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Ethical Failures Are Never Cheap: The 5 Ways to Boosting Ethical Decision Making

Most companies have ethics and compliance policies that get reviewed and signed annually by all employees. A company policy states that “Employees are charged with conducting their business affairs in accordance with the highest ethical standards.” “Morals, as well as legal obligations, will be fulfilled in a manner which will reflect pride on the Company’s name.” These all come from a company’s policy. Yet, to sustain a truly ethical organization, it takes more than a compliance policy or Values Statement.

“Corporate ethical failures have become painfully common, and they are not cheap.”

Billions of dollars have been paid in fines by companies charged with ethical breaches. Despite good intentions, organizations set themselves up for ethical catastrophes. In this age of corporate mistrust, creating an ethical workplace takes more than compliance programs.

Unraveling the Ethical Organization Paradox

According to the National Business Ethics Survey, leaders make concerted efforts to pay holistic attention to their organization’s systems. Yet, despite progress, a number has failed.

  • 41% of workers reported seeing ethical misconduct in the previous 12 months
  • 10% felt organizational pressure to compromise ethical standards
  • $185 M in fines imposed on Wells Fargo as 5300 employees opened up more than a million fraudulent account.

Despite good intentions, organizations set themselves up for ethical catastrophes. The paradox is, without realizing it, organizations tend to create an environment in which people feel forced to make choices they could never have imagined.

Preventing ethical catastrophes can be done. Organizations just need to create that environment where people are encouraged to make ethical choices. There are 5 critical ways organizations can boost ethical decision making.

Boosting Ethical Decision Making in 5 Effective Ways

Boosting ethical decision making is important. This can be achieved when done using the most effective ways.

  1. Foster a Speak Up Culture. This is best applied when the courage needed to raise ethical concerns are inhibited.  Leadership development comes to fore in creating a  “Speak Up Culture” that is essential in achieving operational excellence.
  1. Create Realistic Performance Targets. The second way of boosting ethical decision focus on ensuring that people do not make compromising choices to reach targets.
  1. Ensure Goals Are Fair and Non-conflicting. The culture of fairness in the organization is the main focus here. This is best applied when there are conflicting goals in pursuit of growth.
  1. Infuse Ethics into Regular Activities. This approach is the most challenging but life-changing. Often, leaders talk about business ethics only when there is a scandal or as part of the organization’s compliance program. Infusing ethics into regular activities ensure that ethics becomes an everyday part of the organization and its DNA. It becomes embedded in the way people relate with each other, work with each other, and even in the application of its processes and systems. Here, ethics become your organization’s everyday life.
  1. Set a Positive Example. Leaders play a vital role in setting higher standards when it comes to ethics. Essentially, they must be able to put themselves in the shoes of those they lead to see what unintended meaning they are sending. This can be seen in how they react to stressful situations or event confront poor performance. Leaders need to become extra vigilant as others may interpret their actions or behavior otherwise.

Organizations don’t want to find themselves in a front-page scandal. Hence, they must scrutinize their actions to far greater degrees than they may have realized. The 5 Ways of Boosting Ethical Decision Making can just be the organization’s steppingstone towards transforming into an Ethical Organization and sustaining it.

Interested in gaining more understanding of how Ethical Organizations improve Ethical Decision Making? You can learn more and download an editable PowerPoint about Ethical Organization: Improving Ethical Decision Making here on the Flevy documents marketplace.

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About Joseph Robinson

Joseph Robinson is the Vice President of Strategy at Flevy. Flevy is the marketplace for best practices in business management. Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. The documents at Flevy (https://flevy.com) are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience. Flevy covers 200+ management topics, ranging from Digital Transformation to Growth Strategy to Lean Management. You can peruse a full list of management topics available on Flevy here. Prior to Flevy, Joseph worked as an Associate at BCG and holds an MBA from the Sloan School of Management at MIT. You can connect with Joseph on LinkedIn here.

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