The Global Business Ethics Survey (GBES), published yearly by the Ethics and Compliance Initiative (ECI), serves to foster a better understanding of ethics in the workplace from the perspective of employees. The 2019 report, incorporating responses from employees in 18 countries, examines the link between organizational commitment (to organizational values and ethical leadership) and two key ethics outcomes:
- Observed misconduct rates and
- Reporting of observed misconduct.
Management guru Peter Drucker said, “Culture eats strategy for breakfast.” He may not have included the word ethical yet knowing Mr. Drucker’s values it’s a given. Yet too often companies forget that culture is the way we do things around here and all of the strategic planning in the world will not right an unethical culture. And an ethical culture is a critical component, most especially with the new workforce today.
When there is an ethical culture in place as the bedrock of an organization, employees know what the expectations are as well as what is not acceptable. Click To TweetThere is a growing trend to more ethical responsible standards for a company. Black Rock’s Chairman and CEO, Laurence (Larry) D. Fink, caused a furor in the business world as well with his January 2018 letter to Blackrock’s shareholders. He stated, “The public expectations of your company have never been greater. Society is demanding that companies … serve a social purpose. To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society. Companies must benefit all their stakeholders… Without a sense of purpose, no company can achieve its full potential.”
The 2019 ECI survey emphasizes this message. In a strong ethics culture, leaders not only set shared organizational values and goals, but they also demonstrate them. The leaders are first and foremost role models.
Ethical leaders hold themselves and their employees, at all levels, accountable. Yet as much as we talk about ethical leadership and organizational values, the GBES study shows that “employees are not seeing enough evidence of these elements in place.”
In fact, overall in the 18 participant countries surveyed 39% of employees do not see a strong commitment to organizational values and 58% still do not see a strong commitment to ethical leadership. In North America, these percentages are at 35% for organizational values and 47% on ethical leadership.
We have far to go. When employees see a lack of commitment to either of these two factors, this signals them this is just window dressing on the organization’s part and consequently neither the organization’s leaders or its employees are expected to follow or model ethical behavior.
The study establishes “a link between employee’s perceptions about the organization from strong to moderate or weak to organizational values, ethical leadership and ethics outcomes, observed misconduct as well as the reporting of observed misconduct.
The study’s conclusion: a strong commitment to organizational values and ethical leadership leads to better ethics outcomes. The opposite holds true, leading to worse ethics outcomes.
The study is worth exploring in more depth. It measures abusive behavior, violations of health and safety regulations and conflicts of interest. It was no surprise, misconduct in the areas the study measured were substantially higher in organizations perceived by employees to have a weaker commitment to organizational values and ethical leadership.
Unfortunately, in organizations with weak ethical cultures, employees were also more likely to say they felt pressured to compromise their organizations’ ethics standards, policy or the law. There were also higher incidents of misconduct and yet fewer reports of misconduct.
The study clearly emphasizes that to demonstrate a stronger commitment to organizational values leaders need to talk about the importance of ethical conduct and continually reference the organizational values the company stands for. They must consistently act in alignment with these values if they are to inspire others to do the same.
There is no question that leaders must set the tone, establish the culture, and get buy-in to the organization’s values and beliefs. Whether in business or government it is imperative we hold our leaders accountable. The higher a position the more an individual is “on display.” Ethical leaders demonstrate ethical behavior, not a sometime thing, but as a daily, consistent habit Click To Tweet
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
