Thursday, September 23, 2010

Wasted Ethics Policies

Since SOX (Sarbanes-Oxley), companies have scrambled to develop policies and training to keep them from becoming the next Enron. Some companies have even created a "Chief Ethics Officer" position. These efforts are welcomed although largely fruitless if not supported by actual leadership action.

Let's be honest. How likely is it that an unethical employee will suddenly become ethical after reading a new ethics policy or sitting through an ethics training? Not likely. After all, having an ethics policy in your company is like having a Bible in a hotel room. Just because it is there doesn't mean that everything that goes on is ethical. The best we can hope for is that the ethical employees will now be more aware of certain behaviors to look for and hopefully will be more willing to report unethical, or at least questionable acts. The worst that can happen is that we provide the unethical employee with the intelligence to know what we are looking for so that they can either avoid that altogether or become more clever in concealing that activity.

After all, having an ethics policy in your company is like having a Bible in a hotel room. Just because it is there doesn't mean that everything that goes on is ethical.

This is not to say that we should avoid writing strong ethics policies or provide training to our employees. Rather, it is to put those efforts into the proper perspective. Neither a written policy or any training will have the desired impact if it isn't supported by leaders willing to "walk the talk." Any indiscretion by leadership--no matter how minute it may be--can lead to the development of a "culture of corruption." It can actually happen very quickly. A sales manager fudging an expense report gives tacit approval to the sales force to do the same. A CEO using a company vehicle for personal reasons--against company policy--loses credibility and the ability to discipline a subordinate who does the same thing. As an old Russian saying goes, "A fish rots from the head down." So, any ethics problem in a company is actually a leadership problem.

What can leaders do? Besides the aforementioned training and policy efforts, leaders need to be willing to act quickly and decisively against ethics violations. Discipline must be fair, consistent, and quick. The moment an employee at one level is treated differently than an employee from a different level, for similar violations, the leadership has been neutered. Even if the employee in question is a "star," leadership must be willing to support the principles of the ethics policy lest they become worthless.

Leaders must lead with integrity.

More suggestions on actions leaders can take to impact the ethics of their organization will be upcoming.

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