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“Employees Need to Feel That They Are on Board and Part of the Ethical Culture”

Guendalina Dondé talks about the latest trends in Business Ethics, how to move away from rulebooks and follow a bottom-up approach in corporate values and code of ethics.

Guendalina Dondé is Head of Research at the Institute of Business Ethics (IBE). She writes and researches on a wide range of business ethics topics. As part of her role, she is also responsible for reviewing and benchmarking different aspects of organizations’ ethics programmes. She has contributed to the development and delivery of ethics training to many different audiences. Guendalina holds a Master’s degree in Business Ethics and CSR from the University of Trento in Italy.

The Institute of Business Ethics was established in 1986 to promote high standards of business behaviour based on ethical values. The IBE is a registered charity funded by corporate and individual donations.

Christophe Bruchansky: In the 2020 Embedding Business Ethics report, you highlight on several occasions the importance of organizing internal events and meetings so that employees have the opportunity to talk about ethics. Do you have any tips on how to organize such events?

Guendalina Dondé: The IBE has been around for over 30 years now and often we are asked what are the main changes that we have seen in Business Ethics over the course of the years. I think that the way in which organizations engage with their employees is one of the aspects that has evolved the most. For an organization’s ethics commitments to be effective, employees need to feel that they are on board and part of the ethical culture, rather than just given a set of rules to comply with.

There are different ways in which these events can be organized, and certainly technology widens the possibilities. Some organizations have annual ‘Ethics Day’, where employees are encouraged to discuss ethical issues, often involving senior leaders. One of the people interviewed in our report provides a very good example of this. He explained that during their Ethics Day, the Chairman and CEO of the group is put in direct contact with all their employees around the world. They can ask questions and he responds online.

Although they have been doing this exercise for over ten years, they highlighted the importance of keeping adapting it to reflect what employees want. To respond to the point raised by some employees as to whether it was the ethics team, rather than the CEO, who responded to the questions, they built a glass booth and installed webcams so that everyone could see, live-streamed, what was happening. Other people were not happy with the process to select the questions to be answered, as they felt the CEO might decide to pick only the easy ones. In response to this, they put all the questions received online and asked employees to vote for the ones they wanted the CEO to answer. He committed to respond to the top 20 questions. He said that this was really well received because people saw it as transparent, democratic and very respectful.

Is there anything preventing codes of ethics to be defined in a bottom-up fashion? Is it something you would recommend or do you see any disadvantages?

When it comes to codes of ethics, it is really hard to provide one-size-fits-all type of advice. Understanding the specific context is key to ensuring that a code is effective in inspiring behaviours in line with ethical values. However, it is important that employees feel part of the ethical culture of an organization and empowered to take personal responsibility for their decision-making in potentially challenging situations.

For this reason, many organizations do follow a bottom-up approach, which, in my view, has many clear advantages. Historically, the top-down approach, where the values and code are set in the boardroom and disseminated down throughout the rest of the organization, has been the conventional approach. However, in some instances, it has resulted in platitudes rather than being fundamental to the way business is done. The enduring example of Enron should serve as a warning on the risks associated with this approach. Conversely, the bottom-up approach is where the values and code are carefully chosen to represent an employee’s experience of working in the organization. Different organizations have applied this approach in different ways. Some – especially the smaller ones – have reached out to all their staff to get people’s views on their core values and code of ethics. In cases where the core values were already part of the corporate identity, maybe because they had been set by the founder for instance, employees’ contributions were mainly focused on ethical dilemmas that they wanted to see included in the code.

As I said, it is up to the individual organization to figure out the approach that is most appropriate for them and for their employees. However, many interviewees highlighted that it is very important that the E&C [Ethics and Compliance] officer in an organization goes out and does talk to people at all levels of the organization – not just at the top! – to ensure that their views are known and taken into account when the various elements of the programme are updated or revised.

On the one hand, ethics ambassadors need to promote the core values of their organization. On the other, they need to create an inclusive workplace for all, welcome multiple perspectives and constantly challenge their assumptions. How do you know if an organization has found the right balance between the two?

I think that communicating clearly what an ethics ambassador is (and what is not) is a crucial point here. In particular, it is very important that the trust bond between employees and their local ethics ambassador is nurtured and supported. People should feel that the ethics ambassador is there for them to help them whenever they have a problem. The ethics ambassador doesn’t have to be able to give all the answers all the time, but they should be able to point people to the right contact point in the organization or be a first sounding board for employees who have a concern but are not sure about who they should talk to.

Ideally, there shouldn’t be a conflict between the organization’s core values and a workplace that is inclusive for all. These two aspects should reinforce and complement each other. However, if a conflict exists, then the ethics ambassador is in the best position to report the issue to the central E&C team. This shouldn’t be done in a way that exposes the individual who raised the questions. On the contrary, it should be aimed at bringing the attention of the E&C team to an issue that they might have missed otherwise, prompt some discussion and, if appropriate, introduce the necessary changes to make sure that the dilemma is resolved.

Stakes are high for organizations and they need to demonstrate their ethical behaviour to their consumers, policy makers and the general public. Your report mentions a series of KPIs that companies can use to measure the success of their corporate ethics programme. Is there not a risk of gamification? How can it be mitigated?

I think that measuring the impact of an ethics programme is a very important step in ensuring its effectiveness. Having said that, defining what success looks like and how to measure it can be tricky. The obvious risk of introducing specific KPIs is that people focus too much on the indicators thus identified, neglecting other equally important aspects just because there isn’t an explicit KPI attached to them. For instance, if we try to assess the culture of an organization, which is rather difficult to measure per se, the risk might be that we put too much emphasis on the measurable elements of it.

No single indicator will give a definite answer about the culture of an organization. It is important, therefore, not to treat indicators in isolation but to look for links, sometimes in areas that do not obviously seem to connect. On the one hand, this may enable an organization to tell whether the information being fed in through a key indicator, such as the employee survey, is reliable. On the other, a series of alarm bells ringing at the same time in different parts of the enterprise may reveal a serious flaw in the overall culture and therefore in the attitude of the executive leadership.

For example, the results of the employee survey may look good. If, however, customer complaints have been rising and there is a high level of dissatisfaction in the supply chain, this may indicate that the survey is unreliable. Employees may have been unwilling to say what they are really thinking in their survey answers, possibly because they feel intimidated by an overbearing management.

Drawing on a wide-ranging set of indicators also means that not all the information comes from one source. Ethics and compliance, internal audit and human resources all have their part to play. Whereas one of these groups might seek to massage the data, it is less likely that all of them will do so at once.​

Your report indicates that many organizations have moved away from a mainly rules-based, compliance-oriented approach to one based on ethical values. Would you say this is part of a broader move towards distributed organizations?

These results are very interesting, in my opinion. This shift is clearly emerging in different ways. For example, for the first time since the survey began in 1995, respondents indicate that they see the code primarily as a tool to create a shared corporate culture, rather than a way of providing guidance to staff.

I think this potentially illustrates the willingness of companies to move away from rulebooks and to help people to develop their ethical decision-making. Many organizations now provide some decision-making models to their staff. They are often in the form of questions to ask yourself when you are confronted with an ethical dilemma (e.g. is this in line with our values? Would I be comfortable telling my mother what I’ve done? What if everybody did it?). They are relatively simple models, but they have proved very effective in helping people to stop and think twice before they make a decision, particularly when they have doubts about the ethical aspects of it.

Part of the Leadership beyond Hierarchy series.