2020 changes almost everything, but business ethics are still needed

INTEGRITY BEAT - Henry J. Schumacher (The Freeman) - October 2, 2020 - 12:00am

In addition to all the effects on every one of us, companies must break new ground more than ever. This year clearly shows how important it is for organizations to be adaptable and to be able to rethink and react quickly.

But how do I get myself, my team or my organization to act more agile? How can I act flexibly in the currently unpredictable situation and also prepare myself for an uncertain future? Companies ask themselves these questions.

As we are all thinking of strategies into the future, looking at disruptive innovation or creative disruption, I would like to remind everybody that building and maintaining an ethical business culture must be part of the agenda. 

Business leaders must be aware that being caught in corruption, unfair competition, data breaches, cybercrime etc. will not only lead to heavy fines but will definitely affect the reputation of the company.

So let’s talk about building an ethical culture in practice. What is the difference between ethics and building a culture of trust?

Ethics are a set of principles. An ethical culture is a culture committed to pursuing those principles — and sometimes the pursuit of those principles leads an employee to take actions somebody else might dislike. Perhaps the employee reports suspicions of misconduct, involving bribery or collusion in competition or mismanagement of data privacy.

Either way, the employee needs to trust that the company will support that decision to step forward. The apparatus of a corporate compliance program—the training, the internal reporting systems, the code of conduct, the due diligence procedures; all of it—should work toward the goal of a strong sense of trust within the organization. PhilHealth employees would certainly have pressed the ‘red button’ much earlier, had there been that trust.

When you view “building an ethical culture” from that perspective, suddenly several tasks rise to the top of the priority list. 

For example, as much as we all love a strong internal reporting system, most employees report their concerns to managers. Most employees also take their cues about how to behave from managers. Consequently, the training of managers about how to weave ethical standards into the company’s daily routines is critical. 

Formal training will always be important; employees will always need to know what the law says about bribery, or privacy, or collusion, or whatever else comes along. Culture, however, is much more than training, full of informal practices, norms, and expectations. Therefore, ethics and compliance programs must work with middle managers on what those practices, norms, and expectations are, and how to base them on the company’s ethical principles. That’s where you win or lose this battle. 

Senior leaders in government and in the private sector have a crucial role in building an ethical culture since they send the signals about the corporate culture that people in operations translate into daily routines.

Let’s look at 3ways you can build an ethical culture:

1. Develop clear ethical values—honesty, respect, fairness; whatever fits your organization. Talk with senior leaders and the board about what those values should be. Put them in the Code of Conduct, in a place of prominence so that every employee is aware of it.

2. Develop clear training materials based on those values. Create real-life scenarios that employees might encounter, where the resolution shows how ethical conduct is the higher priority than commercial success. 

3. Refine your internal reporting system to assure the confidentiality of whistleblowers. Someone who does report an allegation to a hotline (or some other system that circumvents his or her manager) has a fear about doing the ethical thing. He or she needs to trust that the company will protect their identity—that is, they need to trust the system. They need to see that your internal reporting system is trustworthy.

Those are only a few examples of what building an ethical culture entails. It’s long, painstaking work, that relies on communication and collaboration but that’s how you get to an ethical culture.

Both, the Integrity Initiative, Inc. and EITSC, have developed training materials to assist companies in creating trust and ethics – with special emphasis on anti-corruption and data privacy protection. Both organizations are in standby to assist.

Feedback is welcome; please email me at schumacher@eitsc.com

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