Leaders help us navigate challenging times. And there’s no doubt we’re living in complicated, even perilous moments. A pandemic. War. Economic instability. Political unrest. Racism. Climate change. Inequality. It’s a heavy burden.
When we look to people to guide us, now more than ever we’re looking to business leaders. According to Edelman’s 2022 Trust Barometer, almost 6 in 10 employees choose a workplace based on shared values and expect their CEO to take a stand on societal issues. We want leaders to lead and this is particularly true at work.
In an era of multi-stakeholderism, where consumers and employees alike are looking for responsible businesses aligned with their values, leaders are called to commit to building a strong, ethical culture. It’s the expectation. Given that leaders cast a long shadow and have a disproportionate impact on culture, this work must start at the very top.
Why ethical culture should matter to you as a leader
My ethics and compliance company, LRN, surveyed nearly 8,000 employees across 14 countries and 17 industries, the results of which are summarized in our Benchmark of Ethical Report. We found that corporate culture has a significant impact on employee retention and business results. Companies with the strongest ethical cultures outperform their peers by 40% across all measures of business performance: from levels of customer satisfaction to employee loyalty, innovation, adaptability — even growth.
Manager behavior is a large driver of people leaving — or staying at — companies. According to research in MIT Sloan Management Review, toxic work culture is the biggest factor that leads to people quitting. It is ten times more important than pay in predicting turnover.
With this in mind, how can you, as a leader, exercise your ethical culture muscle? Here are nine practices to reflect on and adopt to promote ethical culture within your organization.
1. Consider your own personal values and what drives you
Before you lead others, you need to have conviction. Employees are increasingly looking to business leaders to be a kind of moral compass, as shown in Edelman’s Trust Barometer research. Your personal value system ideally should align with those of your workforce — otherwise it will become increasingly difficult to lead employees by example. The old adage you can only take care of others after you take care of yourself holds true as a business leader. How do your own personal values align or connect to your company’s value and purpose? You can only create an engaged culture within your organization if you understand what you’re trying to accomplish.
2. Identify how you want your people to behave and make decisions
Once you’ve connected your individual purpose to your company’s vision, you can start to lead your team on a shared journey. As you consider the road to pave for your team, be reflective: Are you creating the conditions for and modeling what you hope to see? What would that look like? What might you do differently?
Our research reveals that there is often a disconnect between the vision leaders in an organization are trying to convey and perceptions of other team members. You want to make sure you’re “playing by the same rules” as everyone else. Otherwise, your employees are likely to see right through you.
3. Ensure you’re cultivating an equitable work environment
Equity and inclusion are top of mind for Gen Z employees, which will make up one-quarter of the workforce in the next few years. A recent Tallo survey shows that 72% of Gen Z applicants seek a fair and ethical boss, 61% want the ability to be heard, and 87% say DEI strategies are very important. Focusing on this is essential for any leader looking to train up and lead a modern workforce. One way to cultivate an equitable work environment is through your hiring practices. But it doesn’t stop there. Organizations need to consider their promotion practices — are they building DEI into their growth and leadership strategy in the long run? Beyond that, leaders need to be comfortable with discussing equity in the workplace: Surveys and discussions with team members about these topics can be a logical place to start to gain an understanding of the pulse of your organization pertaining to these important topics.
4. Communicate openly and often
Transparency and openness are at the core of being an effective leader. Share the “why” behind decisions and requests you make, even if it takes longer or more effort, and connect that to how it helps advance the company mission and reflects the ethics of your organization. It’s also important to be open when things don’t go as planned. What happened, why, and what did we learn from this? Our work with organizations shows that sharing the “bad,” not just the “good,” is a strong predictor of employees’ willingness to speak up themselves.
5. Actively encourage your team to speak up
The dynamics of an organization’s core architecture influence work atmosphere, which in turn has a profound impact on what we call ethical performance: Whether people behave in alignment with values, behave ethically even when under pressure to meet deadlines or targets, and speak out about misconduct. Transparency is a two-way street between leadership and team so encourage those you guide to speak up, ask questions, share ideas and contribute to the overall discussion in a way they are comfortable with doing.
That said, it’s not enough to just encourage your team to speak up. As a leader, you want to “listen up.” Consider how you’re responding in words, actions and body language. Would your response encourage people to speak up again, or are you shutting conversations down? How you respond to little things may impact whether someone returns to you with major concerns.
6. Seek to understand how things are working “on the ground”
Our research shows there is a divide in the experience of leaders and those on the front lines. The “leadership disconnect” is a long-studied corporate dynamic, whereby the further up the corporate hierarchy one is, the rosier one’s glasses tend to be. Our data reinforce this concept with senior leadership reporting scores on average about 11 percentage points higher than those of individual contributors across all dimensions of culture for an organization. As a leader, you play a large role in shaping organizational culture. So, it’s crucial to establish mechanisms to gain feedback from employees at all levels.
Ask your employees: What do you value? How would you describe our culture? What should we change?
7. Hold yourself accountable. It matters
Don’t make promises you can’t keep and do keep all the promises you make. When you say “I’ll look into it,” you must really look into a situation — and then come back with an answer, even if it is one your team might not want to hear.
Being accountable is one of the strongest ways to build trust with your team.
8. Celebrate your team
Recognize your team when they do something big. This can come in the form of a team social (or virtual) celebration, a special shoutout to a team member for their efforts or even a reward system built internally. As an example, a large manufacturing company created a program where managers offer praise credits to employees for going above and beyond that those team members can redeem for gift cards or other experiences outside of work.
It’s important to not just recognize what people do or achieve, but how they accomplish it. Connecting behavior to mission, values and ethics sends a strong signal about what is valued.
9. Seek guidance
Last, but certainly not least — find support. Continue to seek guidance from your learning and development, people and culture, and ethics and compliance teams. Seek feedback from your team — how can you improve? Tap into your peer network, and find relevant outside resources that support your growth as an ethical leader.
You can’t manage what you don’t measure, and you can’t measure what you don’t track. This is true when it comes to KPIs and it’s true when measuring how effectively you’re modeling ethical culture in your organization. Considering these points when reflecting on your leadership style will not only help you; it will support your team and model what it means to do the right thing at your organization.
Emily Miner is a director in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement.
Opinions expressed by SmartBrief contributors are their own.
Subscribe to SmartBrief’s FREE email newsletter on leadership. It’s among SmartBrief’s more than 250 industry-focused newsletters.