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3 Tips for Creating a Culture of Ethics

When did CEOs decide that morality was irrelevant? Shouldn’t the recent departures by the heads of United Airlines and Volkswagen send a message that cutting ethical and legal corners is a foolish business strategy?

The end does not justify the means. In fact, sloppy ethics set the wrong corporate tone, risk the corporation’s reputation and value and may be the loud, memorable endnote to an otherwise stellar career.

Some companies continue to flaunt the line between ethics and legality. Take the case of international logistics company DHL, which was praised recently for a guerrilla marketing campaign using competitors to promote the DHL message. Delivery drivers for FedEx, UPS and others were tricked into hauling huge boxes emblazoned with “DHL is faster” through crowded streets to difficult-to-reach urban addresses.

The stunt was perfectly legal, but legal and ethical are two very different things. The guerrilla campaign violated the “golden rule”—do unto others as you would have them do unto you. Unethical, below-the-belt marketing ploys and business models prove that many businesses simply view this motto as irrelevant.

“The guerrilla campaign violated the “golden rule”—do unto others as you would have them do unto you.”

We increasingly accept sleazy behavior in business. Meeting planners get large affinity program gifts from hotel chains for steering them business. Drug companies give doctors secret cash “rebates” for using name-brand drugs over generics. And Volkswagen turned off emissions technology to make its diesel cars perform faster.

As leaders, we need to restore an abiding regard for ethics, not only in the context of the letter of the law, but also in the spirit of the law. Here are 3 things we can do to establish and strengthen trust among our stakeholders.

  1. Set the tone and standard for ethical behavior. As CEOs, we are responsible for setting clear standards for the ethical values our organizations adhere to. These values should be codified and held in the highest regard, informing every decision we and other leaders in the organization make on a day-to-day basis.
  1. Communicate these values to internal staff and consultants. Your organization’s values shouldn’t just be something you talk about in strategic planning meetings in the boardroom. They should be present in employee handbooks and in contracts with vendors and consultants. There must be consequences if the standards are violated, and no one should be immune.
  1. Create an internal safety valve to find out about potential violations. Setting a tone for ethical behavior includes creating a culture in which employees feel safe reporting violations of the organization’s clear standards. This culture starts at the top with CEOs and managers who are approachable, honest and transparent in dealing with ethical lapses. Creating a chief ethics officer position, or establishing a hotline for reporting violations, are good ways to encourage self-policing among employees.

If your company engages in unethical but legal business practices, you may have a potential problem on your hands. As a business leader, you must make it clear that your corporate values include honesty and integrity. It may hurt in the short-term, but the public and your customers will value your brand.

It’s time we as leaders define our view of ethics and the law and set an example ourselves.. Only then can our employees and customers determine whether they share our values and whether they support us.

 

About Gary Shapiro

Gary Shapiro
Gary Shapiro is president and CEO of the Consumer Technology Association (CTA)TM, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World's Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro