Ethics and Sledgehammers

A recent Wall Street Journal article outlines the increasing efforts at a number of B-schools to beef up their focus on ethics. While the article also points out the challenge of measuring the return for this investment, there is no doubting the havoc created when ethical behavior is not followed.

Increasing ethics training in school is a good start, but from my experience leaders must double-down on the job as well, with consistent actions to ensure that a culture of ethical behavior is the most visible attribute in an organization. From a cost/benefit perspective, focusing on ethical behavior may be the only area where it makes sense to “kill a flee with a sledgehammer.”

Personally, as an undergraduate I was fortunate to attend Bentley University which started its Center of Business Ethics in 1976. Bentley’s focus on ethics helped me translate what I had learned growing up into the world of business.

At my very first job as a computer sales rep, I was assigned to the local government market in Massachusetts. There I learned quickly that ethics were a really big deal and the different rules in the public and private sectors. I remember making sure we had a clearly identified “cash cup” next to the coffee machine for government prospects to deposit their 25 cents. Since I was prohibited from any social contact with prospects or customers, my golf game never improved. I was well aware that violating the rules could cause disbarment from all government prospects in Massachusetts.

Later serving as President at AT&T’s Global Services Division, I made sure we mandated training for our global work force to ensure they understood every detail of behavior expected of them as part of a US company doing work abroad as laid out in the Foreign Corrupt Practices Act (FCPA). We required annual training certification including an understanding that violations could result in jail time, and ensured leaders at all levels regularly included related topics in monthly agendas.

In another assignment, I served as President at an internet start-up and did not have access to the resources of an AT&T to build formal ethics training programs. Our management team met regularly to discuss how we could include integrity as part of our daily discussions with our young workforce.

In my last corporate assignment, I served as President of Lucent’s Government Solutions Division. Serving the Federal Government involves a whole new level of rules and regulations. We set up a Compliance Office to ensure we took every step possible to set the right tone in our organization that ethics was our top priority. We used mandatory training, monthly newsletters, and regularly included compliance as a meeting agenda topic to ensure appropriate attention on ethics.

The (WSJ) article points out that everyone likely knows the meaning of right and wrong, but business has run under an axiom for a long time: if it is important, then you measure it. Measuring the implications of culture is not well understood. Harvard researchers Jim Heskett & John Kotter provide just such a study in their book Corporate Culture and Performance. Their research proves a values-based, change adaptive culture drives sustainable, measurable growth.

Some still believe ethics, like culture, is “soft.” Legendary management guru Peter Drucker said “what’s soft is hard and what’s hard is soft.” Translation: this stuff matters… a lot.

In my view, an organization has nothing more important than its reputation and leaders must make ethical behavior Job #1 and an active part of their objectives. In addition to good hiring and strong internal audit practices, robust training programs and constant reinforcement can help companies of all sizes support good choices. Ethical behavior is the key to long-term success with customers, employees, suppliers, partners, and the community at large.

My recommendation: educate and reinforce the importance of ethics early and often…and bring out the sledgehammer.