R. Sankar on six ways to create an ethical culture
Ethics is above the law. The notion that what is legally permissible is ethically correct, is wrong
The ethics code must not only set out norms of behaviour, but also provide sanctions for violations and infractions
Leading from the front, penalising errant staff among key attributes says Sankar Ramamurthy
Set the tone at the top
Like most things, creating an ethical culture starts at the top. Role modelling is critical for an ethical culture to take root. This does not mean exhortation and precept. It means living the code and privileging values over short-term gain. Employees watch leaders’ behaviours more than they listen to their words. How leaders behave in moments of truth will have a stronger and more enduring impact than what they say.
That said, it is important for employees to know what constitutes ethical behaviour and what does not, what is acceptable and what is not. Therefore it is important to formulate and disseminate a code of ethics. This is not as easy as it seems, given the complex business environment and the many laws and regulations with which one must comply. Besides, cultural norms play a big role. What may seem harmless in one culture may be utterly unacceptable in another. The code must not only set out norms of behaviour, but also provide sanctions for violations and infractions. The consequences of a breach of the code must be made clear. These may vary depending on the type of infraction, whether it is the first offence or a repeat and other mitigating factors and may range from a reprimand and warning to fines and dismissal. The code must also include a process of fair, impartial and speedy investigation leading to swift action. Protection and the provision of a safe harbour for whistle-blowers are an indispensable prerequisite, as well as a well-designed process for complaints.
The code is a dead letter if it is not disseminated widely within the organisation. This calls for preparing and rolling out a sustained campaign of training and communication. While the duration of the campaign will vary depending on workforce size, it is not uncommon for campaigns to run for a year to 18 months. During this period, the code is brought alive through town halls, workshops and seminars. Innovative methods using social media, the intranet, posters, screensavers etc are l grist to the mill. Values champions, themselves role models, champion the code as well as play a lead role in developing and running the campaign.
The code must be supported by the right infrastructure, including an ethics hotline and ethics resources whose help employees may seek if they are not sure of the right course of action in a given situation.
The code of ethics must form part of new employee orientation and on-boarding.
A one-off exercise in training and communication will not do. For the code to become reality, refresher training is required. The most cost-effective way to go about this is through an e-learning programme. A well-designed e-learning programme sets out and explains the code and uses cases studies to test participants’ understanding and knowledge. In many organisations, completing and passing the e-learning course and self-certifying compliance with the code of ethics are mandatory.
Reward and Sanction
The code will not be seen as important if violating it does not entail serious consequences applied without discrimination to all levels of employees and regardless of how important they are to the organisation. The code will not inspire confidence if leaders get away at the expense of employees lower in the chain of command. I have heard managers say “we cannot do business if we followed the code strictly”. This attitude must be quelled. Very often, too aggressive business targets make employees flirt with danger. When a lot is at stake, shortcuts are tempting. To create an ethical culture, business leaders must understand the difference between a stretch target and an unrealistic one.
Positive reinforcements such as recognition and appreciation of ethical behaviour are as important as sanctions. After all, every organisation touts “integrity” as a key value. Yet, few reward for exemplary behaviour and many merely pay lip service to it. At the least, employees who have violated the code must not be rewarded with promotions and bonuses to which they might otherwise be entitled.
Foster an open culture
A servile and obsequious culture and undue deference to authority are inimical to the creation of an ethical culture. Fostering a culture of openness and encouraging non-hierarchical, respectful behaviour with an emphasis on the truth is critical to the creation of an ethical culture. “My boss, right or wrong” and “my company, right or wrong” are hardly likely to support the creation of an ethical organisation.
Eschew the legally permissible if it is ethically impermissible
Finally, ethics is above the law. The notion that what is legally permissible is ethically correct is wrong. Too many organisations take refuge in technicalities in defending themselves against charges of unethical behaviour. Ethical organisations eschew actions that do not sound and seem right, even if these by law be permitted or be not expressly forbidden.
Sankar Ramamurthy is an Executive Director with PwC and can be reached at sankar.ramamurthy@ in.pwc.com