It’s simply a business reality in the 21st century. The individual behavior of employees, from top management to front-line workers, can make or break an organization’s reputation. That’s not withstanding its significant impact on share value or how it impedes an organization’s ability to attract and retain clients, investors, employees and customers.
Globalization can also increase the potential ramifications of behavioral conflicts. An organization operating in different countries may find the values and ethical standards of other cultures clash with its own, thus creating the need for every organization to develop a code of ethics and corporate conduct to adhere to compliance requirements.
Organizational behavior needs to be defined and deployed in a way that drives the individual behavior of employees in a manner consistent with defined expectations of the wider organization. Many individuals at the center of corporate scandals in the late 90s and early 2000s believed they were innocent of any wrongdoing, including Kenneth Lay of Enron and Conrad Black of Hollinger. The problem is that these individuals did not define their behavior by what most of society would see as “reasonable,” but rather they followed their own code—in some cases, limiting the definition of ethical behavior to simply compliance with the law and nothing more.
But ethics is not just about abiding by the law. Individuals and organizations can act legally and still be acting unethically. Ethical behavior is driven by compliance with a set of values that acts as the touchstone for situational decisions where rules may not exist to cover every alternative. More succinctly, ethics are about the integrity of the decision-making process used to resolve any number of issues.
So how do you infuse ethical behavior into an organization? It starts with education. Undergraduate and graduate business programs must recognize the importance of working ethical behavior and decision-making in the professional world into their curricula. There’s also a role for professional associations. Constant changes in the workplace necessitate continuous education and training, which professional associations can offer throughout one’s career.
Businesses themselves also play a pivotal role in the ethics learning process. With most businesses now operating remotely as a result of the pandemic, many are using the opportunity to create new means of ethical training. Companies have increasingly turned to virtual courses on ethics during the pandemic to develop ethical behavior in the workplace. And many will continue to do so post-pandemic, given the easy accessibility of remote learning and its ability to help employees at all levels learn more about ethical behavior.
This point needs to be underscored. Ethics are ethics, as IMA’s Committee on Ethics member Dave Eichelberger, CPA, longtime accounting professor and formerly Lecturer at the University of Virginia's McIntire School of Commerce, says.
“The environment of being in a pandemic should have no effect on one’s ethics. A person either has them or doesn’t. Ethics in a pandemic should continue to define one’s self and his or her approach to everything.”
Corporate ethics are the amplification of individual behavior. Organizations that succeed in a broad-based deployment of a code of ethics will create a base for enhanced risk assessment, greater transparency for those responsible for organizational governance, and an increased probability that commitments made in words are truly being fulfilled in practice. As a result, CEOs and CFOs who are required to sign commitments of compliance will do so with a greater degree of knowledge and certainty that their words and the actions of their organization are aligned.