How senior management build ethical organisations

In my last article, I highlighted how boards set the "tone at the top" towards building an ethical organisation. Taking this cue, senior management, which includes the CEO, must find ways to shape ethical organisations where everyone is encouraged to do the right thing (even when no one is watching).

In this article, I will share with young leaders issues they should be aware of and touch upon how to forge ethical organisations. Once again, this article should be viewed from the perspective of "voluntary" unethical behaviour, rather than having to deal with "involuntary" unethical behaviour.

No company is perfect. As such, leaders often avoid discussing integrity and ethics due to the fear of imperfection and potential vulnerability. But secrets don't remain hidden in today's turbocharged world with everybody always watching you aided by advanced digital forensics and investigative journalism.

As such, integrity is not about being flawless, but recognising the importance of doing the right thing and navigating intricate ethical dilemmas, failing which we will increasingly find ourselves in ethical quagmires. It requires self-awareness and courage to acknowledge errors and correct course when mistakes are made as well as embracing transparency, rather than burying mistakes. Recent headlines show how ethical misconduct can rapidly ruin reputations built over the years.

Senior management must make values, purpose, integrity, and ethics a priority, inculcating pride in pursuing "Performance (Profit) with Integrity."

I have seen organisations often proudly claim "Performance with Integrity". Interestingly, they invest much effort in foolproof strategies, reviews and training to ensure performance. However, when it comes to ethics, they usually do the minimum to appear ethical without taking sufficient concrete actions to translate their claims into reality.

When ethics is seen as a problematic accessory or an obstacle to achieving goals, codes and policies will not be enough for a lasting impact. There will be ethical misconduct.

Senior management must elevate ethical commitment beyond mere lip service and "check the box" compliance. They must purify the beliefs and systems and integrate explicit conversations on ethics and values into strategic decision-making.

They should also make unethical behaviour increasingly unattractive and difficult by creating the right context, culture, strategies, systems, processes, resources and skills shaping an environment that distinguishes right from wrong and creates a self-reinforcing culture of integrity and values-based choices driven by pride. This may seem to be over the top but is crucial.

In terms of specifics, ethics requires an intentional and integrated set of actions by senior management. These are defining values, embedding ethical culture with a code of ethics tailored to the organisation, establishing clear and easy reporting of misconduct, putting in place and enforcing consequences and rewards, providing ongoing training, bringing alive ethics via communication and activation, and finally monitoring the culture for signs of trouble and mitigating ethical vulnerabilities.

But before you begin this journey, ensure the board is genuinely committed to building an ethical organisation, not just impressing stakeholders with empty slogans. Many senior managers have faced consequences e.g. sacking, criminal charges and even imprisonment for ethical misconduct triggered by the board. You do not want to be a scapegoat. So, urge the board to prioritise ethics to safeguard your reputation and avoid potential legal consequences.

The author is former chairman and managing director of Unilever Bangladesh Ltd.