When the Ethics Bubble Bursts...

As we start to recover from the recession, it’s important that executives pay attention to the messages they’re sending to employees.

Posted by Joe Gerard in on February 4th, 2010

After yesterday’s post about the findings in the 2009 Ethics Resource Centre National Business Ethics Survey, we’d like to share some of the survey recommendations. Depending on your role, the ERC outlines specific steps to ensure you’re prepared when the ethics bubble bursts.

They recommend that we begin preparing for a return to business as usual and implement corporate structures to incentivize and reward ethical behavior.

For Executives

  • Prepare for the return to business as usual
  • Establish performance goals for senior managers on ethical leadership

As we start to recover from the recession, it’s important that executives pay attention to the messages they’re sending to employees. Take the time to observe your own actions in the workplace and ensure that you’re a positive, ethical role model – as we mentioned in yesterday’s post, a successful corporate culture starts at the top. Through setting detailed goals for yourself, as well as for those at other levels of management, it becomes easier to measure the strength of the ethical corporate culture and improve upon weak areas.

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The ERC also recommends measuring the current strength of your corporate culture. If your results prove to be positive, work on heightening your approach as performance increases. If your results prove negative, it is crucial to set an ethical example for your peers, put an ethics code into place and speak openly with employees about improvements that could be made to help build a stronger ethical culture.

The key benefit of being proactive and establishing a strong ethical culture is that the level of risk for future workplace misconduct will decrease. Making ethical practices part of employee expectations and performance reviews, assists in holding employees accountable for their actions, further reducing the risk of workplace misconduct. Senior managers need to focus on being ethical leaders in the workplace in order for others to follow.

For Directors:

  • Create an ethics committee of the board
  • Recruit knowledgeable ethics professionals to serve on the board
  • Establish financial incentives for ethical leadership by the CEO

The ERC recommends the creation of an ethics committee to ensure that the activities of the board are monitored and that the board remains held accountable for its decisions. The ethics committee reviews information that measures the ethical culture of the organization and makes sure that ethical leadership is a key component of policy-setting, as it is a priority for senior level management.

Recruiting ethics professionals to be part of the board is also wise.  The ERC advises boards to have an ethics professional participating in key strategy decisions.

Establishing financial incentives for ethical behaviour from senior levels and the CEO is one way to reward a leader for their commitment to building an ethical workplace. When outlining performance goals for the CEO, there should be goals established that focus on improving the strength of the corporate ethical culture.

For Policy Makers:

  • Emphasize culture and principles
  • Encourage creation of board of ethics committee
  • Encourage disclosure about corporate ethical culture

Meeting the minimum legal and regulatory standards will certainly not be a surefire plan for ethical conduct in the workplace. When investing the time to train employees to be ethical thinkers and creating an ethics code of conduct for the workplace, there should always be a system in place to monitor performance. Metrics that measure ethical culture lead to better outcomes and help predict trouble spots that will make managing ethics easier to handle.

Transparency is important within the workplace, but it’s also important to share as much information as possible with your investors. Informing your investors about your plans and actions regarding your ethical culture will put your investors at ease and will also have a positive impact on you brand image.

Asking for additional information about the progress of your ethics program from executives and other senior level management also makes it easier for policy makers to ensure that the company achieving their goals on the road to a strong corporate culture.

For Ethics and Compliance Experts:

  • Focus on culture and collect data
  • Start with management, especially if your organization is recession counter-measures
  • Prepare for the return to business as usual

The ERC reminds us that assisting companies to sustain their ethical corporate culture and providing them with the proper tools to do so is the main purpose of ethics professionals. Assist managers in a culture assessment and help them to identify the skills needed to attain ethical leadership. Use cultural metrics to track trends and determine causes of patterns of misconduct, reporting, retaliation, openness and accountabil­ity.

Taking the time to work with top managers, who are the voices of the organization, is the best starting point. This makes it easier for managers to understand the changes needed, how to make them, and how their actions will impact employees at all levels of the business. The 2009 ERC Survey notes that managers are very influential in employee conduct and reporting.

The survey data also suggests that the awareness of workplace ethics improves in a crisis and old habits return when the crisis has been overcome. It’s important to address these concerns with senior level managers in order to create a plan of action to deal with any potential factors that could interfere with their progress.

What Does it All Mean?

The recommendations made in the 2009 ERC Survey demonstrate the importance of a commitment to building an ethical corporate culture at all levels. It’s necessary to work together to achieve success and it also requires an even stronger commitment once the recession is over. If we can adopt or strengthen our ethical behaviours now, should the state of the economy actually have an impact on ethics? What is it that stops people from acting ethically in any economic state?

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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