For decades, leaders were expected to focus on one thing: financial results. But we are now in the midst of an ethical revolution.
Leaders are increasingly held accountable for poor behavior, and companies are pushed by employees, governments, and customers to step up and adopt a multi-stakeholder approach that serves social purposes as well as investor demands.
Canned codes of ethics that ask employees to check a box to certify that they’ve read the material and third-party online ethics training courses might be all that is required to comply with the law, but they don’t move the needle. Employees see them mostly as a nuisance they have to suffer through.
Business leaders need to do more. Over the years I’ve developed the following six practices to help leaders be proactive, inspire their workforces, and stay ahead of the ethical revolution.
Lead by example.
Leadership must openly and directly embrace integrity.
The CEO and others on the leadership team are powerful role models who set the company’s ethical tone. If they cut corners, don’t follow the rules, or ignore bad behavior by top performers, it gives everyone implicit permission to act the same way.
Leaders must openly and directly talk about integrity, embrace it as part of the culture, and be ready to do the “right thing,” even if it appears to hurt business in the short run.
In a crisis, fear runs high, and everything a leader does is amplified. An “integrity moment” can happen anytime, and a leader has to be committed to the right principles or risk losing a team’s trust forever.
For example, during a meeting in days of pandemic, an employee asked at CEO, “What if I’m the only one who can operate a particular machine, and it goes down?” In that moment, the CEO leadership was on the line, and he handled it perfectly. “Stay home,” he said, and asked the employee to repeat his words.
Everyone laughed, but everyone got the message — employee health above immediate business needs.
CEOs have to be particularly careful about setting ambitious targets and using powerful language to motivate employees. Audacious goals can create fear (what happens if I don’t deliver?), and they may be interpreted as giving implicit permission for bad behavior.
Make your ethics code your own.
Too many companies treat their code as a legal box to check. They download another company’s code and put their logo at the top. Or they delegate the task to lawyers, who understandably draft a document designed to protect the company from liability. Don’t depend on something that someone else drafts — you can’t outsource integrity.
Your code of ethics should reflect input from a broad cross section of employees and be based on your company’s core values along with the norms of your particular industry, geographic location, and culture. You don’t want to get bogged down with too many rules, but there are usually a dozen or so issues that come up over and over. Clear guidance on how to handle them is important so that individuals aren’t making up their own code as they go.
Talk about it.
It’s not enough to simply go about your business and assume integrity will naturally occur. Leaders must talk openly, explicitly, and regularly about its importance. Orientation is a good place to start. Make a point of having your CEO or another top leader come into each orientation class and spend an hour personally talking with new employees about company values and ethics, using real examples from their career. This sort of authentic live discussion from a leader sets a tone and can make a lasting impression.
Make sure people know how to report violations.
Too many companies bury their reporting system in a link deep in the company intranet and don’t talk openly about how the investigation process works. That silence breeds suspicion, distrust, and an environment in which employees aren’t comfortable using the process. Companies that want a culture of integrity must make the process of reporting all problems, especially violations of the code, easy, straightforward, and clear. You need to create a culture that isn’t afraid to have people raise ethical questions, that welcomes bad news, and that celebrates employees who speak out about problems.
Demonstrate the consequences.
Ethical violations must be investigated, and when they are substantiated, fair and reasonable consequences must be handed out. Leaders and top performers cannot enjoy immunity. Even in companies with a robust reporting and investigations protocol, employees may be skeptical that reports will be acted upon and may cynically assume that nothing ever happens. That sort of culture erodes trust and discourages everyone from reporting issues.
One way to fight this problem is to build transparency into the process. Providing windows of transparency into a good process can build trust.
Remember that repetition matters.
Integrity can’t be handled by a once-a-year email or a couple of pages in a forgotten employee handbook.
Be creative; don’t rely on canned, outsourced videos to make a difference. Challenge someone on your team to make funny videos about ethical scenarios, and get leaders to participate.
Make an “integrity minute” part of each company meeting, or (as we did at Chegg) hold a game-show-style test in which leaders have to answer tough questions about your code of ethics. Or create an “Ethics Ambassador”, in which volunteers from across the company are given special training and provide ethics advice to other employees.
Make a point of adding ethics as a dimension of your business decisions. In addition to asking “What does it cost?” and “What’s our profit margin?” ask about the impact of a product’s supply chain on the world, or how the product affects employee health or climate change. The key is to create an environment in which it’s seen as good to talk about ethics, a program designed to create an integrity environment through repetition. Embrace an environment in which values are top of mind in words and deeds.
Integrity is a powerful double-edged sword for companies today. Lapses can spark employee rebellion, customer blowback, and government investigations. But handled correctly, integrity can be a superpower that inspires employees and resonates with today’s values-minded consumers. And integrity is contagious.
Create an environment in which it is openly embraced by leadership and woven into the fabric of your culture, and it will be a powerful asset.