by Mike Merrigan, J.D.
According to the 2014 Edelman Trust Barometer, only one in four general public respondents trust business leaders to correct issues and even fewer — one in five — to tell the truth and make ethical and moral decisions. This is a sobering reminder of the perceived state of business leadership and its credibility with the general public.
Arthur Andersen, Enron, WorldCom, Tyco and the financial crisis serve as historical reminders, while GM’s myriad recalls serve as a current reminder to the public. So how should business leaders improve and strengthen ethical and moral decision-making in their organizations? Some say that you should just hire ethical people. A 2008 CareerBuilder.com survey of HR managers found that 49 percent of resumes contain material misstatements. A 2012 survey by the American Institute of Certified Public Accountants concludes that 54 percent of resumes contain false information. Others say that you need to have a well written Code of Ethics/Conduct and train your employees about it. Believe it or not, Arthur Andersen and Enron each had some of the best written documents and did extensive training.
Should we install a hotline so employees can anonymously report misconduct? The research shows that less than 5 percent of employees actually use them. Most don’t report things because they don’t want to be viewed as not being a team player or for fear of retribution from their supervisor.
What if a business simply adopted the mantra “if it’s legal, it’s ethical”? It is certainly a decent starting point, but merely following the law has led to such “bending the rules” that it does not allow us to reach our full potential as human beings. To borrow a quote from Alexander Solzhenitsyn: “A society that is based on the letter of the law and never reaches any higher is taking small advantage of the high level of human possibilities … Whenever the tissue of life is woven of legalistic relations, there is an atmosphere of mediocrity, paralyzing the noblest human impulses.”
Ultimately, strengthening an organization’s ethical wisdom requires leaders who operate from a thoughtful set of personal values. Personal integrity of the leaders is critical to building organizational integrity. Leaders must be personally committed, credible and willing to take consistent action on the values they espouse.
John Twitty shared with me that while he was the general manager at City Utilities, he constantly challenged himself to meet the “mirror test.” His chief internal auditor would also remind him that the “tone at the top” was absolutely critical if an organization expects its employees to behave ethically and in the best interest of customers. John Wanamaker, managing partner at BKD, has co-authored the book they give all BKD staff titled “The BKD Experience: Unmatched Client Service.” BKD’s mantra is “Integrity Trumps Economics Every Time” and is reinforced by their PRIDE values of Passion, Respect, Integrity, Discipline and Excellence. These PRIDE values are integrated into the normal channels of management decision-making and are reflected in the organization’s critical activities.
An additional step they take, which was certainly missing from Arthur Anderson, is that the company’s systems and structures support and reinforce its values with appropriate checks and balances. Mercy Health Senior Vice President of Mission and Ethics Brian O’Toole has written that all managers throughout the organization should have the decision-making skills, knowledge and competencies needed and be given the opportunity to make ethically sound decisions. An organizational tradition of support that encourages freedom of inquiry, supports personal values and reinforces a focused sense of direction is necessary or the individuals who make up the organization are lost.
Lastly, the Edelman report indicates that leaders build trust and credibility for themselves and their organization by doing three simple things: communicating clearly and transparently, telling the truth regardless of the complexity or unpopularity, and engaging with employees by giving them a voice that is heard and acted upon. Too bad the leaders as Enron didn’t follow any of this advice, but at least Mary Barra is trying to.
Sources: Edelman Trust Barometer, “Business Ethics” by Marianne Jennings, “Strengthening Ethical Wisdom” by Jack Gilbert and Brian O’Toole, “The Hidden Costs of Organizational Dishonesty” by Caldini, Petrova and Goldstein and “The Management of Organizational Justice” by Cropanzano, Bowen and Gilliland
This article appeared in the November 29, 2014 issue of the Springfield News-Leader. It is available online here.
Mike Merrigan, J.D., MBA, is a clinical professor in management at Missouri State University. Merrigan, a former vice president and regional general counsel for St. John’s Health System and Mercy Health, writes on issues related to health care, including the Affordable Care Act. Email: michaelmerrigan@missouristate.edu.