Ethics scandals in business news are certainly nothing new, but some have arisen lately that are instructional and rather close to our industry. The news about emissions violations by several auto companies prompts a closer look at our own ethics programs and whether they are working in the intended manner.
The first question to ask within your company is whether you have an ethics policy statement. If you dont, take a look at examples of such statements on the web. It should categorically state the need to adhere to all laws in the countries and municipalities in which your company operates, but it should go further. For example, the ExxonMobil policy (excerpted from the web) states that: The corporation cares how results are obtained, not just that they are obtained. Directors, officers and employees should deal fairly with each other and with the corporations suppliers, competitors and other third parties. This introduces two important concepts: first, how results are obtained is important and goes beyond just obeying the law, and second, the concept of fairness applies. If your company does not have an ethics policy, consider putting one in place; however, this is only the first step in the process.
The second step involves awareness and training. Your company onboarding process should include an introduction to the ethics policy. It is helpful to also present some examples of ethics issues from the industry or other industries that may prove instructive and practical. You should put in place an ongoing ethics refresher course for your employees covering some more complex examples of ethical decision making, including those that may arise from operations in other countries where cultural norms may be different than in the U.S.
It is useful to consider the kinds of ethical issues that may be faced in the workplace. Of course there are the infrequent occurrences of true malicious intent where an employee purposely seeks to defraud the company for personal advancement or financial gain. There are also the occasional occurrences of serious issues such as sexual harassment or discrimination, which must be rooted out. These issues are generally identified by other employees or through audit and other management processes. Human resources and legal folks together with management are responsible for dealing with these issues in line with the law and with your companys core policies.
However, we all know that ethical factors transcend these types of issues and pervade many business decisions. Lets consider the types of ethical problems faced by our management and employees, and how we may get into trouble even if we do have a strong ethics policy statement, ongoing practical training and well intentioned employees.
One ingredient for ethical troubles is a high stress environment or time of heavy business pressure and/or confusion. Of course, in business there is always stress and pressure, but here I am referring to especially stressful times such as business downsizing, potential for customer or business loss, supply crisis, merger or acquisition, or other such times. In such an environment, consider reinforcing your ethics policy through a top management statement and communication cascade and discussion.
Another ingredient for ethical problems is a company culture that does not welcome open and honest discussion at every level. In such an environment, people may feel that the message is just to get things done regardless of the implications, and they are not likely to come forward with difficult ethical decisions. I have written in other columns about corporate culture and how important it is to business success. Also important is to ensure access for employees and managers to good legal advice. Your company legal resources need to communicate that their door is always open and that, in fact, it is desirable for employees to engage them. This is true not only of decisions in progress but also with regard to past decisions where perhaps mistakes were made and impacts can be mitigated.
In some cases, the genesis of ethical issues lies in the complexity of the rules and regulations and the ways in which they are understood or interpreted within your company. Certainly within the automotive and lubricants industries there is a massive set of rules and regulations with which to comply. Of course ignorance is no excuse, so management must resource properly so that new and existing regulations are researched by those responsible for detailed compliance. Managers must ask sufficient questions, including in complex technical areas, to ensure that they feel comfortable with compliance within their organization. Consider (with legal advice) whether some compliance areas could benefit from a pooled industry approach or discussion in order to spread resources. Hire expert assistance in some more complex areas such as environmental or toxicology compliance.
A special case of ethical issues lies within the general category of loopholes, e.g., where something in the regulations is either unclear, not covered at all, or where there may be conflicting interpretations within the same set of overall regulations. Encourage employees to bring such areas forward to management and legal so that decisions can be made at the appropriate level, especially if such decisions are likely to have significant impact on customers, the community, business reputation or financial outcome. You may want to highlight such issues with the governmental or administrative entity for clarification or improvement; this may also help to ensure an even playing field for all competitors who are subject to the same set of rules and may be facing similar difficult decisions.
A final area to consider with regard to ethical decision making relates to fairness. There has been tremendous scrutiny lately of the pharmaceutical industry and whether their pricing practices have been fair to customers. Encourage employees to consider critical decisions with an eye to how the customer, community or other stakeholder might feel if it came to light.
Similarly, you may want to encourage employees to bring forward difficult ethical decisions where the outcome of the decision will have high benefits for some stakeholders and high debits for others. The key with these decisions is to ensure they are openly discussed, that the risks and benefits are analyzed, and that the appropriate level of management, legal and other disciplines are involved. This will help to ensure that your company makes the best ethical decisions and protects its most important asset: its reputation.
Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. E-mail her at saralefcourt@gmail.com or phone (908) 400-5210.