Company Doctor – Executives must set good examples

Last updated on May 13th, 2019 at 02:45 pm

When I entered into the corporate world, I was exposed to a concept identified as “the shadow of the leader.” The theory was that you would behave in a manner that reflected the behaviors your boss demonstrated.

This same theory applies to being a parent. We want our children to be honest and ethical, but are we setting the proper example? You cannot pick up the paper or turn on the television without reading or hearing a story about corporate ethics. They range from Enron’s corporate misconduct to employees lying on their expense reports.

What happened to the Judeo-Christian ethic we all learned as children? Why when we are exposed to the workplace do some elect to renounce this standard and adopt one of corporate greed?

Some people say money corrupts and eats away at our ethical foundation: others say the competitive environment contributes to the ethical lapses we read about. I feel what we are experiencing is a lack of leadership on the part of our corporate icons. 

A recent study completed by the Ethics Resource Center identified three ethical-related actions (ERAs). They were:

•    Setting a good example.

•    Keeping promises and commitments.

•    Supporting others in adhering to ethics standards.

They measured the impact of ethics training on management and non-managers in the organization. The researchers found that there was a very small statistical difference between the senior managers who were trained to handle risk and those who were not. The difference becomes three times larger when you examine the gap at the non-manager level. These findings point out the importance of ethics training at the non-manager level. The rank and file as well as the middle managers have certain behavioral expectations of their top management. The researchers identified the following expectations:

•    Ethics are communicated as a priority.

•    Management sets a good example of ethical conduct.

•    Management keeps promises and commitments.

•    Management provides information about what is going on.

•    Top managers are held accountable for ethics violations.

Let’s look at each of these expectations individually and identify behaviors that need to occur in order to establish and maintain an ethical culture.

Ethics are communicated as a priority.

What are you doing as a manager or as an owner on a daily basis to communicate to your organization the importance of behaving ethically? Are your decisions or behaviors demonstrating ethics or are they in conflict with your stated policies? Do you have a stated ethics policy in your employee handbook? Honesty and transparency are necessary conditions for an ethical culture.

Management sets a good example of ethical conduct.

I have worked in organizations where the chairman says one thing and does another. No one is fooled. Your employees know what is going on in their organization. You cannot hold your employees to a standard that you do not publicly support. Here is where the “shadow of the leader” has the greatest impact. The ethics you demonstrate will be repeated by your employees.

Management keeps promises and commitments.

It is critical that when management commits to a course of action, that they follow through or explain why they couldn’t. It is the little things that set the tone in an organization. It is when management does not keep their promises that employees look to outside sources like unions and government agencies to insure these commitments are kept.

Management provides information about what is going on.

There needs to be an ongoing dialogue between management and the rest of the organization. Too often information does not flow down to the balance of the organization. Silos can prevent information from being disseminated, and should be disassembled. You need to establish open and consistent communication channels. One approach is an all company meeting or the use of a monthly newsletter. These are consistent channels and easily reach the entire organization.

Top managers are held accountable for ethics violations.

You cannot hold your employees accountable for ethics violations unless you hold your managers to the same standard. Disciplining a manager sets an example for the rest of the organization. You cannot have two standards of conduct, only one. You do not want to leave your organization open for criticism or litigation by not being consistent in your approach to discipline.

So what can you expect if you set and meet your ethical expectations? The following outcomes were identified in this research by the Ethics Resource Center:

•    Employees who perceive top management sets a good example are less likely to behave unethically.

•    Employees who are satisfied with the information distributed by top management are less likely to observe unethical behavior.

•    Employees who feel that top management keeps their promises and commitments are less likely to observe ethical misconduct.

This research clearly shows that management, especially the owner or chairman, must openly demonstrate support for the ethics policy in order to maintain an ethical culture. The leaders at Enron, WorldCom, Strong Funds and Martha Stewart Designs did not “walk the walk” they only “talked the talk” and they paid a price for their unethical behaviors. The pity is that their organizations paid a much heavier price, Enron no longer exists and Strong Funds was sold to Wells Fargo, losing its corporate identity.

It’s time we all made ethical behavior a priority and an expected behavior in our organizations. Compliance to the company’s code of conduct will only happen when these five positive behaviors are consistently demonstrated by the company’s leadership. No formal training program can replace management demonstrating an ongoing commitment to an ethical culture. Until these behaviors are observed and understood by the entire employee population at all levels, the leader cannot cast a positive shadow on the organization.

 

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