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June 19, 2006
5 Tips to Help Executives Create an Ethical and Responsible Culture
PHOTO: The Ethical Fork in the Road
“If ugly things can get swept under the rug, they will, which is why it is essential that organizations have a comprehensive system in place for getting out in front of small problems before they become big problems.”
Commented Alice Peterson an expert in ethics and corporate governance.
According to Syrus Global, from Hollinger to Enron, much has been reported about corporate scandals and poor ethical decisions, but the debate continues as to whether the wrongs were caused by a few bad apples or a culture of playing fast and loose.
Alice Peterson, expert and president of ethics and corporate governance firm Syrus Global, offers five tips to help executives and corporate boards avoid being the focus of the next scandal to hit the headlines.
"Creating an honest culture is certainly aided by the much ballyhooed 'tone at the top,' but that's not enough," said Alice Peterson. "You need to be sure that when your employees make decisions, they come up with answers that serve the shareholders' best long-term interests -- meaning a good economic outcome is probable and good ethical judgment has been exercised. Employees need to be educated about what the law says you can and cannot do. When an employee (or a vendor or other partner) knows about violations of their company's accepted code of conduct -- and boy, do they know -- they must be able to anonymously and safely let someone know about it without any fear of reprisal."
According to a recent report by the Association of Certified Fraud Examiners (ACFE), as many as sixty percent of employees have observed violations of law or company standards. Other studies report similar results.
Peterson offers the following tips to help you create a culture that will discourage ethical lapses and strengthen your corporate reputation:
1. Listen to your employees, partners and vendors: Encourage employees, partners and vendors to come forward regarding wrongdoing they might have witnessed. Tell them repeatedly that your company doesn't tolerate retaliation, and encourage use of the "open door." Provide them with confidential ways to report wrongdoing that ensure anonymity. You will glean critical information when employees, partners and vendors know they can speak up comfortably and anonymously. According to the 2004 ACFE report, the most common way employers detect fraud, by far, is anonymous tips.
2. Have a disciplined process for dealing with reports of wrongdoing: According to Alice Peterson, "As the saying goes, 'what gets measured gets done.' If ugly things can get swept under the rug, they will, which is why it is essential that organizations have a comprehensive system in place for getting out in front of small problems before they become big problems." Consolidate findings from internal audits, the ethics office and confidential employee reporting into a single database. If you can identify problems and patterns of unethical behavior as they emerge, you can address them before they escalate into bigger issues.
PHOTO: Taking the Ethical High Road
3. Take swift and determined action when it is called for: Make it clear to employees that illegal activity is not tolerated, and that your company expects of its employees an even higher standard of values and code of conduct than is required by law.
4. Provide effective learning opportunities for employees: Most people are willing to do the right thing, but they may need to be educated about what the law really says or how your company's values are interpreted in the everyday. Stuart C. Gilman, past president of the Ethics Resource Center (ERC), has publicly called it both "naïve and dangerous to assume that everyone knows 'ethics.'" A systematic training program for employees helps establish the seriousness of a specific code of business conduct that begins on the employee's first day on the job. And, the ERC's 2005 National Business Ethics Study® found that formal programs can indeed make a difference in weaker cultures. "It's like the lines on the highway," says Peterson. "If there are none, you're likely to drive a bit all over the place -- but when shown where to drive, people stay within the lines."
5. Ensure that your board of directors vigilantly oversees the creation of an ethical culture: Peterson, who is also a member of public company and non-profit boards, says, "It starts in the boardroom. Directors are charged with hiring and regularly reviewing the CEO, overseeing strategy and planning, and understanding risk. Assuring that a company has a strong ethical culture is part of their monitoring and oversight. They must ask tough questions, and not settle for lame answers."
"Building an ethical and responsible culture is the first step to creating a strong reputation -- and a strong reputation creates pathways to greatness. If your company turns a blind eye to unethical behavior, the storms that will inevitably ensue will be difficult and costly to weather," adds Peterson. "Set a strict standard and make sure people know that ethics are non-negotiable. That way, when you turn up on CNN, it's more likely to be for the right reasons."
PHOTO: Think About It
A few comments from the Reputation Doctor for all of us regarding ethics in the workplace:
Don’t treat employees who report unethical behavior like criminals, instead treat them like confidential heroes.
We need to stop treating unethical behavior inappropriately. A huge step in the right direction is to treat employee who report inappropriate behavior as confidential heroes and not criminals! Purging the corporation of wrongdoing should be the goal and to do so it requires the purging of attitudes of protection and creating an atmosphere and culture of truth.
Transparency and accountability are two very important bricks in reputation management..
Reputations are built with bricks. Transparency must be demonstrated. To do so, executives must have several consistency examples each month to allow all to see the corporation will build integrity by praising and rewarding ethical behavior and have zero tolerance and punishment for unethical behavior.
How are you doing with ethics as both a corporate leader and a human being?
Ethics is often described as science or study of morality or the principles of conduct governing an individual or group; concerns for what is right or wrong, good or bad. Let’s see. If you had to be evaluated today, would you have an excellent ethical evaluation? Here is a new and important ethical measurement tool for us all: conduct yourself in private the same way you do when your boss, wife, parent and children are seated in front of you. Imagine a hidden camera can see all of your decisions no matter where you are. Here is an even bigger challenge. If you believe in God, isn’t doing the right thing, honesty, accountability, transparency, humility and consistency all supposed to be our behavioral standard every day because He sees all? This is something to think about very seriously. Ethical behavior defines who you really are.
Remember, do the right thing when your reputation is in crisis and seek the counsel of an experienced reputation management expert. It will be a major challenge, but ultimately the rewards of repairing your reputation will be great. Why? Because Your Reputation Is Everything! ™
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.ReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches, senior counseling or other business opportunities with Mr. Paul, call 212-595-8500 or email info@mgppr.com.
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