Beyond Words: Boosting Business Ethics

From executives to general staff, knowing how to deal with conflicts of interest can’t be left to chance. Here’s a three-stage approach to building a do-right culture

The essentials

In 1989, after its acquisition of Texaco Canada, Imperial Oil wanted to bolster its approach to business ethics. Already a leader in the area, it turned to a cross-functional team of four executives, including Jim Ridler, to carry the ball. What Ridler learned from the experience as an ethics advisor informed his views on how to shape and sustain an ethical organizational culture. Ridler has been teaching business ethics at Smith School of Business for more than 20 years. In this conversation with Smith Business Insight, Ridler discusses the importance of taking a structured approach to business ethics.  

Toward a Common Culture

Today, one of the realities is that employees come from a variety of backgrounds and will have different degrees of concern about business ethics. Without a common culture around ethics, it can be very difficult.

There needs to be a program to make this ethical culture happen. It must be visibly led at the top and it should be all in, involving all employees from the janitor to the CEO. There are potential ethical problems at any of those levels that can be a problem for the organization and its stakeholders.

You also need resources. One of the things I found after we’d gone through orientation and workshops was that I got flooded with over 200 calls for advice in the next year. People sometimes have a really hard time deciding what the ethical thing is to do.

There are three steps for achieving a strong ethical business culture: developing and implementing the program, maintaining it, which is an operational role, and enhancing it after it’s operating and you’ve learned something.

Stage 1: Developing and Implementing an Ethics Program   

Think of developing an ethics culture as an integrated process that is led by the CEO and the board.

A good place to start is to make current assessments of your base case by conducting anonymous surveys or questionnaires of your employees and perhaps other stakeholders.

From that, develop or revisit a vision for the organization. Then a mission statement would be the role or purpose of the company in society and include core values such as honesty, trust, fairness, respect, and responsibility. From that an ethics code and ethics program can be developed. The ethics code should include a process for every employee for how they can raise a concern, anonymously if necessary so that there’s no retribution. The code we developed at Imperial included an ethics test or decision tool that employees could use to assess any situation they were in and decide what to do.        

You can use HR to gather employee input that can be used when you put together the program package. Once it’s been massaged, it’s up to top management to review and then personally communicate the program and ethics code to stakeholders, especially to all employees.

At Imperial, we then held employee workshops throughout the entire company. The workshops were led by the manager of each work group, not by the ethics advisor and certainly not by HR. It’s really important that it’s not some random gathering of people but individual work groups that have the workshops, because that way it’s in the context of their situation and management.         

Ethics can be part of the appraisal process, just like sales or cost or safety, and recognized just as any other important part of performance to be rewarded or to be penalized 

We were also asked to have every employee sign a card that they had seen the ethics code of the company and its core values and that they would follow that code. There was resistance to this. People said, Why do we have to swear on our blood that we will honour this any more than anything else? Don’t you trust us? Asking them to sign a card was seen as going against what they thought the culture was. They weren’t being asked to sign off on virtually anything else.

I think each management team should consider the suitability of this option based on the organization’s situation and not just automatically decide on requiring sign off.

Stage 2: Maintaining the Culture

Once employees are using the material to make decisions, it becomes about practice. Practice is what makes the culture. I’m a fan of Aristotle, and that was his focus, that you can build your character by the decisions you make. Similarly, a company can build its culture by the decisions individual employees make, and turn those ethical principles in the code into ethical actions.

In order to do that, you often need ethics advisors or officers to help them make ethical decisions, beyond the tools they were given in the workshops. Another thing that could be implemented is an incident reporting process, reporting on situations that actually occurred rather than just questions that have been raised. There should be a fair and effective review and disciplinary process to follow up on these incidents.        

As well, the ethics code and core values can be incorporated into recruitment criteria and orientation.     

To get a reality check on how well your organization is progressing, do audits. Getting views from outside as well as inside from employees is valuable. It can be stipulated in key supplier agreements.

The other piece is senior management’s role. They have to patiently walk the ethics talk; this is going to take time. Leaders can champion ethical values as part of their own management systems. An example is appraisal. Ethics can be part of the appraisal process, just like sales or cost or safety, and recognized just as any other important part of performance to be rewarded or to be penalized.

Stage 3: Enhancing a Culture of Ethics

There are two elements to enhancing an ethical culture: the program itself and senior management involvement.

Let’s say you've been running an ethics program for at least a year. Do a proactive environmental scan as well as stakeholder surveys: Are there best practices worth adopting? What are issues we are not dealing with? What are areas that are coming up that weren’t there years ago? What can employees or consultants tell us? Identify areas of risk. Use all this to upgrade the ethics code or ethics test.           

You can also consider whether to offer refresher workshops for employees. That’s a management decision based on need; I would say at least every couple of years. For one thing, you have new employees coming in and it also gives you an opportunity to provide follow-up information. The ethics advisor should keep an inventory of the issues raised and whether the issues required action, and this could be discussed in workshops.     

The second element is senior management. They can look at harmonizing other policies, practices, and training in order to incorporate ethical concerns where relevant. With the environmental scan, they can review and develop reaction policies for any hot new ethics issues.

Lastly, and this is a tough one, they can hold their own ethics workshops. An example could be international operations. What are the guidelines we're going to supply to our employees and suppliers who are operating internationally and with governments around the world? This a real task. I did get it to happen once, with some reluctance in terms of attendance and only because the president held the workshop. It was not an enthusiastic gathering. I think there was an element of, We’re above this and know it all already. Unfortunately, reality can then bite!

Interview by Alan Morantz

Smith School of Business

Goodes Hall, Queen's University
Kingston, Ontario
Canada K7L 3N6

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