Ethics 101

Generally, leaders are value-based individuals whereas managers are more rules based. However, as a response to the Enron and WorldCom fiascos, the US Congress and other regulatory bodies are tightening the rules regarding corporate governance. Because ethical values are missing, corporate ethics have been newly defined by rigorous rules, ones that have teeth in them and will scare the living dickens out of every executive. Although rules will help, it is the underlying values that we, as leaders, need to state, foster, and inculcate into our culture. Rules are like the sidelines to the field—they let us know when we are out of bounds. Yet, we should never have to get close to those lines. Our values should click in more quickly and help us “do the right thing.”

I find it hard to believe that corporate officers intentionally set out to break the law and conduct unethical acts, but somehow they end up there. Maybe after all is said and done, one of them will write a book and ‘tell all’ as to what happened. No matter what their reason, however, corporate leadership needs to set the tone for the organization and see that the tone is fully embraced within all levels of the organization.

What are some of the activities that the leadership team can do to help develop a culture of high ethics?

  1. Have a written policy – stress the values of the organization
  2. Post the policy on the website – make it a public declaration
  3. Communicate with employees – early and often
  4. Provide mechanism(s) for whistle blowing without reprisals
  5. Have an independent review each year
  6. Report the findings to the audit committee

I challenge our corporate leaders to work just as hard on the values of the organization as they do the policies and procedures (the rules) side of the business. Yes, managers need to have rules from which to operate, but leaders need to be the keeper of the values and ensure that all in the organization understand the values and will live by them. The rules will just make it much easier to accomplish.

Each corporate leader has a responsibility to develop and implement a code of conduct that will establish the highest level of ethical behavior conceivable. Code of conduct management is like quality management. It needs to start at the top and it’s not one of these concepts that it is “good for everyone else, but doesn’t apply to me.” The code of conduct needs to be established according to the laws of the country where business is conducted and must conform to those ethics that your stakeholders would conceivably expect of the organization. By stakeholders, I mean stockholders, employees, customers, suppliers, etc.

Recently, I wrote about integrity and one of my readers asked a question about a specific example of goings-on that are occurring in their business setting. I felt the example is not too distant from what actually occurs in our business environment. I’m opening the question up to any reader who has an opinion on how to handle the situation. See Reader Question below. Most of the time, especially in international business dealings, there are many shades of gray in ethical dilemmas. What advice would you give to this individual?

Are you doing all you can to foster high ethics inside your organization? Are there guiding principles that can be improved? Do you know which ones need to be improved and do you have a plan to attend to them?

Now ask yourself… Am I a Leader?

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