Practical Ethics – The New Way to Advance an Ethical Culture

I have always been struck by the “feel good” advocacy and advice from so-called ethics “experts.”  Sure, it is great to talk about moral values, ethical principles, and other high-minded ideas that inspire an audience to embrace the value of an ethical culture.  But that is not really the point of promoting an ethical culture as part of a corporate culture.

Let’s start with a few basic ideas.  A company is an organization that is formed to sell products or services and ultimately to make a profit.  A company is not a substitute for a democracy or for our political system.  However, companies are not people (sorry Mitt Romney) and they reflect the collective values and principles of its constituencies — the board, senior management and employees.  Shareholders and other stakeholders have legitimate expectations as to how a company is going to operate and how it is going to advance its mission – to sell products and services.

I am not so naïve to think that companies do not operate in our political context and do not have an important role to play in our communities.  A company has to define its ethical principles as a means to define its role and mission for its employees, shareholders and other stakeholders.  A company does not operate in a vacuum and has to interact with key constituencies including the government, the community and its business partners.

Assuming that a company is willing to define its ethical and organizational values, a company has to align its values and principles with its senior executives, managers and employees.  In other words, a company has to define its ethical principles with the ultimate goal of securing buy-in from these important constituencies.  If a company fails to align its values and principles with its key constituencies, the company will suffer from an ethical disconnect – a situation where employees do not believe in the company’s mission and resist corporate definitions of purpose.  When this occurs, a corporate culture is sure to suffer from cynicism and discontent.

At bottom, employees want to believe in its senior leadership and its corporate mission.  Employees need to believe in the work that they do and the overall positive impact of the company and its products and services.

In the end, this raises the difficult question for every company – while the company has defined its ethical principles and values, how do these values and principles translate into every employees’ daily responsibilities?

Employees want to know – okay, the values and principles all sound good, but tell me how this impacts my job?

This is the essential question for ethical cultures – what do the company’s ethical values mean for its employees?

A company has to answer these questions with real and tangible explanations.  For every employee, a company expects the employee to:

  • Act with honesty
  • Treat co-workers, business partners and customers with respect
  • Report colleagues and business partners who engage in misconduct
  • Seek guidance from your supervisor or compliance staff when an employee wants to understand how to handle a specific business situation

A company has to bring reality to the equation and explain how its ethical principles work in practice.  Senior management has to conduct themselves in a manner that promotes the company’s ethical principles.  Such conduct serves as a teaching example for every employee.  These examples of conduct show that the company is committed to its ethical principles and that it lives by its word.

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2 Responses

  1. Tim C. Mazur says:

    Michael, I’m a so-called ethics “expert” who disagrees with several items in your post.

    First, it’s not the mission of an organization to sell products and services. Company missions are focused on identifying their purpose and role in society. JetBlue’s mission, for example is to inspire humanity–both in the air and on the ground. Selling services is a means to achieving its end (i.e., its mission), it’s not the end in itself. Similarly, earning a profit is a means to achieving its mission, not the end in itself. If you want to learn more about this, please read a book by another so-called ethics “expert”: “The Wealth of Nations” by Adam Smith. He felt his other book, “A Theory on Moral Sentiments,” is even better.

    Second, a company does not define its ethics primarily by aligning its values and principles with its senior executives, managers, and employees. That would make ethics relatively meaningless, as every organization changed its values with every new crop of leaders. VW and Wells Fargo can’t decide that their transgressions were ethical simply because senior executives believed they were. The “value” in ethics is that it’s a societal concept, not something that changes according to the whims of an individual person or company.

    Most companies identify values that challenge their senior executives, managers, and employees to be better than they currently are–to improve and become more like what society considers to be an ethical organization. As an actual so-called ethics “expert,” when I help organizations identify their values, they choose them based on the behaviors deemed necessary for the organization to achieve its mission (i.e., the opposite of what you wrote), not simply what will be easy for employees to buy into. The solution to “disconnect” is not to make the values and ethics easier, it’s to challenge senior executives, managers, and employees to be better.

    There’s more that deserves a response but I have to get back to work as an ethics and compliance officer. Seems to me you should find a better so-called ethics “expert” to help when writing a post on ethics.

    • Tim: Thanks for your comments. They are informed and helpful. not surprisingly, I disagree with some of your comments and responses to my posting.
      Of course, there is a great value in an ethical culture. I have written numerous posts on this topic. However, my point is to try and make ethics accessible and effective to maximize behaviors needed for the organization to success. Too often, I encounter company cultures where executives, managers and employees communicate that the so-called values that the company has embraced have no relevance to the day-to-day work, purpose or overall mission. This disconnect is an unfortunate lost opportunity to inspire and improve overall productivity, performance and creation of an ethical culture. Too often, I observe companies with high-minded, feel-good principles that do not inspire nor connect with company executives, managers and employees. At no point would I ever suggest that the solution to this disconnect is to make the ethical principles easier to access; in fact, my point is to make them relevant, to inspire and hopefully to succeed in building a true culture committed to business ethics.

      As to your other point concerning the mission of a company — Jet Blue’s purpose of improving humanity is a perfect example of what I am talking about.
      It sounds good, feels good, and is one of many important purposes but may not be the best way to ensure the day-to-day operation of a business that provides a valuable service transporting people reliably and safely around the world for important purposes — for commerce, family relationships, friendships, and many other valuable purposes. But Jet Blue is a for-profit corporation with an important mission — to provide valuable services, to manage and use capital provided by investors, to make profits and to inspire their executives, managers and employees to do so efficiently and effectively.

      There is a reason that ethical companies are more profitable than unethical companies. Employees at ethical companies are more productive, less likely than employees at unethical companies to engage in misconduct, and are more likely to stay at the ethical company. This is something we certainly agree on. But, I guess the question is how to get to the point of being an “ethical” company. My point is that ethics has to have more relevance to a business than just challenging employees to do better, but has to be a message that engages employees, inspires employees and has measurable benefits in the overall performance of the company.

      Thanks again for your comments — very insightful, challenging and helpful to define our perspectives. Feel free to email me at mvolkov@volkovlaw.com to follow up on our discussion.

      All the best, Mike