Chapter 10: Making it Stick: Doing what’s
Right in a Competitive Market
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@January 2, 2023 2:35 AM
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Making It Stick—Key Components of an Ethics Policy
Characteristics of a market.
Demanding customers: want new and better products and services at lower prices
Impatient stockholders: want the stock price to rise each and every quarter.
Aggressive vendors: want to sell you more of everything.
Demanding federal, state, and local officials: want to burden you with more rules and regulations while
encouraging you to hire more people and pay more taxes.
Demanding creditors: want their loan payments on time.
Aggressive competitors: want to steal your customers from you.
https://www.youtube.com/watch?v=_pLh6bOKbQE
When you are operating a business in such a tough environment, run an ethical business and to do “the right thing”
for all your stakeholders can be very challenging.
Many executives, after the unethical behavior of their companies has been exposed, point to the ruthless competition
of the business world as their excuse for not doing the right thing.
So how do you make it stick? How do you make sure your company holds on to its ethical principles even if everyone
else in your marketplace doesn’t?
→ Sustainable ethics: Ethical behavior that persists long after the latest public scandal or the latest management
buzzword.
It is a culture
Requires involvement of every member of the organization.
Stages in Making Ethical Behavior Sustainable
ESTABLISH A CODE OF ETHICS
Well-written code of ethics can:
Capture what the organization understands ethical behavior to mean.
Establish a detailed guide to acceptable behavior.
State policies for behavior in specific situations.
Document punishments for violations of policies
audience for the code of ethics: every stakeholder → understand clearly the standard of behavior expected from
them and the consequences for failing to meet that standard.
Recommendations from the Institute of Business Ethics to create an ethics code.
Find a champion: Unless a senior person— hopefully the CEO—is prepared to drive the intro- duction of a
business ethics policy, the chances of it being a useful tool are not high.
Get endorsement from the chairperson and the board: Corporate values and ethics are matters of
governance. The board must be enthusiastic not only about having such a policy but also about receiving
regular reports on its operation.
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Find out what bothers people: Merely endorsing a standard code or copying that of another will not suffice. It
is important to find out on what topics employees require guidance.
Pick a well-tested model: Use a framework that addresses issues as they affect different constituents or
stakeholders of the company. The usual ones are shareholders, employees, customers, suppliers, and
local/national community. Some might even include competitors.
Produce a company code of conduct: distributed in booklet form or via a company intranet.
Try it out first: Piloting with small samples
Issue the code and make it known: publish and send it to all stakeholders
Make it work: Practical examples of the code in action should be introduced into all company internal (and
external) training programs as well as induction courses. Managers should sign off on the code regularly, and
a review mechanism should be established. A code “master” needs to be appointed.
SUPPORT THE CODE OF ETHICS WITH EXTENSIVE TRAINING FOR EVERY MEMBER OF THE
ORGANIZATION
your stakeholders aren’t required to follow it.
Each department of the organization should apply the code to examples that could arise in its area where
employees can work on:
Recognizing the ethical issue.
Discussing options for an appropriate response.
Selecting the best option for the organization.
HIRE AN ETHICS OFFICER
Ethics officer is a senior executive responsible for monitoring the ethical performance of the organization both
internally and externally.
The role of ethics officer is usually developed as a separate department with the responsibility of:
Enforcing the code of ethics.
Providing support to any employee who witnesses unethical behavior.
This person can be promoted from within the organization (selecting a familiar face who can be trusted) or hired
from outside (selecting an independent face who is new to company history and office politics).
CELEBRATE AND REWARD THE ETHICAL BEHAVIOR DEMONSTRATED BY YOUR EMPLOYEES
Celebrate examples of good ethical behavior.
Award prizes for:
Celebrate examples of good ethical behavior in your company newsletter.
Award prizes for ethical behavior—and let the employee choose the reward.
Award prizes for new and creative ideas—and let
the employee choose the reward.
Recognize employees who represent the standard
of behavior to which you are committing.
Declare an Ethics Day, and allow every department to share success stories.
PROMOTE YOUR ORGANIZATION’S COMMITMENT TO ETHICAL BEHAVIOR
An ethics policy commits you to doing the right thing for all your stakeholders, so that message must be shared
with all your stakeholders—both inside and outside the company
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Make clear and firm promises to them, and then deliver on those promises.
Offer concrete examples that your organization is committed to winning the trust (and the business) of your
customers by building a reputation they can count on.
For example:
• Offer a no-questions-asked refund policy like Lands’ End.
• Offer a 110-percent price-match guarantee like Home Depot.
• If you overcharge clients by mistake, give them a refund plus interest before their accounting depart- ment
figures out the error and asks for the money.
Get your clients involved in the development of your ethics policies. Ask them to tell you what forms of behavior or
guarantees will make them feel reassured that they are dealing with an ethical company.
• Let your employees visit client sites to talk about your code of ethics in person.
• Share your success stories with all your stakehold- ers, not just your employees.
• Invite your stakeholders to your Ethics Day celebration.
CONTINUE TO MONITOR THE BEHAVIOR AS YOU GROW
Any organization’s commitment to ethical performance must be watched constantly.
Continued growth of technology will present new situations for ethical dilemmas, ex: policies on e-mail monitoring
and web surfing, so your code may need to be rewritten on a regular basis
Code may need to be rewritten on a regular basis.
Becoming a Transparent Organization
Reactive policies: Result when organizations are driven by events and/or a fear of future events.
Proactive policies: Result when the company develops a clear sense of what it stands for as an ethical organization. It
is true ethical policies.
Common characteristic of this organization: Commitment to organizational transparency.
Transparency: Organization maintains open and honest communications with all stakeholders.
However, the financial markets that govern stock prices (and the profits to be made as corporate executives cash in
their stock options) have proved to be remarkably indifferent to “open and honest communications.”
Important qualities of transparency:
• A requirement that is being enforced on markets and companies through regulation.
• An enabler of better relationships with partners and customers (that is soon to be an expectation).
• A great opportunity to rework business processes
to increase efficiency.
• A risk to confidential intellectual property.
risk factor of becoming too transparent
start sharing cost and revenue figures with employees, and even produce honest appraisals of organizational
performance in annual reports (rather than polished, vetted PR docu- ments),
giving away too much information, from their perspective, leads to the inevitable conclusion of the loss of market
advantage through corporate espionage, for if you give away your secrets, what do you have left?
Ultimately, however, organizations can only build trust with their stakeholders if there are “open and honest
communications.”
a culture of trust today is essential. We live in an interesting time with digital technology. We basically have full
transparency to information, and I think there's a higher expectation amongst individuals, especially who know to be
included, to basically be part of the conversation.
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WHY TRANSPARENCY MATTERS IN CREATING TRUST
leaders, need to have transparency to build trust in the organizations we lead. When I was starting out, basically as
an employee, you had very little access to information.
Companies would do annual reports or their shareholder newsletter. And I think that today, to attract and retain the
best talent, people need to understand decisions. Corporations need to embrace a greater level of transparency in
terms of sharing information with their employees.
Companies that basically share this information are going to have greater loyalty, greater shareholder return, and
harder working employees. If information is power, why would I not want to give more information to my people to
make them as powerful as possible to help our businesses grow and help us succeed in the marketplace.
BADNEWS: PAINFUL BUT NECESSARY
potential layoffs or potential downside? There was actually a child psychology study where they looked at children
who were told and aware of issues, and then they had the parent come in and lie to them and basically tell them
everything was okay, everything's fine, don't worry about it.
And they studied, studied and looked at actually children's stress levels during this experiment. And ironically, when
given reassurance, stress levels spiked. And the reason is people children are perceptive.
. And what the study basically found was the spike was an erosion of trust. People are aware of the bad.
And if you're not as a leader, communicating, telling the story, managing information, people are going to make up
stories on their own. So my experience is, while you. Do create distraction when bad occurs, it's infinitely less than the
distraction that would naturally occur in saying nothing.
EMBRACING A CULTURE OF TRANSPARENCY: LISTENING TO YOUR EMPLOYEE
One of the ways we try to embrace a culture of transparency is to actually create and use tools to get better input.
electronic survey that we take on a weekly or biweekly basis of all our employees.
And it's questions of how happy are you? What's preventing you from doing a good job? What are the things that
basically give you energy? I think transparency is a two way street. So using a tool allows us to literally take the pulse
of the organization and see what's on people's minds, what's their concerns.
The whole thing is anonymous.
The idea there of people sharing information, but then you as a leader responding to information with truthful, honest
feedback, creates actions that build trust, build longevity, and build loyalty. I think that organizations that practice
transparency, that earn trust have a little bit more leeway to basically learn and evolve.
→ there are challenges and there's investment required to build trust and transparency. But the commitments in brand
loyalty and employee loyalty, I believe and have seen far outweigh all the investment
Organizational intergrity
Characteristic of publicly committing to the highest professional standards and sticking to that commitment.
carefully “wordsmithed” documents and carefully positioned press releases suggest you have something to hide, and
if you have something to hide, how can you be trusted?
your company does not operate independently from its community, its customers, its employees, its stockholders, and
its suppliers is
→ Vital to earn the trust and confidence of the stakeholders for the long-term survival of the organization.
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Green building
(also known as green construction
or sustainable building
) refers to both a structure and the application of processes that are environmentally responsible
and resource-efficient
throughout a building's life-cycle: from planning to design, construction, operation, maintenance, renovation, and
demolition
circular: make use and return
What are the 5 R's of circular economy?
Circular economy: Rethink, redesign, reduce, reuse, recycle.
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substitution, dematerialization
UN SDG(s) Sustainable Development Goals
GOAL 1: No Poverty
GOAL 2: Zero Hunger
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GOAL 3: Good Health and Well-being
GOAL 4: Quality Education
GOAL 5: Gender Equality
GOAL 6: Clean Water and Sanitation
GOAL 7: Affordable and Clean Energy
GOAL 8: Decent Work and Economic Growth
GOAL 9: Industry, Innovation and Infrastructure
GOAL 10: Reduced Inequality
GOAL 11: Sustainable Cities and Communities
GOAL 12: Responsible Consumption and Production
GOAL 13: Climate Action
GOAL 14: Life Below Water
GOAL 15: Life on Land
GOAL 16: Peace and Justice Strong Institutions
GOAL 17: Partnerships to achieve the Goal
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