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Building ethical organisations

Sue Weekes

Building ethical organisations

If they want to attract customers and staff, organisations can’t afford to banish ethics to a dusty back room. But how do businesses ensure their staff’s behaviour matches up to their ethical standards? Sue Weekes finds out how to really embed ethics into an organisation

During the noughties, many organisations rushed to post their values on the noticeboard as a public demonstration of their commitment to high standards of ethical behaviour. But as one corporate scandal and example of organisational bad behaviour followed another, it became clear that in many cases these espoused values such as integrity, accountability and honesty hadn’t managed to make the leap from the wall into the daily operations of the organisation.

The Institute of Leadership & Management’s (ILM) Index of Leadership Trust 2011 shows that a significant proportion of organisations have improved their approach to ethics in recent years but there is still work to do. Most employees rate their CEOs, managers and organisations as “reasonably” ethical but more than half of those surveyed believe their organisation prioritises financial goals over ethical operations. And while more than a third of private (36%) and public (34%) employees believe their organisations have improved their ethical operations over the past three years, around one-sixth (17%) of public sector employees believe their organisation operates less ethically today than it did three years ago.

Andrea Adams, managing director at strategic leadership and organisational consultants Triumpha, and a former corporate HR professional, reckons ethical behaviour has become a “non-negotiable” for all organisations. “These days, we all have much stronger views about who we want to work for, buy from or do business with,” she says. “While ethics were never just a nice-to-have, in some cases they were just paid lip service. Now they are a business imperative for organisations that want to be sustainable.”

Talk the talk

This, of course, means not just claiming that the organisation respects its employees, customers, suppliers and other stakeholders, or that they value people above profits, or that they are transparent in all areas of their operation, but being seen to be and do all of these things at all times. Adams believes that organisations that are serious about achieving this are finding systems and approaches to “deeply embed” the right behaviours across the organisation. “Like all behavioural change, you start with a standard, assess yourself against that standard, and then seek feedback, maintain momentum and keep focused,” she explains. “In the ethical arena it’s the same thing.”

Trust is a small word but it brings amazing results
A significant proportion of organisations have improved their approach to ethics in recent years, but there is still work to do

In complex organisations this is easier said than done. It’s down to the leadership team to not only set the ethical agenda, clearly articulate it and be authentic role models for it but also ensure it properly permeates throughout the organisation. This means making sure the management teams below them put the code of behaviour in context for employees so individuals understand why it is relevant to them and the part they must play in it. “Involving individuals in co-creating the meaning around the behaviours and inviting them to participate and contribute are what really makes the difference with behavioural change,” says Adams. “They can then go on to build these behaviours and standards into their basic ways of being and doing within the organisation.”

Ethical education

Whether ethics can be taught is up for debate. Kai Peters, chief executive at Ashridge Business School, says studies do show that it is possible to influence awareness of ethical issues and help managers develop sound reasoning processes to guide decision-making. Education can also help individuals better understand the potential stumbling blocks to ethical behaviour. “Research has shown, for example, that bottom line mentality, organisational influences, fear and peer pressure are the four very real and dominant barriers to ethical behaviour.

“Fear, for instance, can cause people to stay silent when they know they should really speak out,” he says. “They may be unhappy with the way the company is operating but frightened that if they become vocal they will risk losing a well-paid senior role at a time when jobs are scarce.”

Personal development can do much to help managers cope with such dilemmas, suggests Peters, by giving an individual a clearer understanding of their personal values so they feel in a better position to stand their ground when necessary. “It can help them develop the capability to self-govern and think critically about the appropriate response to the challenges they face,” he says. “A by-product of this kind of dialogue and development is that managers also develop a support network they can turn to for guidance in difficult ethical situations.”
Organisations have everything to lose by not – or not being seen – to behave ethically in all areas of their operation. The ILM Trust Index also explores the relationship between ethics and trust and found that those organisations which place ethics at the heart of their operations, can obtain the “bonus dividend” of trust. Greater trust translates into a more committed and engaged workforce which in turn leads to improvements in organisational performance so it is indeed a dividend well worth having. In short, ethical values and standards aren’t a choice for organisations and, although few would argue that they ever were, the days when they came with any kind of optional tick box attached are long gone.


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