughout the year.
3. Mandate. You must mandate that ethical behaviors and practices be followed throughout the organization. If you don’t require it and back up your intentions with accountability, you have little chance of changing the culture. You must recognize and reinforce ethical performance and establish consequences for non-compliance, including discipline, up to and including discharge. People need to know that the organization means it when it comes to ethics. Also make sure that employees understand that they will not be retaliated against for reporting unethical behaviors.
4. Measure. Establish programs that will serve as a measure of the ethical practices in the organization. Examples:
• Create an ethics hotline telephone number that employees use to report unethical practices—anonymously, if they desire.
• Create an open door policy so employees feel free to visit their supervisor or manager whenever they want.
• Provide access to top managers by having them visit facilities and worksites throughout the organization on a regular basis.
• Conduct surveys relating to the organization’s ethical practices.
5. Establish accountability. Ethics should be part of every manager or supervisor’s goals. Include the topic on the evaluation form used to assess leader effectiveness. They should be measured on this factor, along with their other business deliverables. Ethics should also be a factor in executive compensation.
6. Model. Perhaps the most important of all is that top management of the organization must model the ethical behaviors that are expected of everyone else. Top management shouldn’t become living contradictions of the ethical policies of the organization. There will be times when difficult decisions have to be made that reinforce the ethical standards of the organization, rather than meet an immediate business need.
7. Challenge. Leaders must continuously challenge the organization to reach for higher ethical standards. Look at all areas of the organization for such opportunities. Look beyond just the financial aspects to things such as product stewardship, environmental responsibilities, community and social issues, and other areas where your organization can have a positive impact on the lives of others.