How to build a culture of ethics in your company

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Roger, a good friend and an ethical individual, was at a business conference last week with a co-worker, Sam, who decided to take a few of his subordinates out for an evening of entertainment—entertainment not sanctioned by the company. The next day, as Sam was preparing to submit his receipts for his expense report, Roger noticed that he was submitting the receipts for his prior night’s activities. More importantly, Roger noticed that Sam’s description on the receipts was inaccurate. Sam flat-out lied on his expense report.

Roger wondered what would be the ethical thing to do. On one hand he could ignore what he saw and just let it pass, rationalizing that it was not his business. Or, he could confront Sam and encourage him to reconsider his choice, suggesting that following the ethics policy of his company would create better consequences. Or, lastly, Roger could comply with the company’s guidelines and report the ethical lapse. 

The question isn’t what did Roger do. The question to consider is: “What would you do?”

If you chose the third option—the one that is expected as part of compliance with most organizational ethics guidelines—you would be labeled a “whistleblower.” Who wants to be called that? Snitch, tattletale and other negative words from childhood come to mind when someone is called a whistleblower. Yet, if your company or association is committed to creating a culture of ethical behavior, the term “whistleblower” is the number one key to ethical success.

How Can That Be?

Statistics indicate that 42 percent of the time someone “tipping off” an employer about an ethical lapse or potential fraud is the number one way companies maintain ethics and prevent fraud. Amazing as it may seem, internal staff is the best police system for maintaining ethical behavior.

Most are amazed that it is that high; all too often we want to look the other way, or are afraid to confront those committing ethical blunders. It’s easy to understand the hesitancy; many of us are afraid to rock the boat. Often, what we fail to realize is that the person committing an ethical blunder is putting the company in danger. So, how do we create a culture of ethical actions? 

  1. Recognize That Unethical Choices Never Start Large. The “Unethical Continuum” is a natural progression of what many call a “slippery slope” of human action. This progression allows small infractions to go unnoticed or unreported until the day people or companies are in the midst of a full-fledged ethics disaster. Sam didn’t “intend” to act unethically; he felt that he was doing the right thing by treating his subordinates to something beyond the norm at the company function. His challenge was figuring out who would be responsible for the expense. The challenge with his ethical choice was a common problem: Rationalization. 
  2. Understand the Three Components of Human Behavior that Lead to Ethical Lapses. When a human makes a choice, any choice, there are typically three components that come together that allow a choice to be made and move forward: (1) need, (2) opportunity and (3) rationalization. While, as employers we have little control of an individual’s need, we do have some level of control over opportunity to make ethical choices and how one might rationalize behavior. 
  3. Be Clear About what Ethical Behavior Looks Like. Large companies have clearly drafted ethics and compliance policies that employees are expected to understand and follow. The smaller the company, the less likely there will be a clearly written ethics policy. But large or small, the challenge for all companies is communication about what is acceptable and unacceptable. Creating an ethics policy and training it effectively are keys to exposing rationalization and improving ethical behavior within an organization. 
  4. Train, Train, Train! Let’s be honest: most ethics training is boring! It centers on the rules and never gets to the heart of what motivates human behavior. And, frankly, if we don’t understand what starts folks on that slippery slope downward into the unethical realm, then we miss the opportunity to change behavior before it is too late. Effective training should move beyond just what’s included in the ethics and compliance policy and cover (a) why people make unethical choices (b) what can be done to prevent unethical choices and (c) what motivates our behavior. Telling someone what to do is far less effective than helping them see the value in consistently making ethical choices.  
  5. Encourage Accountability. What keeps people between the ethical lines is shared accountability. We are our brother’s keeper. If one is to be kept within the ethical lines then we must not only have the road signs (ethics policy), but the practical means to correct behavior. As stated earlier, 42 percent of the time ethical blunders are reported by co-workers or those who witness the issue. And while “whistleblower” carries a negative connotation, the reality is someone who cares enough to call “foul” to unethical actions is the most valuable ethics asset and organization has. 

When in Doubt, Do the Right Thing!

Ethical missteps are all the same; they will eventually lead to a negative outcome. Little infractions that go undetected or unreported often lead to larger infractions until “unethical” becomes “illegal.” Perhaps we should reframe or replace the word “whistleblower” with “ethical partner.” One thing is certain: ethical choices are empowered choices and that is certainly one critical component of business success.

Chuck Gallagher is the president of the Ethics Resource Group and an international expert in business ethics. Gallagherprovides training, presentations and consultation with associations and companies on ethics and creating ethical cultures where people do the right thing, not because they have to, but because they want to! Information can be found at http://chuckgallagher.com or via e-mail at chuck@chuckgallagher.com or by phone at 828.244.1400.


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Maxwell Pinto    
Toronto  |  December, 17, 2013 at 08:24 AM

Well written and informative...some thoughts for consideration: Business decisions often concern complicated situations which are neither totally ethical nor totally unethical. Therefore, it is often difficult to do the right thing, despite what many case studies will have you believe! Moral values such as respect, honesty, fairness and responsibility are often ignored in times of stress and confusion, when one must stand by one’s principles. Leaders have to deal with potential conflicts of interest, wrongful use of resources, mismanagement of contracts, false promises and exaggerated demands on resources. For instance, in a proposed sale, is it the seller’s duty to disclose all material facts regarding the product /service in question or is it the buyer’s responsibility to conduct due diligence? Should the seller answer each question exactly as it was asked, and ignore some pertinent information or merely address the spirit of the question? Can ethics training prevent Bernie Madoff, Vincent Lacroix, Conrad Black, etc. from being themselves? No, but a well-designed & implemented program can (a) help good people to do the right thing consistently (b) make it more difficult for wrong-doers to succeed & (c) raise people’s ethical IQS Maxwell Pinto, Business Consultant & Author http://www.maxwellsmallbizconsulting.com


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