Building an Ethical Culture - ON24wcc.on24.com/event/84/13/69/rt/1/documents/slidepdf/110514_cpama… · Ethical employees will leave if ... Because you can be proud of the culture

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Building an Ethical Culture

Karen Wensley

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Purpose of this webinar

To encourage listeners to think about their own actions,

and how they contribute to the ethical behaviour of

others

To discuss some theories of ethical reasoning

To present some tactics that can enhance ethical

leadership

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Trolley Problem

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Trolley Problem

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Ethics

A branch of philosophy which seeks to address

questions about morality

The standards that govern the conduct of a person,

especially a member of a profession

A set of moral principles

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Poll Question

Are you an ethical person?

yes

no

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Forces that impact individual

ethical decisions

Individual Responsibility

Regulatory

framework Organizational

culture Market

pressures

Professional

obligations Social norms

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What is ethical leadership?

Leaders who themselves act ethically

Leaders who question decisions and encourage others

to do so

Leaders who can think long term and who take into

account the impact on the stakeholders outside of the

organization

Leaders who insist that performance management and

compensation systems are aligned with ethical behavior

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What is ethical leadership?

Leaders who are seen to reward ethical behavior and

are seen to punish unethical behavior

Leaders who don’t speak in platitudes and who

acknowledge that ethical issues can be complex and

help employees work through them

Leaders who insist on robust processes to report

unethical behavior

Its not about good people vs bad people

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The sliding scale of

unethical leadership

Bosses who order their staff to cheat

Bosses who design incentive programs that reward

bottom line results without any consider of how to get

there (plausible deniability)

Bosses who dismiss the need for internal controls and

assume everything is fine

Bosses who don’t recognize the problem until its too late

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A framework for ethical

decision making

Linda Thorne, “The Role of Virtue in Auditors’ Ethical

Decision-Making: An Integration of Cognitive-

Developmental and Virtue-Ethics Perspectives”

Research on Accounting Ethics, no 4 (1998) pp 291-308

teachable

Character-

based

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Moral Sensitivity – why do we

fail to identify issues?

Ethical fading/ethical blindness

Everyone is doing it

Obedience

Rationalization

Self-interest

Someone else’s responsibility

Desire to fit in

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decision making



Developmental and Virtue-Ethics Perspectives”,


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Ethical reasoning

List all of the stakeholders

– Employees

– Customers

– Suppliers and their employees

– Your local community

– The business community

– Society

Determine all of the likely consequences

Consult widely

Identify any sources of rationalization or self-interest or

bias

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decision making





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Motivation: Why do organizations

need ethical leaders?

Unethical behavior is risky

There really is a slippery slope

The accounting profession can’t exist without trust

Employees will act in accordance with the cultural norms

and rewards of the organization they work for

Ethical employees will leave if they perceive leadership

to be unethical

Cheating is OK, until its not

Ethical reasoning is an antidote to groupthink

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IPSOS poll 2012 –

Canadian trust of professions

Profession % Highly Trusted

(5 Or More/7)

Firefighters 88%

Nurses 85%

Medical Doctors 75%

Teachers 65%

Police Officers 57%

Accountants 48%

Plumbers 40%

Financial Advisors 34%

Church Leaders 33%

Car Salespeople 6%

Telemarketers 3%

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to be unethical



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Low High

High High

Low Low

High Low

Individual Ethics

Organization

Ethics

Burchard ethical

dissonance model

Mary Jo Burchard, “Ethical Dissonance

And Response to Destructive Leadership:

A Proposed Model,” Emerging Leadership

Journeys 4, no.1, pp.154-176

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to be unethical



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Motivation: what are the drivers for

leaders not acting ethically?

Drive for success/fear of loss of reputation

Economic gain/fear of loss

Appetite for risk and/or belief in one’s ability to beat the

odds

Lack of empathy with other stakeholders

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decision making





teachable

innate

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The Josephson Institute of

Ethics Six Pillars of Character

Trustworthiness

– Honesty

– Integrity

– Reliability

– Loyalty

Respect

Responsibility

Fairness

Caring

Citizenship

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Ethical behaviour

Requires ethical sensitivity, judgement and intention

Based on character

Requires courage

Benefits from practice

– Mary Gentile Giving Voice to Values

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The tools of ethical leadership

Tone at the top

A reporting mechanism

A code of conduct / ethics / values statement and related

education

A balanced scorecard

A culture of quality

Openness to diverse ideas and thinking

Its not what you have, but how you use it

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Tone at the top

Tone at the top is good, but tone in the middle is better

People learn the ethical norms of the organization from

their immediate boss and colleagues

Are ethics ever discussed at teams meetings?

Do people feel empowered to challenge decisions on the

basis of ethics?

What language is used to describe clients / regulators /

other stakeholders?

Who is perceived as on the “fast track”?

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A hotline

There is always a strong norm against “snitching”

People who report issues to the hotline are likely to be

labelled troublemakers

Because of the negative consequences, people who call

the hotline often have a grievance

Nonetheless, they deserve an impartial hearing

The key is how the reports are dealt with

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The code of ethics

Everyone has one

Some are long, some brief (“Don’t be evil”)

It is a good conversation starter

How is it embedded in training?

Does the CEO refer to it?

The code should mean more than following a list of rules

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Balanced scorecard

Employees watch who gets rewarded

People punished or dismissed for ethical lapses are

often allowed to give a different reason

Is there a singular focus on revenue/profit/chargeable

hours?

Even if the scorecard includes a balance of measures

(people, quality, teamwork, etc) are they considered less

important than revenue/profit?

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Quality culture

Strong cultural norm against admitting errors

The desire to cover up mistakes is a key cause of

unethical behavior

What happens to people who make mistakes?

What avenues are open to people who are struggling?

As a leader, how do you balance instilling confidence

and modelling “we are all human?”

How do you avoid legal risk from trumping other

considerations?

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Managing up

How do you say “no” to a boss asking you to do

something you are not comfortable with?

– Recent examples – bribery of foreign officials, stock option

backdating, aggressive tax plans, accounting that skirts GAAP,

ignoring safety issues

Mary Gentile

– Standing up for your beliefs is a muscle that needs exercise

– Persuading others starts with understanding their motivations

• Is it too risky?

• Will it hurt others?

• Does it violate their sense of professional integrity?

• Will it cost more in the long term?

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Openness to new ideas

Research tells us diverse groups make better decisions

This applies to ethical issues as well

Groupthink will allow cheating to flourish

Leaders need to model this behaviour and to find

mechanisms to hear what employees are saying in the

coffee room

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Why be an ethical leader?

Because you believe it to be the right thing to do

Because you can be proud of the culture you leave

behind

Because its important for the profession

Because its good for the sustainability of the business

Because your employees and your customers and your

neighbors are watching

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Questions?

Documents

Building an Ethical Culture - ON24wcc.on24.com/event/84/13/69/rt/1/documents/slidepdf/110514_cpama… · Ethical employees will leave if ... Because you can be proud of the culture