ETHICS

Trust Builds Value in Business Ethics Programs

5/1/2015
By Marillyn A. Hewson
One of the first things people think when meeting someone for the first time is, “Can I trust you?” In business that question can mean the difference between success and failure.

Trust is built through ethical behavior. So, workplace ethics is serious business, with significant implications for reputation, recruiting, competitiveness, and at the end of the day, the bottom line.

People want to work for — and do business with — companies they believe in; companies that value integrity, accountability and doing the right thing. This is why, now more than ever, a robust ethics program is the critical foundation to any successful business plan.

Trust builds value — but first, employees have to demonstrate how much they value trust. Here are five tips for getting the most from a business ethics program.

First, establish an ethics program grounded in values.

Every ethics program starts with values. This is about more than words on a page. It’s a chance to lay out everything a company stands for — and all the things it wants to strive for.  Lockheed Martin’s core values are non-negotiable: do what’s right, respect others and perform with excellence. And these are the ideals that its ethics program stresses as well.

It’s important to identify the values that guide a company, and then establish its ethics program around them. Employees are making moral and ethical decisions every day. Leaders can’t just leave these kinds of decisions to chance. It’s essential to create a well-defined ethics program with straightforward policies, procedures and processes — and to reinforce them through ongoing education, training and communication.

Next, build a culture of communication.

The story of the emperor’s new clothes is well known. The emperor is swindled by some cunning faux-tailors; they tell him they’ve made him beautiful garments that only wise and competent people can see. When the emperor marches out in front of his subjects, it takes a child to tell him he’s naked. Everyone else is too worried about challenging authority, or looking bad in front of peers.

Building a culture of integrity and trust depends on people’s willingness to participate. Everyone in an organization needs to know that they can raise doubts or express concerns without fear of retaliation — whether those concerns involve themselves, a coworker or someone else. It’s critical to make that clear, to keep the lines of communication open, and to set up multiple reporting channels, including anonymous options.

The third tip is to lead by example.

From board members and executives to managers and supervisors, leaders set the tone and direction for the entire company, so it’s important to foster a culture of integrity at every level. That means involving senior leaders in ethics training and outreach initiatives. It means encouraging leaders to talk openly with their teams about the ethical considerations they weigh when making decisions. Actively engaging in this ongoing conversation shows that ethics are a priority.

And this kind of engagement pays off — literally.

The leadership consulting firm KRW International recently looked into business ethics. They found that moral leaders actually tend to make their companies more profitable. Employees rated their bosses on attributes like character and integrity, and sure enough, businesses led by upright CEOs saw an average return on assets nearly five times greater than those led by bosses perceived to be less moral.

The next tip is to address issues quickly.

To ensure that values are embedded into a company’s culture, executives must deal with issues immediately. It doesn’t matter who’s at fault. Every employee, regardless of his or her role, must be held to the same high standard — whether that employee is a first-year hire or the company’s CEO.

This is why it helps to have a strong ethical culture. When these principles are embedded into your business environment, it’s easier to quickly and transparently handle any issues that arise — from providing guidance on difficult questions to mediating disputes.

And finally, hold business partners to the same standards.

In early January 2015, Chipotle stopped serving pork at nearly a third of its restaurants. The reason? They had discovered that one of their providers wasn’t meeting the values set as part of their “Food with Integrity” standard.

At the time, a spokesman for Chipotle said that they could easily have filled its pork shortfall with “conventionally raised pork,” but the company was unwilling to compromise its standards. The company may have lost some sales in the short-term, but they upheld their reputation and fortified consumer trust. In the long run, integrity is a far more valuable business asset than short-term revenues lost.

Remember: Everyone who supports a business, supplies products and sells on a company’s behalf is an extension of an organization. To be a truly ethical organization, everyone must be held to the same high standards.

During World War II, Lockheed Martin employees working on the B-26 bomber made a pledge to the nation’s servicemen and women to be “ever mindful that your lives and possibly our futures might depend on how well we did our jobs.” They promised “every detail of construction of the airplane was completed as carefully and thoroughly as though we were to fly it ourselves.” At a time when the world looked like it could fall apart, they knew their values and performance had to be unshakeable.

The stakes may not always seem so great, but the same standard should always apply — in the quality of our products, the quality of our performance and the quality of our behavior. Employees, customers and shareholders respect — and support — businesses that act with integrity and leaders who set the tone.

Marillyn A. Hewson is chairman, president and chief executive officer of Lockheed Martin Corp. The views expressed are solely her own.

Topics: Business Trends, Manufacturing

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