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.
If a company is looking for ways to boost or ensure 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. 16.
- 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 percent of employees identified pressure to meet unrealistic business objectives as most likely to cause them to compromise their ethical standards, and 75 percent 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.
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 may know her and understand what she 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.