Nurturing an Ethical Corporate Culture
It would be nice if corporate codes of ethics and lists of values could really keep companies on the straight and narrow. Alas, history proves that it's not that easy. Creating an ethical organization often means delving into the murk of corporate culture, the sometimes prickly matter of leaders' personalities, and the threatening subject of whistle-blowing.
It's a shame that the development of codes and standards isn't the key to preventing bad corporate behavior. After all, during the 1990s, there was a big increase in the percentage of U.S. companies with written ethics standards, which jumped from 60% in 1994 to 79% in 2000, according to a survey conducted by the Ethics Resource Center. The most common element of written ethics codes is a listing of values and principles, used by about three quarters of U.S. and Canadian firms surveyed by professional services provider KPMG. Slightly over half of those companies had specific rules of conduct and ethics guidelines.
The problem is that values and codes can wind up as organizational window dressing. Take the case of a large U.S. corporation that touted the values of communication, respect, integrity and excellence while maintaining laudable policies in regard to human rights and anti-corruption. It turns out that the company was Enron.
Enron may have become the poster child for organizations where aggressive corporate cultures drown out ethical decision-making, but the underlying dynamics are fairly common. In lots of companies employees face so many mixed messages that they become cynical about "value statements." In fact, the most commonly cited reason for unethical behavior in corporations is a working environment marked by cynicism and low morale, according to the KPMG survey of over 2,300 working adults. More than six in 10 of respondents to that survey said their employers would not punish people who had done something wrong.
Other studies show similar findings. For example, in-depth interviews with HR professionals and accountants working in various UK organizations found that "ethical cynicism" is a coping strategy for many employees presented with ethical dilemmas. These employees silently live with work behaviors that trouble their consciences, doing so in order to protect present or future job prospects, according to researcher Alan Lovell writing in The Journal of Business Ethics.
The question is how to develop a corporate culture that melts away such cynicism. One cultural component needs to be that employees can speak up without fear of reprisal. "It is absolutely and unequivocally important to establish a culture where it is possible for employees to complain and protest and get heard," says Michael Josephson, founder of Josephson Institute of Ethics, in Workforce magazine.
There are various ways to create a more open culture, such as through employee surveys and hotlines that ensure confidentiality. Sears, for example, provides its employees with helplines. Calls can be directed to specialists who are carefully trained to resolve conflicts and, if need be, to launch investigations.
Developing a more open culture also requires leaders who are consistently modeling the right behaviors. Leaders that berate or harass employees who call attention to ethical problems can swiftly erode ethical work cultures, whatever organizational mechanisms and standards have been put in place. Sometimes, of course, leaders send messages in more subtle ways, such as by giving bonuses or promotions to workers who "make their numbers" while cutting ethical corners. Such practices send very strong signals.
Storytelling also plays a critical role in culture formation. One way of nurturing an ethical corporate culture is to share stories about employees who've raised important issues to the ultimate benefit of the company. Such stories can go a long way in encouraging people to question the types of business decisions that have recently caused the demise of some major U.S. corporations.
An article on the "ideal corporation" can be found at
http://www.businessweek.com/magazine/content/02_34/b3796603.htm
An article on creating better corporate cultures can be found at
http://www.aligningthestars.com/aligningthestars/media_mentions_detail.asp?ID=8347
The KPMG ethics survey "Managing for Ethical Practice" can be found in PDF format at
http://www.kpmg.ca/english/services/docs/fas/ethicssurvey2000e.pdf
More information on the Ethics Resource Center can be found at
http://www.ethics.org/
More information on the Josephson Institute of Ethics can be found at
http://www.josephsoninstitute.org/
A good article on more open workplace communication is Janet Wiscombe's "Don't Fear Whistle-Blowers" in the July 2002 issue of Workforce magazine. The company's Web site can be found at
http://www.workforce.com/
It's a shame that the development of codes and standards isn't the key to preventing bad corporate behavior. After all, during the 1990s, there was a big increase in the percentage of U.S. companies with written ethics standards, which jumped from 60% in 1994 to 79% in 2000, according to a survey conducted by the Ethics Resource Center. The most common element of written ethics codes is a listing of values and principles, used by about three quarters of U.S. and Canadian firms surveyed by professional services provider KPMG. Slightly over half of those companies had specific rules of conduct and ethics guidelines.
The problem is that values and codes can wind up as organizational window dressing. Take the case of a large U.S. corporation that touted the values of communication, respect, integrity and excellence while maintaining laudable policies in regard to human rights and anti-corruption. It turns out that the company was Enron.
Enron may have become the poster child for organizations where aggressive corporate cultures drown out ethical decision-making, but the underlying dynamics are fairly common. In lots of companies employees face so many mixed messages that they become cynical about "value statements." In fact, the most commonly cited reason for unethical behavior in corporations is a working environment marked by cynicism and low morale, according to the KPMG survey of over 2,300 working adults. More than six in 10 of respondents to that survey said their employers would not punish people who had done something wrong.
Other studies show similar findings. For example, in-depth interviews with HR professionals and accountants working in various UK organizations found that "ethical cynicism" is a coping strategy for many employees presented with ethical dilemmas. These employees silently live with work behaviors that trouble their consciences, doing so in order to protect present or future job prospects, according to researcher Alan Lovell writing in The Journal of Business Ethics.
The question is how to develop a corporate culture that melts away such cynicism. One cultural component needs to be that employees can speak up without fear of reprisal. "It is absolutely and unequivocally important to establish a culture where it is possible for employees to complain and protest and get heard," says Michael Josephson, founder of Josephson Institute of Ethics, in Workforce magazine.
There are various ways to create a more open culture, such as through employee surveys and hotlines that ensure confidentiality. Sears, for example, provides its employees with helplines. Calls can be directed to specialists who are carefully trained to resolve conflicts and, if need be, to launch investigations.
Developing a more open culture also requires leaders who are consistently modeling the right behaviors. Leaders that berate or harass employees who call attention to ethical problems can swiftly erode ethical work cultures, whatever organizational mechanisms and standards have been put in place. Sometimes, of course, leaders send messages in more subtle ways, such as by giving bonuses or promotions to workers who "make their numbers" while cutting ethical corners. Such practices send very strong signals.
Storytelling also plays a critical role in culture formation. One way of nurturing an ethical corporate culture is to share stories about employees who've raised important issues to the ultimate benefit of the company. Such stories can go a long way in encouraging people to question the types of business decisions that have recently caused the demise of some major U.S. corporations.
An article on the "ideal corporation" can be found at
http://www.businessweek.com/magazine/content/02_34/b3796603.htm
An article on creating better corporate cultures can be found at
http://www.aligningthestars.com/aligningthestars/media_mentions_detail.asp?ID=8347
The KPMG ethics survey "Managing for Ethical Practice" can be found in PDF format at
http://www.kpmg.ca/english/services/docs/fas/ethicssurvey2000e.pdf
More information on the Ethics Resource Center can be found at
http://www.ethics.org/
More information on the Josephson Institute of Ethics can be found at
http://www.josephsoninstitute.org/
A good article on more open workplace communication is Janet Wiscombe's "Don't Fear Whistle-Blowers" in the July 2002 issue of Workforce magazine. The company's Web site can be found at
http://www.workforce.com/