The ethical behavior formula

Taken together, virtuous values, actions and behavioral standards/codes can produce a "formula," such as that illustrated below, that may increase the likelihood of ethical organizational behavior:

Virtuous Values + Aligned Action + Behavioral Standards/Codes Increased Ethical Behavior

Consider adapting the six virtuous values and aligning them with key managerial leadership actions such as selection, employee orientation/socialization and allocation of resources. Behavioral standards and/or codes of ethical conduct can be added as appropriate. Acting on these three formula components may serve to increase the display of ethical organizational behavior.

Three Good Reasons to Apply the Formula

There are at least three good reasons to practice ethical behavior in your organization. These reasons may motivate you to adapt the "formula" into your managerial leadership practice repertoire.

First, it is the right thing to do. Employees and external stakeholders alike want and deserve to be treated ethically. Taken to the extreme, a culture allowing unethical behavior can breed all manner of damaging and even criminal activity.

Second, it makes economic sense. A mounting body of evidence shows that an emphasis on the softer sides of business, including ethics, positively influences the harder traditional bottom line. By listening to employees, effectively recognizing their work and practicing good ethical behavior, managers have given a boost to such hard measures as operating earnings, ROI and stock price.

Third, in line with a growing trend to look beyond shareholder value to a broader stakeholder perspective, organizational ethical behavior becomes the socially responsible thing to do. Just think for a moment about the impact of Enron's, Tyco's and World Com's unethical behavior on their respective communities, workforces and other stakeholders.

A Way to Apply the Formula

To pull the virtuous values, proactive actions and behavioral standards and ideas together, I offer you a checklist. The Ethical Behavior Enhancement Checklist is intended to help you promote and practice ethical organizational behavior.

The Ethical Behavior Enhancement Checklist

Instructions: For each statement below, on a scale of 1 to 10 (0 being lowest, 10 being highest) rate to what extent the statement is true and/or to what extent you currently practice this behavior. Please be candid since this checklist is self-directed and is intended to help you increase the presence of proactive ethical organizational behavior in your enterprise.

In reviewing your responses to the checklist, you are encouraged to identify the areas of greatest opportunity for improvement and begin a program of change in these areas. Ideally, responses in the range of 8 - 10 would be most desirable. Additional targets for continual growth and improvement can be identified as circumstances warrant.

With this checklist in your hands, you challenge others to start measuring, tracking and enhancing their organization's practice of ethical behavior. Remember, at the most basic level, ethics is about behavior. Doing the right thing is enhanced by espousing a set of virtuous values, aligning their actions with those values and specifying in key areas those behavioral standards that will encourage others to steer their behavior in an ethical direction.


A set of virtuous values is clearly espoused.

(0 -10)


Espoused values are routinely affirmed by my actions.

(0 -10)


People in my organization would say that I talk and act in an ethical manner.

(0 -10)


People are selected based upon their alignment with our virtuous values.

(0 -10)


New organizational members are oriented to our virtuous values.

(0 -10)


Systems and processes that hold people accountable for their words and actions are in place.

(0 -10)


Decisions regarding resource allocation are made fairly.

(0 -10)


People perceive resources to be distributed fairly.

(0 -10)


As appropriate, behavioral standards and/or codes of conduct are specified.

(0 -10)


The economic and people impacts of ethical behavior are measured.

(0 -10)

Toward an Ethical Culture: Characteristics of an Ethical Organization

"What are the signs that a company is getting it right and addressing the most important dimensions of managing ethics in an organization?" That was the question Kirk O. Hanson, executive director of the Markkula Center for Applied Ethics, addressed at a recent meeting of the Business and Organizational Ethics Partnership.

The model

Hanson built his talk on a model he devised in 1984 and has revised over the years. "We have a lot of things to draw on that we didn't back in 1984," he said. There has been a lot of discussion in recent years about what the signs are that a company is taking ethics seriously. The federal government's "guidelines for prosecution" and "sentencing guidelines" encourage federal officials to identify those signs.

As a result, he said, "I think today we have a lot more sophistication of corporate practices. Also we have these other influences, this language around Sarbanes-Oxley (2002) and Stock Exchange Standards (2003), sentencing guidelines (2004) and now the McNulty version of the principles of prosecution (2006)."

Hanson's Flow Model

The values of the organization are clarified not only in the overall corporation, but also within each unit of the corporation. The critical element is to have the executives then model those values. Through communicating the values, the company creates systems to embody those values. "If we do all of that, hopefully the values are aligned," he explained. "But you do need these escape valves, these vehicles— whether it's a hotline or a helpline or a committee that talks about difficult cases. You also need audit enforcement on the compliance side."

But the model would not be complete without a renewal step. Companies like Johnson & Johnson review their values statements on a regular basis. "What they did every three years was to rewrite their credo. Maybe just a few words," Hanson said. "One year, instead of 'we have obligations to our employees,' they changed it to 'our employees and their families.'" Each renewal would lead to a new educational effort to roll out the new values.

To update and flesh out his model, Hanson discussed best practice elements— what constitutes best practices in those areas and what can go wrong. Those elements included:

• Value statements

• Codes of conduct

• Executive modeling

• Training and communication

• Systems that embody values

• Mechanisms to discuss difficult cases

• Hotlines and helplines

• Audit, enforcement and discipline

• Governance of ethics and values

• Renewal process

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