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ethics.docxEthics: The Key to Organizational Culture.
Authors:
Bart, Chris
Source:
Canadian Manager. Fall2011, Vol. 36 Issue 3, p4-6. 3p.
Document Type:
Article
Subjects:
Business ethics
Corporate culture
Work ethic
Enron Corp.
Employee recruitment
Professional ethics
Abstract:
The article discusses strategies for establishing an ethical organization. It names several companies that experienced moral failures including YBM Magnex, Enron, and Berkshire Hathaway, and notes the importance of trust in promoting an ethical work environment. It explains the need for the company's leadership to define an ethics code that describes how good behavior affects operations and business starting with recruitment, job descriptions, employee training, and performance management.
Lexile:
1300
Full Text Word Count:
1179
ISSN:
0045-5156
Accession Number:
67012916
Database:
MasterFILE Premier
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Ethics: The Key to Organizational Culture
Contents
ARTICULATE YOUR ETHICS CODE
ETHICS AND THE HIRING PROCESS
ETHICS AND ROLE DESCRIPTIONS
ETHICS TRAINING AND DEVELOPMENT
ALIGN YOUR ETHICS CODE WITH YOUR PERFORMANCE MANAGEMENT SYSTEMS
Listen
EXPERT ADVICE
The word ethics is widely used - and misunderstood - in business. Yet, ethics are incredibly important. They define our moral principles and our rules of conduct. Quite simply, they define 'good' versus 'bad' behaviour. 'Ethics' has quickly become one of the top five topics facing corporations. And with good reason. The bad behaviour of corporations and the senior managers who lead them has produced some remarkably shameful examples of just how far our moral compass has gone astray - and not just in a few instances. YBM Magnex. Hollinger. WorldCom. Enron. Hewlett Packard. Lehman Brothers. Even the great Berkshire Hathaway is not immune, with the supposed successor to Warren Buffett (David Sokol) being fired for insider trading. And the list goes on.
The result of these scandals has been an unprecedented decline in the trust and respect that society gives to its once revered corporate institutions. For instance, according to the latest Edelman Annual Trust Barometer (2011) only 50% of 5,075 participants surveyed in 23 countries think CEOs are credible sources of information. Only 53% think financial/industry analysts are credible sources of information; and 94% do not believe information is trustworthy unless it comes from multiple independent sources. Moreover, trust in the US has dropped from 53% in 2008 to 42% in 2011. And in another major study by ethics guru John Delia Costa, it has been reported that 8 eight out of ten Canadians perceive a steep decline in their trust of corporations, and 40% of employees report having witnessed ethics transgressions of varying magnitude.
Promoting and restoring an ethical work environment, therefore, is ultimately about trust. Because, without trust, you and I can't rely on the words or promises of others. Moreover, the costs to the organization to compensate for the trust deficit can easily become extraordinary with demands for stricter and higher regulatory compliance, slower decision processes, 'over' diligence and even brand equity erosion. Ultimately, customers rarely will buy the products or services of companies they don't trust. And winning back a customer you have lost is often nearly impossible.
Accordingly, without the ethical behaviours which promote trust, it will be exceedingly difficult for any organization to accomplish anything - let alone, its organizational strategy.
To build an ethical organization - based on trust - it is important that each of the following steps be implemented.
ARTICULATE YOUR ETHICS CODE
The leadership of an organization needs to define what constitutes an organization's ethical orientation. This is usually expressed in the form of an 'ethics code', which details in precise terms both acceptable and unacceptable behaviour. A well-crafted code, however, not only describes what not to do, but also what the organization looks like when everyone is operating 'at their best'. A truly marvelous example of this style of code can be found at the website of the Kraft Foods Company www.kraftfoodscompany.com/assets/pdf/codeofconduct.pdf. And they have a separate one specifically aimed at the conduct of the board of directors as well.
As a general rule, creating such a code should not be done as a reaction to a crisis, as this will signal that ethics matter only when the organization is in trouble. Ethics must be a standard operating condition. In addition, it is important that the code be seen as a critical strategic factor - something important to the success of the organization - as opposed to simply something that needs to be done to satisfy the regulators and/or company critics.
But defining ethical conduct in a written document is no guarantee that the behaviours required will in fact follow. Since the goal is to instil and maintain a culture of trust, it is important that the code be made real for every person - both new and old.
ETHICS AND THE HIRING PROCESS
For new employees, this means that the ethical code must be used as part of the selection process. The code should be made available to all prospective candidates prior to an interview. During the interview process, potential new hires should be invited to discuss the degree to which it aligns with their personal ethics. They should be asked for specific examples and ultimately to express their acceptance of the code. This might even involve some mini-case or problem solving exercises. Once hired, the ethics code should form part of the orientation process and individuals should be asked to describe specifically - in behavioural terms - how it will affect their work.
ETHICS AND ROLE DESCRIPTIONS
For both new and current employees, all job descriptions should make reference to the code and state explicitly the expectation that every employee will adhere to it. Indeed everyone should be asked to sign, on an annual basis, both their understanding and acceptance of the organization's code. The aim, up to this point, is to ensure that everyone knows exactly what it is that they should do to make the code real and why they should do it. HR should be the prime orchestrator of this process.
ETHICS TRAINING AND DEVELOPMENT
Unfortunately, knowing what to do and why it should be done is sometimes not enough to get the ethical behaviours desired - particularly among the existing cadre of employees and old-timers who have been inoculated to accept - and even perpetrate - ethical transgressions. A comprehensive and aggressive training program will ensure that the values detailed in the ethics code have meaning for each person in his or her job. Role playing, simulations and case examples should all be provided to demonstrate the organization's new commitment to the code. While this may sound pretty obvious, it is surprising to learn that even with 90% of Fortune 500 companies reporting to have codes of ethical conduct, only 45% have training programs specifically related to them.
ALIGN YOUR ETHICS CODE WITH YOUR PERFORMANCE MANAGEMENT SYSTEMS
The final leg of the journey on the road to an ethical work environment, however, involves adjusting the organization's performance management system to include ethical behaviour as an important criterion for performance measurement, promotion and possibly even termination. This is the acid test that determines just how seriously a company takes its own ethics/values code. More than anything, it means being prepared to fire those managers who, despite having 'delivered on the numbers', do not 'live the company's values'.
Employee surveys also need to be adjusted to measure the perception - particularly of the organization's front line workers - regarding the impact that leadership behaviours are having on them. Again, it's usually HR's responsibility to report with high transparency on those results and to initiate ways to take corrective action.
By following these guidelines, organizations can help restore the trust which most individuals - operating as customers, employees or governors - long to have return.
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By Chris Bart, Dr., F.C.A.
