Setting the Tone for an Ethical Workplace Culture
Written by Gary E. McCullough
In theory, many people think ethical issues are simple, cut and dried questions to answer, or situations to be resolved. However, the reality is that most ethical dilemmas, particularly those faced in the workplace, are much more subtle. In real life, no one tells you that you’re about to find yourself in an ethical dilemma, or necessarily the clear-cut way to address it.
Throughout my corporate career, I have come to learn that there is no “cookie cutter” approach to creating a culture of ethics, compliance and integrity. And while most organizations have well-defined rules and regulations, values, vision statements and training programs, at the end of the day, it is about the people. Ethics are the responsibility of each individual person, but start with the CEO and the Board of Directors setting the right tone from the top.
I have faced my fair share of ethical challenges throughout my 25-year professional career, which started as a U.S. Army Infantry officer, and extended through executive roles with leading companies such as Procter & Gamble, Wm. Wrigley Jr. Company and Abbott Laboratories. However, my most challenging role was also my most recent, where I served as CEO of Career Education Company (“CEC”), a publicly traded for-profit post-secondary education provider that, at its peak during my tenure, had 90 campuses and served more than 100,000 students.
For-profit education is a highly scrutinized industry, and as one of the largest players, CEC was no exception. I took on the challenge of leading this company because I believed it could address real education needs not being addressed by traditional two and four-year institutions.
In 2004, issues began emerging amid allegations of document tampering, enrolling unqualified students, overly aggressive sales and marketing, among other claims. When I joined CEC in 2007, the company was still reeling and the culture was unraveling due to the resignation of my predecessor. It became my responsibility to set the right ethical tone at the top, create a cohesive company and institute rules where there were few or none.
The company made steady progress during my tenure – we reduced annual employee turnover, increased employee confidence in the company’s integrity and ethical values, achieved positive growth, and more.
However, the reality is that while a number of major issues were corrected, it wasn’t enough. I’m proud of the changes I made during my leadership of CEC, but I’m also able to reflect on what else could have been done, or could have been done differently. As a result of this, I’ve taken away quite a few ethical lessons that can be applied to any company, regardless of industry.
These are:
1. Implement structure and clear expectations.
Whether your company is looking to rebuild or create a new foundation for an ethical culture, at minimum the following should be put into place:
- Clear policies and expectations (e.g. vision/values statements);
- Strong education and training programs;
- Metrics and measurement systems;
- Monitoring systems to identify potential issues;
- A compliance organization/ infrastructure (varies depending on business);
- A helpline or method for reporting issues (preferably confidential);
- A method to investigate and resolve complaints.
Not only does this create a basis for addressing issues, it also shows employees that leadership is serious about ethics and making changes where necessary. Speaking of change, these tactics can also help manage any employee resistance by providing them with vehicles to comment or raise concerns.
2. Ignoring infractions is not an option.
Leaders face an ongoing balance: too harsh and you run the risk of demoralizing your team; too lenient and you get run over. Having said that, leaders do not have the option to ignore even minor infractions of organization rules – otherwise, why have them? Where leaders do have a choice is in how they respond to these infractions, and the message their response sends.
3. Make ruthless decisions, but execute them with compassion.
Tough decisions come in a variety of forms: staff reductions, cuts in compensation, passing over someone for a promotion because of performance issues, and more. Don’t hesitate to make those decisions if they are necessary and right – no matter how difficult – but be sure to execute them with compassion. Depending on the situation, this can mean delivering the news in person, making resources available to employees following a particularly difficult decision, etc.
4. Focus on the work.
If you work in a company with many issues, directly address them, but don’t dwell on mistakes of the past. As an example, while at CEC, I met with our accreditors, regulators and more than 200 members of Congress or their senior staffs. In those meetings I acknowledged that I had taken over a challenged company in a troubled industry but that both the company and the industry were taking actions to change. My goal was not to defend past practices, but to focus them on the work that was underway to fulfill our obligations.
5. Be in alignment with your Board.
Boards share “ownership” of the compliance agenda with the CEO and senior leadership team. This is often best accomplished via Board committees, particularly the audit committee, and by bringing in outside perspectives, methods and best practices to further strengthen the agenda.
Additionally, Boards ensure that senior leaders and ethics/compliance staff remain in alignment with the company’s overarching values, mission and objectives. If CEOs or senior leaders are ethically challenged, Boards have the responsibility to correct the behavior or to terminate them.
6. Instill it in the culture.
The bottom line, leaders must model the behavior expected from others. And when engaging with individuals, never let an opportunity pass to remind them of the company’s obligation to its stakeholders to always “do the right thing.”
