What are the most important elements for companies to implement to ensure that they remain ethical?

Your company’s good name and the trust of stakeholders are two of its most important assets. You can protect your company’s reputation and increase employee engagement by creating a workplace where ethical conduct is the norm. Reduce ethics risk by taking these five key steps:

1. Honestly assess your needs and resources.
2. Establish a strong foundation.
3. Build a culture of integrity — from the top down.
4. Keep a “values focus” in moments big and small.
5. Re-evaluate and revise as needed.

Honestly assess your needs and your resources.

Successful businesses start with a good plan. So do successful ethics and compliance programs. In order to create a relevant and meaningful plan, you have to know the lay of the land. It’s important to know:

• What ethics challenges are common in the work we do? In our workplace?
• Where are our greatest areas of risk? Which groups of employees, locations, business units, etc. are potential “hot spots”?
• What values are important to our company and its employees?
• What values are necessary for our business, our work in particular?
• What ethics and compliance resources will be most beneficial for employees? What vehicles of support (a phone line, an email, an individual or committee, internal social network, etc.) are likely to be most utilized and helpful?
• In developing our code and values, which groups’ input is necessary? Who would be helpful? (For more information on this, see our resources on writing a code.)

See related blog post: Optimizing Risk Management Using Artificial Intelligence

Your program will only make a difference if you begin by having an accurate picture of existing strengths and areas of vulnerability. Risk assessment should be the starting point of your internal efforts, followed by gap analysis and program assessment. Audit reports are also an essential piece of the puzzle.

You can gather information in a variety of ways. Focus groups allow representative samples of the larger population to share their opinions and experiences; they provide a deep, rich “snapshot” of the state of ethics in your organization. Surveys (internal or conducted by a third party) provide the opportunity to gather information from a much larger group of your employees, to compare results and to analyze data by relevant subgroups (i.e., employee levels, departments, units, etc.).

Establish a strong foundation.

Once you know your needs, you can put in place the resources to address them by establishing a robust ethics and compliance program.

The good news is that such a program makes a difference. As part of the 2011 National Business Ethics Survey®, the Ethics Research Center (ERC), the research arm of ECI, demonstrated that an ethics and compliance program is a powerful tool for reducing pressure to compromise standards and observations of misconduct; increasing employee reporting of observations that occur; and decreasing retaliation against whistleblowers. In essence, when a company commits resources to ethics, it makes a difference. Fewer employees feel pressured to break the rules and fewer misdeeds take place. When bad behavior does happen, employees tell management so the problem can be addressed internally.

This strong foundation consists of several elements key elements:

1. Written standards of ethical workplace conduct (for more information on this, see our resources on writing a code).
2. Training on the standards.
3. Company resources that provide advice about ethics and compliance issues.
4. A means to report potential violations confidentially or anonymously.
5. Performance evaluations of ethical conduct.
6. Systems to discipline violators.

Chapter 8 of the Federal Sentencing Guidelines for Organizations also calls for oversight by the governing authority, high-level personnel with overall responsibility for the program, and individuals with operational responsibility for the program.

But just having these elements is not enough. When it comes to ethical conduct and compliance, it’s not enough to “print, post and pray.” Implementation and integration matter.

Your ethics and compliance program must be vital, integrated element of your work and the way you do it, ensuring that employees know how to and feel supported in their efforts to uphold ethics and compliance standards in their work. The hallmarks of an effective ethics and compliance program are:

1. Freedom to question management without fear;
2. Rewards for following ethics standards;
3. Not rewarding questionable practices, even if they produce good results for the company;
4. Positive feedback for ethical conduct;
5. Employee preparedness to address misconduct; and
6. Employees’ willingness to seek ethics advice.

Build a culture of integrity — from the top down.

People have an innate desire to get along and (long-past high school) want to fit in and conform to the norms of those around them. It may not be pleasant to admit it, but most people’s ethics standards are fairly malleable. Although most people retain a desire to “do the right thing,” the definition of right is significantly influenced by the company they keep. Culture matters.

Fortunately, if your company has diligently built an ethics and compliance program and woven it into the daily operations of the organization, a strong ethics culture is far more likely. Research proves that an effective ethics and compliance program helps build a culture of integrity in which everyone “walks the talk.” In a strong ethics culture, employees at all levels are committed to doing what is right and upholding values and standards.

Leaders are powerful drivers of corporate culture; they set the tone in any organization. They decide who gets attention, who gets promoted, what merits rewards and recognition. They set the standard. They are the example. There are several things leaders should do to help promote a strong ethics culture:

• Talk about the importance of ethics.
• Keep employees adequately informed about issues that impact them.
• Uphold promises and commitments to employees and stakeholders.
• Acknowledge and reward ethical conduct.
• Hold accountable those who violate standards, especially leaders.
• Model ethical conduct both professionally and personally.

When it comes to ethical leadership, there are two key things to keep in mind:

1. Character is paramount. Ethical leaders show integrity not only in the way they conduct themselves at work, but in their personal relationships as well. In a world of social media, private behavior often becomes public knowledge, shaping employees’ beliefs about what kind of individuals their leaders are.
2. Leadership happens at all levels. While senior leaders set the tone for the entire organization, supervisors shape the everyday environments in which employees work and make decisions. The actions of supervisor have a profound impact on employees and their workplace conduct.

Keep a “values focus” in moments big and small.

Ethics is about choices-big and small. Organizations with integrity keep their values at the forefront in both mundane and the extraordinary moments. Corporate values should come into play and be reflected in multiple processes that drive the everyday life of the company, including:

• HR policies and their implementation
• Reward systems
• Hiring and retention
• Performance management and evaluation
• Promotion decisions

On those occasions when crises occur, leaders should recognize not only the ethical dimension of the moment at hand, but the “teachable moment” it represents. Edgar Schein, the father of the study of organizational culture, noted that moments of crisis are particularly powerful culture-builders because of the intensity of emotion involved. Our research shows that employees learn a great deal about leaders’ priorities and character when they show their “true colors.” If leaders make values their touchstone in times of crisis, employees learn that ethics matters.

Re-evaluate and revise as needed.

Situations and needs will change. You need to know what is working, what isn’t, what new vulnerabilities have emerged, what progress you’ve made and where there’s work yet to be done. Be disciplined about regularly revisiting the state of ethics and compliance in your organization. Risk assessments, follow-up surveys and periodic or ongoing focus groups will allow you to keep your program relevant and minimize risk. As an added bonus, regular assessments will demonstrate internally (and, if ever needed, externally) that the resources you’ve invested in ethics and compliance have made a difference.

There has been a lot of attention paid to ethics in business lately. Of course, most of that focus has been on the lack of ethics in business.

Even worse, the drive to “get ethics” is now a huge push. I cringe at the thought of a quick fix for something so fundamental as a company’s ethical behavior. Ethics are a foundation of a good company, and while they can be fixed, the best companies begin with a solid ethical footing.

For entrepreneurs, ethical behavior is often overlooked as the chaos of everyday business obscures the philosophical side of your company. But fear not, it is far easier to reconnect to a solid ethical footing than it is to attempt an “ethics transplant.”

Many business experts treat ethics like a sermon on the mount. Although it’s hard not to preach a bit when it comes to ethics and morals, I’ve tried to identify some things to think about, in addition to recommendations on how to behave ethically. It’s interesting to consider how good ethical behavior reflects smart business practices, but maybe that’s exactly why the great companies are just that.

Consider these eight elements that comprise the ethical bedrock of an awesome organization:

Respect:

As an entrepreneur building a business, you need to respect yourself and surround yourself with people you can respect. Remember, strong respect doesn’t mean you can fly on auto-pilot. While you can assume your people will do their job as well as they can, they do need coaching, training and direction, but respect and trust make it easier for you to avoid micro-managing them.

Do not hire or do business with people you don’t respect, or who don’t respect you. These are the types of people who ultimately don’t respect their colleagues, customers, vendors, or themselves. When existing relationships weaken, take action. Do your best to rebuild mutual respect, but it can no longer be rebuilt, let the person go.

Honor:

Good people are a fundamental part of good ethics. They are also great ambassadors for doing things right. Give special attention to strong performers and people who exemplify the spirit of your organization. Most companies recognize top achievers and producers. Go beyond quotas and sales figures. Point out, and show your gratitude to the people who exhibit exemplary behavior, and who have made sacrifices on your behalf. These are people who have helped you be successful, and you need to acknowledge and honor their contributions publicly, as well as privately.

Integrity:

hen it comes to integrity, it is impossible to avoid sounding preachy or parental. Do not lie, steal, or cheat. Make your word your bond and always stand by your word. When you are wrong, own up to it and make good on the deal. Treat others as you’d want to be treated.

Do not hire or retain people who do not have integrity. Other employees, customers and vendors will not trust them. That lack of trust is like a virus; eventually they will not trust you either.

Make sure no one is selling the company’s values short to make a quick buck. After all, making a bad deal to meet a quota or target is not only unethical, it’s often unprofitable in the end.

Customer focus:

A company is nothing if it does not have customers. More to the point, if a company does not produce what people want and will pay for, there is no point to that company. A focus on your customers reinforces the responsibility you have to the market. Your decisions affect your people, your investors, your partners and ultimately, your customers. Serving all of these people is part of your ethical responsibility. Selling your customers short not only risks compromising your ethics, it also risks the long-term health of your company.

Results-oriented:

You wouldn’t be an entrepreneur if you weren’t focused on results already, but ethics factor into results too. Don’t aim for results at any cost. Work on achieving your results within your company values. Results should be attained in the context of developing something that customers want, and producing and delivering it at a price that is fair to all the parties involved.

Good managers clearly identify the results they expect, then support their employees and help them achieve those results. They provide feedback on performance in an effort to help the employee achieve their potential, and the results the company needs for success. In a good company (and an ethical company), results are more than just numbers. They are benchmarks and lessons for the future as well as goals for the present.

Risk-taking:

So far, you might be feeling that ethical companies are timid and mousy, scared of doing the wrong thing. That is simply not true. Organizations that thrive, prosper and grow do so by taking risks. They do not stick to the safe path. Great companies innovate, they think “out of the box”, and they try new things. They re-invent themselves and they reward the risk-takers. As long as you stick to your philosophical guns, risk-taking poses no threat to your ethics.

Great companies attract employees who are willing to take risks, and they encourage, support and reward them for taking calculated risks. When the risks pay off, they share the rewards with those who produced. When the risks do not pay off, they take the time to analyze what went wrong, and learn what to do better next time.

Think about this; Who would you rather be surrounded by when you are taking risks: people who you trust and respect, or the sharks and snakes?

Passion: 

Great organizations are comprised of people who have a passion for what they are doing. These are people who are working for you for the thrill and challenge, not merely putting in time to collect a pay-check. They are excited, driven, and believe that their work and efforts can make a difference.

Without the passion burning within them, people put in a minimal effort, getting paid and going home. These people are role models to others: why work so hard when you can come in late and leave early?

People can demonstrate their excitement in many ways, so be aware that extra effort on a project or working on the weekend shows passion as much as enthusiastic cheerleading.

Persistence:

People in awesome organizations have the will to persist. They will keep working even when results are not what they hoped, or when customers refuse to buy. Their persistence is tied to their passion for what they are doing and a belief that this group of people, this company, has the best chance of “making it” of any company they could join. And so, they work harder, They continue to take risks. They behave with honor and integrity. They keep their focus on the customer’s needs and wants. And, they are not satisfied until they achieve the goals and results that are expected.

You, as the leader, need to put a lot of time and effort into hiring people who share these values. Talk to your team about the importance of these values to the strategy, plans and decisions made. You need to clearly draw the line which separates “what’s allowed” from “what’s not allowed” in the company. And, when someone steps over the line, the leader needs to tell them they stepped over. Depending on the person (and the incident), give them another chance and get them to change their behavior, or let them go. Taking no action is unacceptable.

Sticking to your beliefs might be the ultimate representation of good ethics. And not surprisingly, it doesn’t just make good sense from an ethical standpoint, but it makes great business sense.