Professor Holly Brower Offers Ethical Leadership Advice in Investor's Business Daily

Take These Steps To Improve Weakening Leader Ethics
Reposted from Investor’s Business Daily | By Steve Watkins

Companies are making strides when it comes to building an ethical culture. The amount of misconduct that employees observe has reached a historic low. At the same time, workers are likelier to report any wrongdoing they see.

But the Washington, D.C.-based Ethics Resource Center’s biennial National Business Ethics Survey also shows areas that portend trouble if firms don’t address them. Employees say their leaders’ ethics are in decline and moral cultures are weakening. And those who blow the whistle on wrongdoing believe they face more retaliation from higher-ups than in the past.

Here’s how leaders can reverse those troublesome signs and keep up the strong points.

• Improve the environment. Employees who say their companies have weak ethical cultures climbed to near-record levels in the survey. Leaders need to show employees across the firm that integrity is a priority or they’ll pay the price, said Patricia Harned, president of the ERC, which is a nonprofit research firm: “When cultures weaken, we expect to see more misconduct next time. This is a reason for leaders to not rest on their laurels.”

• Raise visibility. Harned tells leaders to take a close look at their ethics programs such as training and hot lines to report wrongdoing. Make sure they work and emphasize them to workers. “Just because you have them doesn’t mean employees are aware of them and intend to use them,” she said.

• Aim high. Sure, it’s vital to get people throughout the firm to buy into the importance of an honest culture. But top executives need to create that climate first or it won’t stick, said Holly Brower, who teaches leadership at Wake Forest University: “Leaders have to provide the support and direction, and they have to model the way.”

• Communicate. Show employees the value you place on honesty by talking about it constantly. Encourage two-way discussions. And have the CEO fly to the firm’s various locations for ethics training.

“That shows that it’s a priority,” Brower said. “You know this is costing the company money, so it must be important to them.”

• Train them. Lower-level managers have the biggest impact on whether employees view the company as ethical. Firms need to show those supervisors how to handle complaints and set an honest tone within their group, Harned says. Have them refer to the code of conduct frequently in team meetings. Have them explain the role that core values play in decisions.

• Cut the coercion. The survey showed that the number of employees who felt pressured to cut ethical corners jumped. Solve that by stating often it’s crucial to make the numbers, but without sacrificing integrity. “The tone the supervisor sets can make all the difference in the world,” Harned said.

• Follow up. It’s imperative to show you won’t tolerate those who break your rules, Brower says. Restaurant operator Denny’s (DENN) rebounded from discrimination claims in the 1990s by being clear that any employee doing anything discriminatory would be fired, Brower says. No exceptions. No second chances. “Then employees know that’s the culture,” she said.

• Tell it. Explain to employees the kinds of actions you want by using real-world examples. If someone walked away from a big sale because the client wanted a kick-back, use that as a model. “Show that we do the right thing, even if it costs us money,” Brower said.

• Make it pay. When reviewing managers, include how they handle misconduct and foster a culture of integrity. “It becomes a formal part of the evaluation process,” Harned said.