How do businesses encourage and support ethical behavior? Often the ethical tone of a business is set by organizational leadership.
Consider the following observation by the Ethics and Compliance Initiative (ECI) on the results of the National Business Ethics survey:
For discrimination in particular, employees indicated that most of the observed misconduct (56%) was committed by those in leadership. Some industries seem to be particularly perilous for employees; nearly two out of every five employees (39%) in the accommodation and food services industry have observed at least one type of interpersonal misconduct, while fewer than two in ten (17%) employees in professional services observed an incident of misconduct.1Global Business Ethics Survey. Interpersonal Misconduct in the Workplace. Vienna, VA: Ethics & Compliance Initiative, 2018, p. 6.
Management cannot guarantee that employees will behave ethically. But there are processes that significantly improve average behaviors. If a company is looking for ways to boost or ensuring ethical behavior in an organization, this is an interesting and alarming finding. In their report, the ECI suggested five strategies to promote safer and more ethical workplaces:2Global Business Ethics Survey. Interpersonal Misconduct in the Workplace. Vienna, VA: Ethics & Compliance Initiative, 2018, p. 6.
- Make ethics a leadership priority
- Focus on achieving success the right way
- Be attuned to the impact of organizational change
- Nurture a speak up culture
- Be transparent
These findings suggest the important role that executives play in building ethical organizations—ethics and integrity tend to start (or fail) at the top and trickle down.
Additionally, employees want to know whether leaders treat lower-level employees with dignity and respect, share credit when good things happen, and uphold standards even when it reduces revenues and profits. They watch to see whether leaders are steady in crisis, hold themselves accountable or, alternatively, shift blame to others. Workers also look at day-to-day management decisions to gauge whether ethical behavior is recognized and rewarded, or whether praise and promotions go to workers who bend the rules.
The Role of Executives and Managers in Setting Ethical Standards
When executives establish specific, measurable objectives for the company, those objectives determine where people will focus their time and effort. When the objectives cannot be met and there are dire personal consequences for failure, such conditions can lead to the compromise of ethics and standards. In the National Business Ethics Survey, 70% of employees identified pressure to meet unrealistic business objectives as most likely to cause them to compromise their ethical standards, and 75% identified either their senior or middle management as the primary source of pressure they feel to compromise the standards of their organizations.
Executives play an important role in creating company policies on ethics—and by visibly following and upholding them. As the survey data cited above suggest, employees look to executives to decide whether standards-of-business-conduct policies should be observed and respected. When executives bend the rules or turn a blind eye to bad behavior, the policies lose value and executives lose the respect of employees. This opens the door to a range of unanticipated issues, as employees look to ethical norms outside stated policy and beyond the executives’ control.
Ethics Training
Having codes and policies in place that address ethics is not enough. Employees need to be taught how to respond in situations involving ethics. Therefore, many managers enroll their employees in an ethics training program. Ethics programs often involve activities that encourage ethical behavior and reinforce a company’s ethics code/policies.
One ethics activity involves having employees match various scenarios on one set of cards with the possible responses on another set of cards. Every scenario will have appropriate and inappropriate answers. After the participants match scenarios with responses, the group discusses the decision. Discussing the responses gives managers the opportunity to explain why some policies are in place and demonstrate how employees should respond in ethical situations they will likely face on the job.
Selecting and Hiring Ethical Employees
Although it is important, or even required in some cases, to have an established and effective code of ethics, it is crucial to the stability of a company to first hire ethical employees. It is better to hire someone who is naturally inclined to behave in an ethical manner than to rely on a company code of ethics to encourage an unethical employee to make ethical choices.
One method of selecting and hiring ethical employees is the use of personality tests or situation-specific questionnaires. Personality tests can be used to determine temperament, outlook (i.e., whether positive or negative), and mood. Situation-specific questionnaires can be customized by a company and used to uncover how a candidate would react when faced with an ethical dilemma.
Calling personal references may also help hiring managers filter out less ethical candidates. Although this method is used often, it is important to be aware that references often withhold negative information about a candidate. Managers should supplement references with another method of weeding out dishonest candidates.
Best practices in the selection and hiring of ethical employees involve including the company’s most ethical employees in the interview process. Interviewers already doing the job a candidate is applying for can ask relevant questions that can lead to answers that reveal a lot about the candidate, such as a propensity to make unethical decisions.
Fostering Ethical Decisions
In addition to establishing a code of ethics, hiring ethical employees, and protecting whistleblowers, key aspects of senior management’s role in fostering ethical decisions and behavior in any organization include planning, implementing, and communicating the specifics of an ethics program. Ethics programs disclose important corporate values, often through the use of policies and employee/manager training. After a program has been implemented, senior management should monitor and evaluate it and then modify the program as needed or desired to ensure its effectiveness.
It is also important for senior management to model ethical behavior. The responsibilities of senior management in modeling ethical behavior include the following:
- Act ethically and be seen to act ethically.
- Be active in the ethics program. For example, introduce the ethics training or be the person to speak.
- Encourage employees to raise issues.
- Address ethics issues.
- Enforce the ethics program, such as by punishing violators.
- Ethics programs are like an insurance policy. They help mitigate the worst consequences when employees do stray, and they help prevent “accidents” by raising employee “safety” awareness.
Internal promotions send very strong signals about what is important to a company. When the company hires an employee from a different company, she is likely not well known by most employees. If the company promotes an employee who is already working at the company, others know him and understand what he has done to deserve the promotion. If the company promotes individuals to management positions when they have displayed questionable ethics in the workplace, it creates two issues. First, it creates a level of managers who are more likely to encourage their employees to achieve business results at any cost, even when ethics are compromised. Second, it sends a message to all employees that business results are more important than ethics.
Decisions about doing the “right thing” are not necessarily represented by a single big decision; rather, they are often a series of many apparently small decisions that can culminate in an organization finding itself on the wrong side of its stakeholders, society, and the law. Even corporate executives who have been imprisoned for unethical conduct later admit that they knew that what they were doing was wrong, but somewhere along the line they lost sight of their own standards or honesty and integrity. Unfortunately, such behavior can have devastating consequences for the public, the environment, and the company—and it can cast a cloud on businesses that make good ethical, legal, and socially responsible choices every day.
Management 2020 text remixed from multiple sources under a CC Attribution-NonCommercial-ShareAlike 4.0 International License. View a complete list of original sources.
