There are many reasons why your organization should pursue a cohesive culture. Codes of conduct are reassuring to investors and other stakeholders that may be critical to your organization. Customers tend to prefer organizations with demonstrable ethical values and people prefer to work for such organizations. A strong and cohesive ethical approach helps employees act decisively and can help your brand avoid reputation damage.
It’s particularly challenging for large global organizations to install a cohesive house culture across all of its areas of operation. Achieving global consistency of approach to ethical matters takes vision. If your brand is to live its values consistently, it needs strong leadership on ethical matters wherever it is active.
Global organisations also need to find ways to effectively monitor their ethical compliance performance across all areas of operation. A study by Deloitte found that only a minority of organisations manage to do this on a regular basis.
In fact, 25% of respondents to their global survey admitted that no monitoring took place. That’s particularly concerning considering that the majority of decision-makers they spoke to worked in financial services.
Challenges to ethical working
One of the key failings of global organizations was the lack of clear and consistent training in ethical issues. In fact, close to a third of C-suite executives recognized their failure to implement regular training in this area. A sizeable body of respondents also felt that there were no rewards or recognition for ethical practices, so employees didn’t have any incentive to comply (besides their own consciences).
When employees have targets or goals to meet, it’s important that there’s some reward for meeting them within the ethical guidelines. Otherwise, organizations may find themselves rewarding employees for using unethical behavior in achieving their goals. This sends mixed messages to other employees that it’s ok to bypass ethical standards.
It’s vital that leadership rewards behaviors that align with the organisation’s code of conduct. It’s also vital that behaviors that challenge or violate them are addressed and penalised.
That sounds straightforward but organizations often make the error of failing to tackle challenges to its stated ethical standards. That’s always noticed by employees and is highly destructive to maintaining ethical standards across the organization.
One of the challenges faced by global organizations, in particular, is that employees regularly find themselves interacting with other organizations that have very different ethical standards to their own organizations. In these kinds of situation, it’s absolutely vital that employees have a clear set of directives backing them up as they negotiate the ethics of dealing with third parties.
Organisations that aren’t giving firm guidance in this area are making it hard for their employees to resist pressure to act in contravention of good ethical practice.
It leaves employees in the uncomfortable position of not knowing how they are expected to behave – which makes them more likely to be swayed by external contacts into behaving unethically. “Everyone else is doing it” is a hard argument to resist.
One UK-based private equity firm venturing into the Latin American market during a boom period found its ethical standards were repeatedly tested. Practices such as keeping false accounts for the purpose of tax evasion and the casual acceptance of bribery to smooth transactions with authorities seemed to be common in the new market.
The team was under shareholder pressure from home to deliver results in the new market, but they felt the only way to do this was to conform to the market’s own ethical standards.
It was essential for central management to clearly articulate the standards that were expected of the team in order to back them up and guide them in uncertain situations. By proving clear ethical guidance, this helped make it clear to the local team that they weren’t expected to violate the ethics of the home market in order to get results in the new market.
In this particular case, the private equity firm actually pulled out of the market because they saw no way to achieve their goals without violating their own ethical guidelines. That’s an extreme measure to take but it was the ultimate test of the firm’s ethical standards.
A united front
Whether businesses operate across multiple markets or just in a domestic capacity, they are still likely to employ people from many different cultures. Truth and honesty are relative ideals.
In some countries, bribes are not only allowed – they are also tax deductible as a business expense. Cynics may even say that bribery and corruption are endemic the world over; only the degree of sophistication by which it is concealed varies.
It’s important to articulate exactly what is accepted practice in your organisation but also to ensure that everyone understands ethical behavior in the same way. For example, what constitutes an acceptable corporate gift? Many organisations find it helpful to set thresholds for gift value in order to provide clarity.
Your organization may find local practices vary when it comes to matters such as cultivating relationships with authorities outside the organization. Your local teams will benefit from firm guidelines on what is acceptable within the wider organization.
Organisations need to take a firm stance if behavior that is considered acceptable locally is not acceptable in other key markets. It’s an important way to protect your organisation’s reputation in all the markets it operates in.