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Business ethics should be priority for business leaders
By Shelia Watson
Contributing Writer
At a recent panel discussion on business ethics sponsored by Lee Hecht Harrison, Charleston’s business leaders were invited “to better understand the critical nature of this issue,” said Steven Spires, senior vice president and managing director of the sponsoring company.
“Over the past few years, scandals like Enron have made corporate ethics a priority for business leaders,” Spires said. “Whether a company is large or small, executives are now being held to a much higher standard of ethical responsibility.”
Trends in ethics
Exactly how critical is the topic?
According to a 2005 National Business Ethics Survey released by the Ethics Resource Center, more than half of American workers have observed at least one type of ethical misconduct in the workplace. The survey also reported that, despite an increase in awareness of formal ethics programs, employee reporting of any misconduct they observe is down 10% from the previous year.
“The business climate is different today than it was 30 or 40 years ago,” said John C. Knapp, president of the Southern Institute for Business and Professional Ethics and moderator of the recent ethics forum.
“There was a time when we assumed our customers trusted us and our organization unless we’d done something to lose that trust. Today it doesn’t take much for people to lose confidence in the organization.”
Decline in trust
Research shows that trust has declined steadily over the last 40 years, Knapp said.
“People don’t give the benefit of doubt anymore when you make a mistake,” he said.
Knapp pointed to several reasons for the decline, including converging trends regarding information technology, a more mobile society and corporate downsizing.
“When we were younger, we had a half hour of national news at night and very little of it was about business,” Knapp said. “Today we have a steady stream of information at our fingertips throughout the day, 24-hour news channels, the Internet and radio, all blasting headlines about leaders and business that is not always positive. A steady stream of negative news has a corrosive effect on trust, and many people fall into the trap of thinking all big companies must be like those they hear about.”
It is also significant that people are more mobile, more ready to change and more willing to move, Knapp said.
“It’s no longer a given that someone would start with a company at age 22 and get a gold watch a couple of decades later,” he said. “Many people view themselves as free agents, and they’re less invested in the long-term success of a company. They’re always aware that there are other opportunities to consider next week or next year.”
Corporate downsizing played a role in that phenomenon, he said.
“When corporations said ‘I’m not loyal to you,’ people said the same. People are not committing themselves to the long-term well-being of the company,” he said.
That’s not all bad, Knapp admitted.
“People are more flexible and more resourceful, and they have more of a self-reliant attitude. That’s good. But the bond is still weaker,” he said. “Today you have more of a virtual organization, and the company has to work harder to get a shared focus.”
Fostering awareness
An ethical culture does not happen by accident. It happens through leadership drive, and it is intentional, Knapp said.
“It’s important to be aware of the areas where you might be vulnerable, where misconduct could be damaging to the organization. It requires some self-examination and a willingness to look honestly at how things are done,” he said.
Implementation is key, Knapp said.
“Enron and Worldcom had basic program elements that organizations should have,” he said. “They had training. They had a hotline for people to call with concerns. What was lacking was a consistency between the walk and the talk at the CEO level. You had people who were not living out principles and value statements.”
Size doesn’t matter
No matter the size of the organization, Knapp said, leaders must set the right tone for ethical behavior.
“In any organization, regardless of size, ethical performance is something that is a result of an intentional focus on establishing high standards of conduct. It’s an understanding that this is what the organization’s reputation is built on and what can put it at risk.
“The same principals apply no matter the company’s size. Ethics is about establishing a culture in a business, and that begins at the top. It is fundamentally a responsibility of leadership, whether the company employs three or 30,000. It’s the responsibility of the leader to establish appropriate values and rewards for good performance and do the right things to prevent undesirable activities.”
The specific approach will likely differ depending on the industry and the type of business.
Nevertheless, Knapp said, maintaining ethical behavior takes effort.
“The idea that one could go on the Internet and download a code of ethics would be a fundamental misunderstanding from management.”
A focus on common issues is a good place to start, Knapp said.
“Honesty, integrity and promise-keeping are things necessary to maintain good relationships. Today, the wise leader is the one who goes about every day asking ‘What can we do to proactively build trust?’”
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