We came across “How to Cultivate Ethical Leaders” in a December 2018 publication by the Society for Human Resource Management (SHRM) written by Theresa Agovino, workplace editor for SHRM.
The article highlights how leading companies are implementing policies and affecting real influence over the ethical behavior of their employees through strategic company instituted standards. Agovino describes how Milliken & Co, ranked one of the most ethical businesses in the world by the Ethisphere Institute, has created a culture of ethical behavior by focusing on several key organizational habits.
Milliken’s senior vice president of human resources, Craig Haydamack, remarks how from the minute employees walk through the door they are inundated with an ethics culture. The first week of orientation emphasizes values such as transparency, fairness, and honesty which are at the foundation of the company’s own value system. Beyond a rigorous on-boarding process, Milliken is careful in who and how they interview candidates and post signs promoting the company’s ethics hotline everywhere. Milliken’s ethics immersion program not only contributes to their global rank as a leader in ethical behavior, but in studies performed by Ethisphere, the benefits attributed to a total ethics culture are closely correlated the company’s bottom line. From 2015 to 2017, stock prices for the companies that were recognized by Ethisphere outperformed U.S. Large Cap Index by nearly 5 percent. Moreover, deleterious effects of bad decisions, particularly at the management level due to a lack of ethical leadership can cost companies a huge amount of money.
The best way to promote principled behavior, according to Milliken is to approach ethics not only through your legal department and C-suite, but to promote it as a senior leadership team, through acting ethically yourself. When unethical behavior is witnessed it is important to act decisively and consistently to ensure the behavior stops immediately.
According to the article, some actionable steps that you can enforce today in your organization in order to develop an Ethical Culture include: Creating a detailed code of conduct, recognizing individuals who display outstanding integrity, and setting up “multiple channels for people to report misconduct.” These should include “hotlines or other methods that allow for anonymity.”
Some positive trends are being seen according to the Global Business Ethics Survey from the Ethics & Compliance Initiative, including the following metric: “Employees are speaking up when they witness bad behavior. The proportion of people who reported inappropriate conduct rose to 69 percent in 2017 (the highest amount in 17 years), up from 64 percent in 2013 and 56 percent in 2000.”
The article cites that “Many HR executives believe it’s important to give employees anonymous channels through which to make complaints.” The common theme is that ethics should be infused into the very fabric of the organizational structure. Creating and maintaining an ethics culture requires a multiple faceted approach that does not have a one-size fits all solution. Setting up an ethics culture is deliberate and starts at the top through implementing standards, engaging with employees by example, and setting clearly defined values which are promoted on a daily basis by senior leadership.