What You Can Do to Improve Ethics at Your Company
Enron. Wells Fargo. Volkswagen. It’s hard for good, ethical people to imagine how these meltdowns could possibly happen. We assume it’s only the Ken Lays and Bernie Madoffs of the world who will cheat people. But what about the ordinary engineers, managers, and employees who designed cars to cheat automotive pollution controls or set up bank accounts without customers’ permission? We tell ourselves that we would never do those things. And, in truth, most of us won’t cook the books, steal from customers, or take that bribe.
But, according to a study by one of us (Christopher) of C-suite executives from India, Colombia, Saudi Arabia, the U.S., and the U.K., many of us face an endless stream of ethical dilemmas at work. In-depth interviews with these leaders provide some insight and solutions that can help us when we do face these quandaries.
We were surprised that 30 leaders in the study recalled a total of 87 “major” ethical dilemmas from their career histories. Over 50 had occurred in the course of the last five years. Another surprise was how few of the incidents were caused by bribery, corruption, or anti-competition issues (only 16% of all ethical dilemmas mentioned). More often the dilemmas were the result of competing interests, misaligned incentives, clashing cultures.
Based on this study and our collective experience of working with thousands of business leaders, there are a number of obstacles and contradictions we see most often impact the ability to act ethically:
While these obstacles stand in the way of making ethical decisions, they aren’t insurmountable. Here’s what we learned from the leaders in the study about what worked for them in improving the ethical climate in their organizations:
Know where you stand
The senior leaders in the study told us that, in contrast to what corporate compliance officers would like us to believe, their organizations’ codes of conduct and ethics training wasn’t particularly helpful when it came to managing ethical dilemmas. Rules and regulations often don’t cover the majority of ethical issues, especially those around people and resource trade-offs. Even the law, they said, is limited as it’s usually geared to big transgressions.
Instead, you need to understand what matters to you. Companies become ethical one person at a time, one decision at a time. If you don’t know where you stand, or if you can’t accurately read your organization’s underlying culture, you’ll find yourself blowing in the wind (at best). Emotional intelligence can help you here. Self-awareness enables you to build and strengthen that inner compass. Organizational awareness enables you to identify the forces in your company’s culture and processes that could drive you and others to do the wrong thing. You also need emotional self-control: it takes courage to step away from the crowd and do the right thing.
Learn what really matters in your organization
To be prepared to challenge the unwritten rules of your organization — and the systems that support them — you need to learn to listen to weak signals about what the organization truly values. There will usually be lip service to doing the right thing, but what happens in practice? You can, for example, pay more attention to:
Build a strong and diverse personal network
According to the study, the most useful resource that leaders have when faced with an ethical dilemma is their own personal network. This provides an informal sounding board and can highlight options and choices that the leader may not have considered. When making ethical decisions, it’s important to recognize that your way isn’t the only way, and that even mandated choices will have consequences that you must deal with.
The challenge is that most leaders have networks full of people who think and act like them and many fail to seek out diverse opinions, especially in highly charged situations. Instead, they hunker down with people who have similar beliefs and values. This can lead to particularly dire consequences in cross-cultural environments.
To overcome this, you need another core emotional intelligence competency, empathy, which allows you to learn how to read others and truly understand what matters to them and what they care about. This will, in turn, help you connect with people and gather their thoughts, opinions, and help when you need them.
Speak up
If, after consulting your network, you believe something’s going wrong, it may be time to be brave and speak up. Leaders in the study repeatedly highlighted the positive consequences of speaking out and at least trying to resolve their ethical dilemmas by remaining true to their own personal values.
If you find you need to speak up, there will be a number of choices to be made. Do you talk to the boss? Consult with peers? Work with advisory functions such as legal, compliance or human resources? You can draw on your personal network for support and guidance on the right way forward within the context of your unique situation.
The leaders in the study were clear about the consequences of taking these actions: increased self-respect, improved confidence in their ability to address future dilemmas, and a more ethical work climate. And perhaps more importantly, taking brave action made them happier at work.
Christopher McLaverty advises companies on their capability architecture and leadership development programs. He holds a Doctorate from the University of Pennsylvania and a Masters in Coaching Consulting and Change from INSEAD. His research focuses on business ethics, organization dynamics, networking and leadership development in cross cultural work environments.
Annie McKee is a senior fellow at the University of Pennsylvania Graduate School of Education and the director of the PennCLO Executive Doctoral Program. She is the author of How to Be Happy at Work and a coauthor of Primal Leadership, Resonant Leadership, and Becoming a Resonant Leader.
What You Can Do to Improve Ethics at Your Company
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