03rd August 2023
Cultivating an Ethical Workplace Culture: The Key Role of Leadership
In this article, Ian Peters, Director of the Institute of Business Ethics, emphasizes the importance of an ethical workplace culture that starts from the top, with senior managers and board members leading by example. He highlights that a positive ethical culture can lead to growth and profitability, as evidenced by a global consumer survey showing that 60% of customers would spend more money with ethical businesses. However, many companies struggle with maintaining an ethical culture or effectively communicating it to their workforce and consumers. Peters suggests that responsibility lies with senior management and the board to determine the organization’s purpose, values, and expected behaviors. They must also exemplify these behaviors, embed the ethical culture in various aspects of the business, and regularly assess their compliance with ethical standards. Ultimately, a strong ethical culture can provide a competitive advantage and garner support from employees and customers alike.
From the original article published in People Management:
Determining the purpose, values and expected behaviours of an organisation is essential, but it will only work if senior managers and board members lead by example, says Ian Peters.
There’s a scene in US political drama The West Wing in which the vice president rails against the president’s stubborn refusal to change tack. “What do you call a leader with no followers?” he asks bemused White House staffers. “Just a guy out taking a walk.”
In business, as in politics, success is dependent on getting buy-in. Buy-in from your customers. Buy-in from your staff. We’re less likely to repeatedly spend money with a company that takes our custom for granted or consistently provides poor service, and we’re likely to start looking at jobs websites if our employer fails to value us or if we feel the workplace is a toxic one.
We want to work for and buy from businesses with a culture that we believe is appropriate and ethical – organisations we can tell are doing the right thing for the right reasons. That culture can only come from the top, through senior management and the board. To paraphrase a real-life American president, that’s where the buck stops.
An ethical culture isn’t a ‘nice to have’ – it’s what can help deliver growth and profitability. The Qualtrics XM Institute’s 2022 global consumer survey found that 60 per cent of customers would spend more money with a business if treated better – a hallmark of a positive ethical culture.
Getting it right can deliver a competitive advantage and commercial benefits. Yet the evidence suggests many businesses are getting it wrong – either because the culture isn’t right, or because there’s a failure to communicate effectively with staff and consumers.
The Qualtrics Institute also found that 62 per cent of customers believe businesses could and must care more about them. At the Institute of Business Ethics, our British attitudes surveys have found that less than half of Britons believe businesses are behaving ethically and there is continued concern over corporate tax avoidance.
The evidence also suggests business culture and whether it’s ethical is an issue on the workforce side. Gallup’s recent State of the Global Workforce report found that 59 per cent of staff are ‘quiet quitting’, meaning they feel disconnected from their employer. Nearly a fifth are ‘loud quitting’, which means there’s been a fundamental breakdown in trust between a business and the employee.
The data indicates there are continuing issues with business culture: whether it is ethical or whether companies are failing to effectively communicate what their culture is.
Read the full article to find out how organisations can develop and embed an ethical culture.
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