Leadership Lessons

Creating an Ethics Culture Doesn’t Have to Be Hard when You Follow these Tips

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Whether you are on or off the field (for sports) or in or around the office (for business), ethics is an integral part of any team or organization. In order to be very clear, ethics is defined as being the branch of philosophy that deals with the concepts of what is right and what is wrong. As a leader, how do you go about creating an ethics culture within your organization?
Set Clear and Concise Expectations
There should never be a question regarding what type of behavior is okay and what is unacceptable. This is applicable in all parts of life. For example, each sport has clear rules on game play. These rules are a fundamental part of any training program. Having clear expectations will help everyone follow the rules.
Lead by Example
This is perhaps the most important part of creating an ethics culture. Although it may sound cliché, you cannot simply talk the talk and expect others to follow. You need to be a constant display of how to follow and fulfill the expectations that are there. Whether you are a leader in your organization or a team member, it is important to understand that there are others that are watching you and will act based on what they see.

"We're getting back to first principles ... when means we're going to have some."Practice Positive Reinforcement

This is also known as operant conditioning. When someone does exactly what he or she are expected to do, you should reinforce that behavior. Reinforcement can be practiced in many forms. It can be verbal praise for a job well done or even a simple expression on gratitude. Positive reinforcement does not have to be drastic. However, you do want that person to know that you recognize their efforts.
On the other hand, negative behavior should not be reinforced.
Cultivate Problem Solving Skills
A very important part of being a leader is allowing your team to solve problems. While in some situations it may be easier to fix the problem yourself, that does not demonstrate anything to your team. The first time you fix a problem, provide a systematic method for solving the problem to those that are involved.
You can also create fictitious scenarios for your team so that they know how to solve the issues before they occur.
Provide Tools for Growth
In order to effectively create an ethics culture, you need to ensure that your team has all of the tools they need. These tools can come in many different forms such as having the proper resources, training to use these resources, and supervision.
Give Constructive Criticism
When anyone in your organization acts in a manner that is not acceptable, it is important to address that behavior properly. Instead of just telling someone that they did something wrong, you need to point out what was done properly and provide feedback on what should be improved upon. The last thing you want to do is discourage a team member by berating their performance.
As you can see, creating an ethics culture is not difficult. It simply requires doing the right things consistently. Following the above principles is a great start for success.
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Chuck Gallagher
Chuck Gallagher

Chuck Gallagher is a business leader, author and speaker on the subject of ethics, choices and consequences. Featured for his unique perspective on ethics and ethical leadership, Chuck has appeared on CBS, NPR, and CNN and in the Wall Street Journal, Huffington Post and Business Week publications. While his client base is typically businesses, Chuck finds great pleasure in working with schools to impact, influence and empower youth to make ethical choices. Chuck can be reached at chuckgallagher.com

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Leadership Lessons

What Everybody Ought to Know About Business Ethics

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Ethical behavior is about having personal integrity, meaning that you are always honest and true in doing business as well in your personal life. But, some people have problems in defining ethical behavior and that can become a problem. People define ethics in a way that suits them most or is socially acceptable. For example: I often ask in my presentations, “How many people feel that voluntarily breaking the law is unethical?” Most everyone raises their hand. That is followed with this question: “How many of you have driven on the interstate highway in the past two weeks?” Most everyone raises their hand. Then the last question – which likely now you have guessed: “And, how many of you have voluntarily exceeded the speed limit by 5 to 10 miles per hour?” Everyone raises their hand! So you feel that breaking the law is unethical yet you gladly do so. Confusing right?

In order to be ethical in business, you first need to demonstrate ethics in your everyday life activities and decisions, because if you don’t, how will you do it in your professional life. Don’t expect someone else to do it for you. Now does that mean don’t speed? To be clear, that’s not the point. What is true is that honest people will make dishonest and unethical choices if they feel that it is socially acceptable. In other words, it’s OK if everybody does it.

What is Business Ethics?

Like we said, ethics is applied to business the same way it is applied to personal behavior. More specifically, business ethics applies to ethical behavior in a business environment. Ethical business must abide by laws and regulations, it must be operated honestly, the competition needs to be fair and the working environment has to be reasonable for its employees. Besides this, a partnership has to be created between customers, investors and vendors. So, the best interest of every stakeholder is to be taken into consideration and included in every decision. While there are differing theories of business ethics – as we can see today not all choices that benefit just one class are ultimately the right choice for a business. The choices Volkswagen made seemed to benefit its shareholders – at least in the short term – but in the long term they were choices that created a disaster!

How To Be Ethical In Business?

For a business to be ethical, the company needs to operate fairly and honestly. So, some of the characteristics must be: respecting and treating the employees, investors, customers and everyone else who has any role with the company fairly; having honest communication with every stakeholder both internally and externally; dealing with them with integrity; setting high standards for responsibility and ethical behavior; having clear communication about policies both internally and externally with stakeholders. In other words, the core values of the organization tend to always come through when it comes to long term decisions. It is safe to say that many people today are questioning Volkswagen’s core values. The same can also be said for a number of companies that have met with unexpected consequences from their choices – just ask the former folks at Enron.

Ethical Dilemmas You Can Encounter in Business

In some cases, not all unethical behavior is illegal. Many times, companies can face ethical dilemmas that are not illegal and they have to carefully navigate through them. To see how this might look like – for example, if a travel agency wants new customers, they will put the price for a vacation in the Bahamas and the customers will choose whether this price suits them and they will book the trip, and this is ethical behavior. But, if that same agency states that they offer a free vacation to attract customers to book through them, and when they call, they find out that there is pricey booking fee – that is unethical. One example of unethical behaviors is not giving information. For instance, when you are buying a used car and you ask the salesperson about whether the car was involved in an accident and they say no, where in fact the car was in an accident – that is also unethical behavior. Also, if you are bribing, or promising things that aren’t true, treating employees unfairly – that all is defined as unethical behavior in business.

Your core values – the ethical moral compass of your organization – generally provides the guiding principles when it comes to the choices that are made at senior levels. I was working with a multi-national company – Fortune 50 company – that told me straight up that they were not doing business in China. When I pressed them as to why, they were clear…they didn’t pay bribes for work and since that was almost culture in China, they elected not to do business there. Here their ethical culture was shinning through.

How Can Good Business Ethics Affect Your Business?

Companies who are demonstrating ethical behavior and certain responsibilities are generating better results and that is why the impact of ethical behavior should never be underestimated. If you have good ethics in your company and incorporate them well, that will define your organization, from the CEO to the lowest-level employee, to behave responsibly. Ethics should be a part of every company’s strategy from planning to execution. You shouldn’t put too much pressure and set unrealistic goals, which can make employees feel extreme pressure and believe that there might be a chance that they can lose their jobs. They need to understand that business ethics is just like personal ethics, the right thing needs to be done where there is a difficult choice.

So, put in simple words, ethics is learning what is right or wrong, and choosing to do the right thing, but when in business, that right thing is not always easy to do. The main aspect is to always discern right from wrong and good from evil. So, always do the right thing, even when you find it extremely difficult and even if it will not be to your advantage.

What everybody ought to know about business ethics – what do you think?
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Chuck Gallagher
Chuck Gallagher

Chuck Gallagher is a business leader, author and speaker on the subject of ethics, choices and consequences. Featured for his unique perspective on ethics and ethical leadership, Chuck has appeared on CBS, NPR, and CNN and in the Wall Street Journal, Huffington Post and Business Week publications. While his client base is typically businesses, Chuck finds great pleasure in working with schools to impact, influence and empower youth to make ethical choices. Chuck can be reached at chuckgallagher.com

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How Good People Make Unethical Decisions
Leadership Lessons

When Ethics Fail: How Good People Make Unethical Decisions

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Far too often does the process of making bad choices, unethical choices, begin with a simple almost thoughtless decision.  How do I know?  I am living proof that good people can make really bad choices and profound doesn’t come close to describing the experience.

“Never in my wildest dreams did I see this coming. When I first started “borrowing” from my client I had every intent of paying back what I took. Heck, I did pay some of it back…at least at the beginning!” Those were the words I shared as I openly confessed that the life I was living was, for the most part, an illusion. Truth be told for all my legitimate successes, I had over time become no more than a liar and a thief. My choices created consequences that he never dreamed were possible.

Some people have advised that I should not be so transparent, especially when writing an article for such a prestigious organization.  By my recantation of my ethical fall is all too common. People who fold their arms stating “I would never do something illegal much less unethical!” find that what triggers inappropriate behavior is a basic part of human nature.  We are all subject to temptation and therefore can and do make bad choices.  I am but an example.

If bad choices lead to tough consequences, what can we do to identify bad behavior before it starts? What can we do, as managers or leaders, to prevent unethical choices from being made in the first place? Those are two very profound questions, both of which are at the heart of why it is critical to talk about the Human Side of Ethics in your organization

The Three Components of Bad Behavior

Research has shown that three behaviors are at the core of what would cause or allow an otherwise ethical person to make unethical and potentially illegal choices.  These behaviors are well documented and for those who are charged with detecting fraud (Statement of Auditing Standards #99) are called “the fraud triangle”

Need. Described as perceived pressure that a person is experiencing, is the first and critical component of what motives a person to stray from ethical to unethical. Need may come in a variety of forms. The person who is in too much debt likely experiences financial strain – which was the root of my need. Alice, a church secretary, found her need triggered by her granddaughter:54’s diagnosis of cancer. Infamous Bernie Madoff’s need was certainly not money; likely, he was triggered by the need to be infallible. Whatever the pressure, need is the core emotional state that starts the ball rolling from a choice that is ethical to unethical.

Opportunity. It makes no difference what your need may be if you don’t have the opportunity to satisfy it then the unethical and potentially illegal choice fails. Without Opportunity there is no fuel for the potential unethical fire. I was a trusted employee, and with that trust came opportunity. Alice was trusted, and had been for so many years that no one could comprehend she was capable of any unethical activity. Madoff took opportunity founded in trust to a new level.

Rationalization. Need combined with opportunity provides a firm foundation, but the glue that holds unethical activity together is the ability to rationalize that what is wrong, is right.  If you ask most people found guilty of unethical/illegal behavior, they will tell you they felt their actions were legitimate. Mark, for example, rationalized that he was not “stealing” money as long as his intent was to pay it back. Further, he solidified this mental game by paying some of the money back. “Surely, I wasn’t guilty of stealing money as long as I was paying it back,” he stated.

The mind can be tricky and when you combine need with opportunity, and can rationalize bad:00 behavior as good, you have the perfect storm to move from ethical to unethical, and potential illegal, behavior.

What Can Be Done to Prevent Unethical Activities?

As business managers, HR Directors and those connected with Compliance, there are clear actions we can take that can help keep folks between the ethical lines.

Look for Need! While we can’t control what needs our employees have, we can be aware of any changes or activities that would suggest an increase in need and the stress that need brings.

I was the one responsible for my unethical actions.  I was in too much debt and succumbed to the pressure of my need by turning to an unethical activity.  I blame no one, but I also have to acknowledge that if those close to me (my partners in business for example) had noticed my changing patterns of behavior their attention might have thwarted my actions.

When subconscious need is brought to light or becomes conscious, then often the outcome is reduced inclination toward unethical behavior.  So, signs to look indicating increased need are: (1) calls from creditors or personal calls intensifying at work; (2) abnormal purchases without apparent new sources of funding; (3) lifestyle changes and/or (4) marital issues or challenges with aging parents.

Need is the fuel that supports the possibility of unethical behavior.  The challenge most managers face with thinking about “Need” is to be open minded enough to consider the potential sources of “Need” so that what might fuel unethical behavior can be suppressed.

Minimize Opportunities. The most effective course of action to keep our employees and associates between ethical lines is to remove opportunities to conduct unethical activities. For example, I embezzled money from a client’s trust fund. While I am not proud of that action (now some 25+ years ago), had the bank account that I used required two signatures, the embezzlement would have been far more difficult. Think about it, with that minor change what would I do, ask the co-signer to help me steal money from the trust? The answer is simple, of course not.  So, less opportunity equals less chance for unethical activity.

A practical question is how do we reduce opportunity?  Some of the answers are obvious.  Minimize opportunities by: (1) requiring multiple signatures on checks; (2) require people to rotate job responsibilities from time to time; (3) strongly encourage employees to take vacations or time off; and/or (4) ask employees from different positions within the company to identify how people can or do act unethically.  When a person is aware that their actions are being watched or subject to being watched, the “Opportunity” factor decreases substantially.  As worn out as the line might be, people really do respect what management inspects.  Of course, management must be subject to inspection as well.

Train Rationalization. Depending on one’s internal ethical compass, what one person can easily rationalize may be a problem for another.  Therefore, as managers our role (just as important as the more analytical “Opportunity” role) is to educate our people on the significance of “Rationalization” identifying what it sounds like and when it might appear.

When employees hear what rationalization sounds like, when we bring to consciousness what is active in the subconscious, it becomes far easier to support each other in our ethical choices. At a recent ethics seminar an attendee commented, “But everybody does it.” As those words were spoken, another participant yelled out, “Rationalization!” The crowd erupted in laughter as people began to see just how simple and easy it is to rationalize the “little things”. And, when we rationalize the little, the larger unethical choices become easier to swallow.

Your Ethical Culture

Every business or organization needs to remember that the creation of an ethical culture is exemplified in the actual behavior and attitudes of all team members.  The question is not so much whether you talk the talk (in policy documents, training materials or video or webinars), but rather whether you walk the walk.

Want to create a culture of ethical behavior in your organization? It’s easy if you think about it. When you start by understanding how good people make bad choices, and follow it with an effective ethics-training program that reinforces ethical choices and accountability, you have a recipe for success. Every choice has a consequence. What choices do you make for your organization to help keep your most valuable assets between the ethical lines?

About the Author
Chuck Gallagher is the President of the Ethics Resource Group and an international expert in business ethics. Chuck provides training, presentations and consultation with associations and companies on ethics and creating ethical cultures where people do the right thing, not because they have to, but because they want to!  Information can be found at http://chuckgallagher.com or Chuck can be reached via email atchuck@chuckgallagher.com.

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