The Network in the News

Set Example, Train Employees To Build Ethical Culture

March 01 2013

It pays to run your firm on the up and up. Ethisphere, a New York-based ethics research firm, found that firms on its World’s Most Ethical Companies list posted 20% greater profits and 6% better shareholder returns than other firms. “Don’t look at compliance as a cost without benefit,” Luis Ramos, CEO of Atlanta-based The Network, a governance, compliance and ethics consultant, told IBD. “Not only do you not get that fine, but you also get better performance.”

* Don’t get complacent. Just because your firm runs on a foundation of ethics doesn’t mean it’s sure to succeed, says Jim Autry, a Des Moines, Iowa-based author and consultant on leadership and ethics. You still have to be good at what you do. But in the long run, an honest base leads to advantages such as customer loyalty and employee loyalty. “Those are important in creating long-term business success,” said Autry, former president of media company Meredith Corp.‘s (MDP) magazine group.

* Build a reputation. Once you prove you’re ethical and treat people fairly, word gets out. “If the perception is that the customer is treated well, that can spread like wildfire,” Autry said. “Word-of-mouth among customers creates a great benefit to a company.”

* Set out a road map. Create policies that tell people how you want them to act, rather than what you don’t want them to do. Be specific about policies regarding gifts, when employees can trade their stock and situations in which moonlighting is allowed.

“It shouldn’t be a list of ‘thou shalt nots,’” Ramos said.

* Show what you want. Once you’ve set policies, train employees to exhibit the kind of behavior you seek, Ramos says. Keep sessions short. The goal isn’t just to say you trained your people. It’s to make sure they understand. “If you make these too long, people will become distracted,” he said.

* Reward behavior you want. If you set up incentives to pay people for boosting sales, make sure to require that those increases are reached through ethical means.

“If you’re willing to sacrifice the company’s values, you can very easily reward unethical behavior and not know it,” said Autry.

* Set an example. Leaders need to tell the rest of the group how people are expected to behave. But that’s not enough, Autry says. They have to show it in their own actions. They can’t break rules to win new business or put personal items on the company expense account if they don’t want employees to do that. “It can’t be dictated,” he said. “You have to model it.”

* Find the problems. Part of an ethical culture is to have a system that catches trouble. Be proactive, Ramos said: “If you wait for an employee to tell you something, you often never hear it.”

* Survey employees to dig up trouble areas. Assess risks. Be sure people understand policies. If no one knows they are supposed to shut down their computers at the end of the day, the rule isn’t effective.

* Follow up. When problems are reported, dig into the cause, Ramos says. That way you can correct the issue and avoid repeating it.

* Be available. Set up visits to all company sites and give people a chance to talk about whatever they want. That encourages feedback and tells the leader what the real issues are. Autry used to meet with groups of 20 at a time when he ran Meredith’s magazine group.

He resolved issues like removing layers of approval to speed purchases.

“We brought about some pretty good reforms as a result of that,” he said. “Part of it is they know you listened to them.”

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Set Example, Train Employees To Build Ethical Culture, Steve Watkins, Investor’s Business Daily, February 28, 2013

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