Workplace culture is defined in part by the corporate ethics a company practices. And when there is an ethical breakdown — such as the widespread fraud case reported at Wells Fargo — it can have a toxic effect on workplace culture.
Employees and customers are paying attention. Ethics matter in every aspect of business now, from hiring talent to attracting customers, as more people demand corporate social responsibility.
Wells Fargo is just the latest company to make headlines for unethical behavior. As the New York Times points out, “this isn’t just a Wells Fargo story line. It is a well-worn narrative that has ensnared many an organization,” including Volkswagen, General Motors and the Department of Veterans Affairs.
So what can companies do to prevent ethical breakdowns? How can companies ensure their workplace culture and corporate ethics are aligned for fairness?
Read on for the latest thinking on the connection between corporate ethics and workplace culture — and how your company can embody the recommended “do as we do” model.
The Role Leaders Play in Ethical Workplace Culture
As HR and business experts pick apart ethics scandals, one lesson is clear: even if leaders are not directly responsible for employee cheating, they play a key role in defining corporate ethics and, by extension, workplace culture.
1. A ‘Culture of Fear’
In the Inc. analysis, “How Wells Fargo’s Culture May Have Paved the Way for Scandal,” one workplace expert blames ethical breakdown on systemic bullying.
Andrew Faas, founder of the Faas Foundation, an organization that seeks to create psychologically safe workplaces, defines systemic bullying as “setting unreasonable expectations to get rid of employees who do not deliver and causing others to resort to questionable practices to meet the expectations.”
Leaders help foster a hostile work environment when they put unreasonable expectations on employees, accept questionable practices (or look the other way) and instill a “culture of fear” that silences employee honesty.
“To every organizational leader out there — what should keep you awake at night is what you don’t know because employees are afraid to tell you,” Faas says.
2. ‘Results at All Costs’
How leaders elicit results from their employees has a big impact on ethics. “Rigid, relentless sales goals” — the kind that prompted Wells Fargo employees to open more than 2 million unauthorized customer accounts — have proven time and again not to work in the long run, writes Bloomberg’s Suzanne Woolley.
Forcing unrealistic goals is a common leadership mistake, according to Fortune’s Geoff Colvin. Demanding results at all costs and pushing people to their utmost limits is “seductive,” he writes. Ultimately, however, it’s “a trap” — one that leaders at Samsung and Volkswagen have also recently fallen into.
“In each case the company’s future was at stake, or so the leaders believed. Failure was not an option. Except, of course, that in demanding success at all costs, each leader has now damaged his company in profound ways that will hurt employees, investors, suppliers and communities for years,” Colvin writes.
3. Ineffective or Absent Training
HR leaders also have a responsibility to keep unethical behavior in check.
In a “Dive Insight” on the topic, HR Dive wonders, “Was Wells Fargo’s HR leadership totally out of the loop with this type of product-driven training?”
The “Dive Insight” suggests that HR leaders may have had issues implementing effective employee training:
“These were not high-powered salespeople, but primarily bank tellers. When their effort to sell honestly failed, they ‘cooked the books,’ so to speak, by creating false accounts, perhaps revealing issues in training at an associate level, at least.”
4. ‘Do As I Say’ Signals
It’s not enough for a company to say what its values are. Leadership must live these values, too — and be careful not to inadvertently send the wrong signal, according to a New York Times column by consultant Jon Picoult.
“How can a toxic culture develop in a way that is diametrically opposed to everything leaders supposedly say and stand for? The answer lies in a variation on the classic ‘Do as I say, not as I do’ admonition. Employees will get their cultural cues not from what management says but from what it signals.”
These signals, many unintended, are embedded throughout the workplace:
- how employees are compensated
- how employees are recognized
- which metrics managers obsess over
- the kinds of questions employees are asked
- how leaders react to dissenting opinions
Employees learn from these signals “what constitutes good versus bad behavior,” Picoult writes. Troubles at Wells Fargo, Volkswagen, G.M. and Veterans Affairs are prominent examples of bad signaling, he adds, “but this dynamic is present virtually everywhere, as I have witnessed while helping organizations find these contradictions.”
How a ‘Do As I Do’ Attitude Improves Workplace Culture
In all of this disheartening news about corporate ethical breakdown, there is a silver lining. The increased attention on corporate ethics, combined with consumer demand, is bringing forward thoughtful advice for leaders.
Clear corporate values are still vital, as long as leaders follow them with an ethical, “do as I do” attitude, as Jon Picoult suggests. Values must be treated as more than feel-good words — they’re guiding principles for hiring, training, business strategy and corporate communication, especially employee recognition.
When it comes to employee productivity, Entrepreneur contributors Doug and Polly White suggest setting realistic goals, along with the right resources and lots of encouragement. “Stretch goals” can be appropriate, as long as employees get creative freedom and are motivated by leadership to follow company values.
For inspiration, seek out role models of ethical workplace culture:
• Zillow is one company with excellent feedback on workplace culture. Leaders attribute this to Zillow’s clear, actionable values: Act with Integrity; Move Fast, Think Big; Own It; Zillow Group is a Team Sport; Turn on the Lights; and Winning is Fun.
• PepsiCo CEO Indra Nooyi explains her dedication to corporate ethics in a recent LinkedIn post: “We call our approach Performance with Purpose. It’s transforming the way we do business so we can deliver strong long-term financial returns in a way that is sensitive to the needs of the world around us, while galvanizing our entire company to embrace a deeper sense of meaning in our work.”
• Another stand-out for strong workplace culture is Southwest Airlines. In a 2013 interview, former CEO Herb Kelleher said that “having a simple set of values” for a company was “very efficient and expedient.”
At Southwest, he added, “if somebody makes a proposal and it infringes on those values, you don’t study it for two years. You just say, ‘No, we don’t do that. And you go on quickly.'”
Gratitude Helps Ethical Workplace Culture Thrive and Stay Resilient
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