Even though ethics may be a relatively “soft” issue for executives, there are very concrete steps that they can take to promote and sustain an ethical workplace environment. These authors, who have wide experience in a variety of organizations, sketch their blueprint for implementing such steps.
Current corporate initiatives
For more than a decade now, companies have been working to institutionalize business ethics and compliance programs so as to improve corporate conduct-or, more precisely, to improve employee conduct. Typically, companies author codes of conduct, put employees through training programs, set up hotlines and the like in their efforts to protect a company’s reputation. Still, industry watchers continue to ask whether these activities are making any difference. After all, both Enron and WorldCom had codes of conduct and undertook education and communication initiatives to support employees’ ethical decision making. Should we, then, assume that education and communication aren’t enough? Or, what other efforts are needed to ensure that employees engage in ethical decision making?
Most companies would agree that codes of conduct, training and hotlines are necessary. But by themselves, these initiatives are insufficient to ensure that employees will make good choices in the face of difficult challenges. As employees increasingly face complex business demands, companies must specifically address the key factors that impact each individual’s decisions and actions. Our experience at Premier suggests that a multi-pronged approach strengthens employees’ efforts to act responsibly. This approach includes enhancing employees’ decision making, fostering an overall ethical culture, and identifying and providing sufficient resources to effectively address ethics issues. We describe this approach in this article.
The study of business ethics
The study of business ethics has improved our understanding of how individuals in organizations make decisions and how they carry through on these decisions. Initially, the research focused on the philosophical underpinnings of ethical decision making by drawing on thinkers such as Aristotle, Kant and Rawls. The emphasis was on understanding the right factors that should affect our decisions. Later, research in developmental psychology explained the thought processes that individuals went through when they were making decisions. Researchers such as Lawrence Kohlberg and Carol Gilligan studied the process of individual moral development.
More recently, social psychology-related research has begun to address the influence of others on an individual’s decision making and actions. Stanley Milgram’s studies on obedience to authority, Sharif and Asch’s separate experiments on conformity, and Darley and Latane’s research into bystander intervention all illustrate the strong influence that others’ opinions and beliefs have on our own decisions and actions. Recently, Pratima Bansal and Sonia Kandola wrote in this journal about how many social psychological dynamics impact a n individual’s actions. (“Corporate Social Responsibility: Why Good People Behave Badly in Organizations,” Ivey Business Journal, March/April 2003). This progression in the study of business ethics has helped people examine more comprehensively the elements that contribute to understanding how employees should make and carry out decisions on ethical issues.
The Enlightenment Effect
It is reasonable to presume that educating a person about ethics will lead to improved decisions and actions. This so-called Enlightenment Effect is one explanation for how we translate our good intentions into good deeds. But a review of the research on the Enlightenment Effect casts doubt on this conclusion. It appears that, in many instances, situational influences prevail over educational initiatives. After studying and conducting field research into the Enlightenment Effect, social psychologist Richard Katzev concluded that simple education is not necessarily sufficient to cause improved behaviour, even for well-intentioned people. (Richard Katzev, “The Enlightenment Effect,” Anecdote and Evidence: Essays Linking Social Research and Personal Experience, Xlibris, Philadelphia, 2002). In fact, it may be that situational factors (like short-term objectives), available resources or the pressing expectations of others have a pre-eminent influence on our decisions and actions.
At the same time, the realities and practicalities of business form a consistent undercurrent that runs through the literature on business ethics. Much like the study of business focuses on the efficient use of scarce resources, the “business” element of business ethics takes into account that companies are unlikely to fully meet stakeholders’ expectations. A common objective is to strike a balance between meeting stakeholders’ concerns and making a profit. Often, ethical issues are framed in the context of how a company can meet its highest-priority commitments and ensure its survival. This emphasis on the practical and realistic has combined with other areas discussed earlier to produce a multifaceted body of knowledge. This research is not simply academic but also can yield a road map to assist organizations in promoting ethical conduct.
A focus on outcomes
Organizations continue to look for the right combination of processes that need to be in place to foster ethical conduct. In recent years, a few studies have taken a new approach to this issue. These studies have focused on connecting corporate outcomes to the factors likely to lead to these outcomes as a way of linking employee intention and action. Two studies by the Ethics Resource Center, and Trevino, Weaver et al seek to measure two primary issues: employees’ perceptions of their companies’ ethics-related actions and the factors that are likely to lead to such actions. These studies then correlate the factors with the outcomes.
These studies found concrete linkages between corporate activities and eventual outcomes. The Trevino study found that in companies where senior managers and supervisors demonstrate ethical leadership, employees are less likely to observe unethical conduct and are more likely to seek advice on ethics issues. (Linda Klwewbe Trevino, Gary R. Weaver, David G. Gibson and Barbara Ley Toffler, “Managing Ethics and legal Compliance: What Works and What Hurts,” California Management Review, University of California, Winter, 1999.) The Ethics Resource Center study found that in companies with ethics programs, employees are more likely to report misconduct; to believe that violators are held accountable; and to feel less pressure to violate company standards of conduct (the latter point is true at least for larger organizations). (“National Ethics Survey: How Employees View Ethics in Their Organizations,” Ethics resource Centre, Washington D.C., 2003.) And similar to the Trevino study finding, the ERC study also found that in companies where senior managers or immediate supervisors demonstrate more ethics-related behaviours, employees are far less likely to witness misconduct.
These findings highlight the need for companies to design effective ethics programs in order to achieve concrete, measurable results. Further, this research shows that companies that institute the right measures are likely to affirmatively influence their employees’ actions. However, this research does not address the specifics of the linkage between employees’ desires to do right and their ability to arrive at ethical decisions and then act accordingly.
Research by Ajzen and Fishbein
Social psychologists Icek Ajzen and Martin Fishbein have explored the relationship between decision making and action in an effort to understand the key elements that influence behaviour. Their Theory of Reasoned Action addresses how much and to what degree certain factors influence a person’s eventual behaviour. Ajzen expanded on his work with Fishbein and proposed a more comprehensive Theory of Planned Behaviour. In general, Ajzen and Fishbein’s work theorizes that an individual’s behaviour can be understood and effectively predicted by understanding and analyzing the following three basic factors:
- A decision maker’s attitude toward performing the behaviour
- The influence that others have on the decision maker and his/her perception of others’ attitude toward his or her behaviour
- The degree to which a person believes that he or she has control over carrying out the intended behaviour
Each of these three factors varies in the amount that they affect intention and, subsequently, behaviour. For instance, social influence in a certain situation may have a greater impact on a person’s decision than it may in another situation.
Ajzen and Fishbein not only applied their models to various decision-making situations, they concluded that the models were relevant to any form of decision/action situation. (Icek Ajzen and Martin Fishbein, Understanding Attitudes and Predicting Social Behaviour, Pearson Education POD, Prentice Hall, Upper Saddle River, NJ, 1980.) Organizations can use this model to gain a better understanding of how employees may behave when it comes to seeking advice or reporting observed misconduct, and what organizations can do to positively influence these behaviours.
Initiatives at Premier
At Premier, we are developing our ethics and compliance activities to address the factors that are most likely to have an affirmative impact on employees’ conduct and, therefore, lead to positive outcomes. Like many organizations, we are working to strengthen individual decision making and to create an environment that supports such decision making. For instance, our ethics and compliance planning process seeks to identify anticipated ethics-related outcomes, and then focuses the Ethics and Compliance Office activities to address the factors. Our education efforts focus both on improving ethical reasoning and helping employees appreciate the external influences that may impact their decisions. Our communication strategy reinforces key messages via multiple mediums by addressing many different situations and activities. In general, our activities are designed to:
- Increase employees’ abilities to behave responsibly and to consider the relevant factors when making decisions
- Help employees increase their ability to address the positive and negative influences that others may have on their decisions and actions
- Increase employees’ knowledge of, and ability to identify and use, resources that aid them in decision making
- Foster a culture that encourages all of the above by helping our leadership team set the right tone through their own actions
- This approach is a coordinated effort to positively impact the factors that influence employees’ decisions and actions.
Multi-purpose workshops
A central part of our communication and education initiative is a workshop focused on managing business ethics issues. This workshop is designed to address the three key factors in decision making and action. It:
- Supports employees’ efforts to reason through ethical situations in order to identify a constructive response
- Provides employees with an opportunity to effectively articulate their intended decisions to a person who is likely to have influence over them (in this case, a fictitious manager.)
- Continuously emphasizes the various tools and resources that are available for employees to use in reasoning through an ethics issue and in confronting others’ influence over their intended solution.
Scenarios: A central component of the workshop is a discussion of hypothetical scenarios that employees may face. These discussions are aimed at increasing participants’ ability to think through and resolve ethical issues. Specifically, the scenario discussion helps participants identify a potential ethical issue, carefully reason through the issue, determine the possible impacts on others, ascertain the company’s and individual employee’s responsibilities, consider options for addressing the issue and then decide on actions to resolve it. The scenarios describe realistic situations. This sense of applicability to personal situations helps to heighten the scenarios’ relevance to employees.
The results of this exercise have been insightful. After more than 60 workshops, employees still continue to raise new considerations, identify new resources and think of novel ways to resolve issues. In addition, the discussions lead employees to raise other problems the company may face based on their enhanced reasoning. For example, participants identify unexpected ways that a certain action could potentially damage the company’s reputation. These discussions have turned into an effective way for the Ethics and Compliance Office to identify common and emerging risks within the company.
Role playing: This exercise pushes participants to think through an ethical issue and determine an appropriate course of action while further developing their critical reasoning skills. More importantly, role playing provides the additional challenge of finding a solution while confronting another person’s influence over their conduct (in this case, a fictional manager). An important objective of the exercise is for employees to find an effective way to articulate to the manager the problem they face and how they think it should be resolved. To create a challenging situation, the manager’s role is laden with typical rationalizations to justify an inappropriate resolution. To resolve the issue, employees might take any number of steps, including clarifying for their manager the situation they face, identifying and accessing company policies relevant to the situation, seeking advice from their manager or another internal support function (like Human Resources or Legal), discussing the potential ramification of improper conduct, or simply working to gain a better understanding of their manager’s perspective.
As with the scenario discussion, the role-playing exercise provides a unique learning opportunity. By embracing their assigned roles, participants often provide additional rationalizations that employees are likely to face. Further, participants identify unique resources or articulate unforeseen strategies for resolving issues. Most important, it helps the company to understand other ways in which authorities or peers can influence employees’ decisions and actions so that we can determine better ways to help employees address these challenges.
It is interesting to note that the role-playing exercise is likely to make employees feel slightly uncomfortable, since it has a degree of difficulty and includes confrontation. We believe this difficulty is an important part in creating a challenging situation. Our hope is that, despite any unease, employees will have a meaningful experience upon which to draw if they are faced with a real dilemma.
Focus on Opportunities & Resources: Another important component of the workshop is giving participants a deeper understanding of the opportunities and resources available to help them resolve ethics issues. What employees want to do and what they believe they have the power to do may be different. Therefore, we want to create an experience where employees can realistically address the challenges they are likely to confront, and where we can then sufficiently empower them to take action. The more employees believe that management not only supports their efforts to resolve ethical challenges but will also provide them with the resources to do so, the more likely employees will believe they are empowered to make ethical decisions.
In the above exercises, the connection with Ajzen and Fishbein’s model is explicit: our intent is to support the components of decision making and action so that employees can make and carryout decisions responsibly. The scenario discussion’s intent is to help the employee appreciate that critical thinking can lead to positive outcomes. The role-playing is meant to reinforce good decision making, but also to provide the employee with an understanding of, and the ability to, address others’ influence on their intended actions. Finally, the focus on opportunities and resources is meant to create for employees a sense of personal control over the situation by empowering them to take action.
Ultimately, our intent is to connect the dots between thinking, action and results. Using Ajzen and Fishbein’s theories as a framework, we bring together decision making and action. In the future, we will connect employees’ actions with the company’s overall ethics-related outcomes, as raised in the Trevino and ERC studies. This multi-faceted approach helps create a cause-and-effect chain that ties together all of our efforts and explains how they fit into a larger set of objectives.
The study of business ethics continues to yield new thinking about how employees can make decisions on ethical issues and act accordingly. The challenge now is to integrate these fields of study to more effectively affect positive outcomes. Companies may benefit considerably by supporting employees’ desires to act ethically by putting in place ethics programs that focus on the three principal factors that have the greatest impact on the decisions employees make and their subsequent actions.
At Premier, we are integrating this knowledge by focusing on a comprehensive decision-to-action framework. We focus our training on those activities that are most likely to lead to enhanced decision making and action by pushing employees to consider the most salient factors relevant to an issue, actively addressing others’ influences on their thinking, and then availing themselves of the opportunities and resources that help them to respond to challenges in a practical manner. We see this as critical in an increasingly comprehensive approach to the company’s multi-system approach to managing corporate integrity. Our plan is to move beyond the workshop setting and incorporate Ajzen and Fishbein’s principles that link intention and action into all of our ethics and compliance processes. Doing so will provide us with the best chance to ensure that employees’ actions correspond to both their good intentions and careful thinking on ethics issues. We believe this decision-to-action focus will be a critical link in demonstrating positive outcomes for the company’s ethics and compliance efforts.
