The true value of corporate ethics

May 30, 2018

A “crisis of ethics.” That’s how former Secretary of State Rex Tillerson characterized the current environment in government and public life.

But ethical behavior has also become a burning issue scorching its way through the corporate world as well. Global brands are under scrutiny for how their employees—and leaders—act when it comes to corporate ethics. In a recent New York Times article, historian and author Yuval Noah Harari called it out: “In a complex, interconnected world, morality needs to be redefined.”

Virtually all top companies now have strong ethical policies and guidelines for employee behavior. Most abide by those policies, but some choose to ignore them in the name of financial gain. Worse, some don’t have any ethical standards at all. The most egregious examples lately of companies lacking in ethical foundations are Uber and Nike. Both have—or had—strong leaders with world views that seemed to side-step ethical behavior within their organizations. And Facebook has been in the headlines for all the wrong reasons, facing unprecedented scrutiny.

Uber: A culture based on questionable ethics

Travis Kalanick, the ousted CEO of Uber, was originally lauded for disrupting the entire taxi-limousine model. The “Uber of –” (fill in the blank) became a synonym for a business model that turned conventions upside down.

Kalanick’s brash behavior and disregard for ethical business practices drove Uber’s rapid growth into a global multi-billion-dollar organization. An article in the April 9, 2018 New Yorker stated, “Uber’s continue financial success…reinforced the idea that ruthlessness will be rewarded.” It noted that of the fourteen cultural values that Kalanick developed with Jeff Holden, Uber’s Chief Product Officer, “toe-stepping” was included.

What’s more, disturbing patterns of sexual harassment were rampant throughout the organization. In short, a compliance consultant described in a report that Uber was “one of the most remarkable discussions of a complete workplace culture disaster that has ever been rendered for a multi-billion-dollar business.”

Nike: Bad behavior starts at the top

Nike is another company in the news lately where the contrast between a stated set of core values and actual manager behavior were in conflict.

Long viewed as an exemplar of innovative thinking and product design celebrating individual achievement, Nike’s CEO Mark Parker stated in an admission of misconduct that “reports occurring within our organization do not reflect our core values of inclusivity, respect and empowerment…this disturbs and saddens me.”

Two high-level executives, as well as others, were fired. But as reported on the website RACKED, former brand president Trevor Edwards “is walking away with a $525,000 payout and almost $9 million worth of unvested stock… The payout isn’t exactly chump change, especially when it’s going to someone who, according to the Wall Street Journal, “protected male subordinates who engaged in behavior that was demeaning to female colleagues.”

Facebook: A dangerous and addictive business model

Of all the companies under close scrutiny for its ethical behavior, Facebook has hit the jackpot with CEO Mark Zuckerberg’s appearance before the Senate Commerce and Judiciary committees.

What makes Facebook’s ethical breaches more egregious than those of Uber or Nike is not the behavior of individual employees. Rather, it is the impact on how the world interacts with Facebook’s product, and, in fact, how the fundamental structure of social media operates.

The very nature of Facebook’s model begs the question: Isn’t the intentional exploitation of people’s vulnerabilities to keep them addicted an unethical behavior akin to selling harmful drugs?

In an April 25, 2018 Washington Post article, writers Mark Griffiths and Daria Kuss wrote:

“…the latest research…showed that social media use for a minority of individuals is associated with a number of other psychological problems as well, including anxiety, depression, loneliness and attention-deficit/hyperactivity disorder… Most people’s social media use is habitual enough that it spills over into other areas of their lives. It results in behavior that is problematic and dangerous…”

Consider this: if a company made and sold a product that it knew would be harmful to people that would not only be unethical, but illegal. Think about real-world examples, including tainted foods sold knowingly; pharmaceuticals that had dangerous side effects but were still marketed; and auto airbags that had fatal defects still sub-contracted to manufacturers.

What happened with Facebook is not that different. Sean Parker, an early Facebook investor and its first President, commented about Facebook and other social media sites that “social media is a dangerous form of psychological manipulation…God only knows what it’s doing to our children’s brains,” he said. Who’s guilty?

Parker said “it’s me, it’s Mark [Zuckerberg], it’s Kevin Systrom at Instagram, it’s all of these people—[who] understood this, consciously. And we did it anyway.” The old expression “fish rots from the head down” has never been more apt.

There is good out there

Lest it all seem awful, there are hundreds of companies that demonstrate positive ethical leadership. Many of them are recognized by The Ethisphere® Institute, a global leader in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust and business success. In the 2018 World’s Most Ethical Companies® list, a number of them stand out.

Edwards Lifesciences, a medical device manufacturer, is cited as one of the top companies. On the Edwards website’s Corporate Responsibility page is a message from Chairman and CEO Mike Mussallem, who says, “our people are committed to integrity, honesty, openness and fairness.”

Voya, another Ethisphere honoree, holds an annual Ethics Awareness Week to help employees better understand its policies to behave ethically and responsibly when it comes to protecting customer information with the highest integrity.

Another company with a sense of ethics that runs deep is W.L. Gore, widely known for its GORE-TEX® technology in outdoor clothing. Gore’s technology extends to a product portfolio that spans medical, industrial, engineering and scientific applications. Gore’s Guiding Principles and Beliefs, first set down by its founders Bill and Vieve Gore, ethically guide the decisions the organization makes from how they work to how their Associates treat each other, to their business partners and customers.

Ethical behavior pays off

Why should a company champion high ethical behavior for its employees and leaders? A Huffington Post article cited a new study conducted by the leadership consulting firm, KRW International. The study found a link between a business’s performance and the integrity of its CEO. It said, “Firms where employees rated the CEO’s moral principles highly performed better than firms whose top executive had a lower character rating.”

When Dara Khorsrowshahi took over as CEO of Uber, one of his first tasks was to create a new list of cultural values, which he developed by soliciting ideas from employees. The former “toe-stepping” value now reads “We do the Right Thing. Period.”


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