Establishing an Ethical Culture

A man goes to the doctor and says, “Doctor, I’ve become a compulsive thief.” The doctor prescribes him pills and says, ‘If you’re not cured in a couple of weeks would you get me a widescreen television?’ ”

This sentiment goes hand-in-hand with research by the Ethics Resource Center which has shown that there is a strong correlation between the health of the organization’s culture and the number of instances of observed misconduct.  In a 2011 survey on ethics and culture, the National Business and Economics Society found that 42% of employees indicated their company had a weak ethics culture compared with 35% in 2010.  With unethical behavior on the rise, it is critical that businesses provide leadership, knowledge and resources to help employees act ethically.

How Does a Business Establish an Ethical Culture?

It has been said that our values influence our attitude, and our attitude influences our behavior. The first step then in establishing an ethical culture is defining the core values of your organization. Senior management should take the lead in defining your core business principles and what ethics means in your environment.  It would be wise however to include input from your employees to ensure the principals actually model the culture and behavior in the trenches of your company.  Once implemented, these values should be demonstrated by all, but especially by company leaders.

Ensuring that your organization has the right people in place is another essential factor in creating an ethical culture. When interviewing, managers should pay as much attention to the candidate’s values as they do to their technical skills. During new hire orientation, emphasis should be placed on your organization’s values and ethics and how that manifests itself in your day-to-day operation. However, the conversation should certainly not stop at new hire orientation; the values of the company should be ingrained in the minds of all employees, no matter how long they have been with your organization.

Once organizational values have been established, they must be continually reinforced and rewarded.  Posting your values is one thing – actually walking the talk is another.  Don’t focus on creating posters as much as rewarding the ethical behaviors your company has embraced.  Nothing helps to motivate employees than including it as part of your annual performance review/reward process.

Another critical tool to demonstrate your commitment to ethical behavior is to establish a confidential reporting system that provides employees with a safe and anonymous way to report inappropriate, unethical, or illegal activities. They key here is don’t roll it out if you’re not serious about investigating and enforcing ethical behaviors.  This goes a long way in showing to your employees (and the courts) that ethical behavior is a requirement at your company.

Practical Guidelines

Everyone has a role to play in establishing and maintaining an ethical workplace environment, but a company’s leaders set the tone that will be emulated throughout the organization. Here are a few practical guidelines to think about as you focus on creating an ethical environment:  

1. Foster a professional and productive work environment:  People who enjoy their work environment will always perform at higher levels and be less tempted to go outside the ethical standards.

2. Be fair and maintain the trust of your employees:  Treat employees and senior management fairly and consistently (this is especially important when handing out bonuses and raises).  Favoritism or inequity can significantly reduce your employees’ commitment to the company’s success and ethical behavior in general.

3. Understand that asking for the impossible may result in unethical behavior:  Recognize that if you put a significant amount of pressure or demands on an employee, it may result in unethical behavior in order to do the impossible.  Try to maintain a sense of balance and understanding even in the most trying of times.  As Charlie Bower said: “The expedient thing and the right thing are seldom the same thing.” 

4. Be reliable and honest:   Transparency in companies can be challenging; however, honesty really is the best policy.

5. Reward employees for demonstrating the values of the organization:  Let employees know that an ethical culture is required for working at the organization and it will be recognized and rewarded.  On the flipside, ensure that non-ethical behavior is not tolerated.

In closing on this subject, I thought Robert A. Cook said it best:  “There is no substitute for character. You can buy brains, but you cannot buy character.”