February 23, 2024

Leading Business

Business in Evolution

Ethisphere’s Culture Insights Report: Ethical Leadership In Business

5 min read

Ethisphere is a global leader in promoting ethical business practices through research, resources and an ethics-based community. Their recently released report, the 2023 Ethical Culture Insights Report, collected data from over two million employees worldwide from 2016 to the end of September 2022. I talked with Erica Salmon Byrne, the CEO of Ethisphere, about the report’s main findings and how business leaders can improve ethical practices in their organizations.

Critical For Business Success

In today’s world, ethics in business are necessary for good corporate governance. Stakeholders, investors, employees and consumers increasingly want firms to be accountable and transparent.

“We believed that there was a real opportunity to celebrate companies that were doing things well, committed to being good members of the communities in which they operated, leading ethically, caring about employee development, making ethical decisions and safeguarding their culture. This has been the mission of Ethisphere since its founding in 2007,” said Salmon Byrne.

Ethisphere uses surveys and assessments to gather information about a company’s values, norms and behaviors. With this knowledge, Ethisphere partners with the company to create a plan to enhance their ethical culture. This plan may include training, policy updates and other strategies.

Since a company’s intangible assets, like brand value, intellectual property and people, typically comprise 70% of its total value, benchmarking and assessment help companies realize tangible value.

For example, companies focusing on ethical behavior and culture are better at attracting and retaining talented employees, building strong connections with customers and other stakeholders and creating lasting value for investors.

Key Findings Of The 2023 Report

Salmon Byrne stated that one of the report’s interesting findings is the decline in most types of observed misconduct after people started working remotely. Respondents showed favorable perceptions of their ethical culture and, in most cases, said that their company’s culture of ethics grew even stronger after the pandemic.

But there has also been a remarkable rise in observed bullying, increasing almost 13% post-pandemic. This trend is consistent with other data sources, such as the International Labour Reports.

The data also shows that while observations of bullying have gone up, the reporting of bullying has not. Employees have indicated that they saw more bullying but were not more willing to report it.

“I’ve had a lot of conversations with people on what they have seen within their own companies, and what most people seem to land on is that it was easier pre-pandemic to pull somebody aside after a meeting and say, ‘I didn’t like the way you spoke to Karen.’ Tools such as Slack lend themselves to people shooting off behind their keyboard, perhaps in a way they wouldn’t have said to an employee if they were speaking to them,” Salmon Byrne said.

Addressing Workplace Bullying

Salmon Byrne said that one of the primary reasons people do not report bullying is fear of retaliation, which is consistent across generations. Another reason people do not report is the belief that nothing would happen if they did. This lack of trust in the system is a significant problem for companies, especially as younger workers enter the workforce. According to the report, the youngest workers, Gen Z, are considerably less likely to report bullying than other generations due to these specific reasons.

To address this issue, Salmon Byrne said companies must create a culture of trust and transparency. When employees report bullying or other misconduct, they want to know that something is being done about it. They may lose faith in the process if they do not see any action taken.

“If you have people coming into your workforce who don’t have faith in the system, then you have to get to work on showing them that if they raise a hand something actually will happen and that it will be fair,” she said.

Salmon Byrne also emphasizes that companies need to educate employees about the reporting process. Many employees need to understand how complaints are handled or what happens when they report bullying or other misconduct. She also notes that the companies doing well in the survey measurements are also taking the time to educate their employees on how the process works.

Successful Reporting

Managers are vital to preventing bullying and retaliation. The data shows that roughly 56% of respondents named their immediate supervisors as their first line to report misconduct.

However, the satisfaction data shows that around 50% of the employees who raised a concern with their manager were not satisfied with the process. Most reported that they felt nothing had happened as they raised their concern to their manager, and it stopped there.

Byrne states that one of the challenges is that managers sometimes need to learn how to proceed once an employee reports a concern. Therefore, preparing managers to be channels that ease reporting is crucial.

“I think in the next couple years, we will see apps switch the paradigm from a reporting perspective. Companies need to ensure that managers are creating an environment where employees feel comfortable using their voices. They’re psychologically safe to speak up. The easier and safer we make it for the employee within the nucleus of their team, the more likely they are to give us that information early and often,” she said.

Improving Company Ethics

One of the most critical aspects of improving ethical practices is leadership. The tone at the top matters, and leaders play a crucial role in setting the right style for their organization.

Salmon Byrne is clear that leaders must take ownership of ethics. It needs to be more than assuming that the compliance team has it covered. Leaders must understand that their words matter to their employees and look for opportunities to highlight critical compliance-related topics or ethical decision-making points in their usual way of speaking.

“One of the things that I love to do with leaders is to ask them what their gut reaction is when someone on their team brings them the bad news. It could be on a spectrum of ‘Whose throat do I choke?’ to ‘How do I fix it?’ The closer you are to the ‘How do I fix it?’ end of the spectrum, the more likely people are to bring you bad news early when you can still do something about it. The closer you are to the ‘Whose throat do I choke?’ end of the spectrum, the more likely your team is to conceal bad news until the very last possible minute. And we all know that means the problem is going to be harder to solve,” she states.

Salmon Byrne emphasizes that creating a safe and open culture encourages employees to bring up concerns when they are small. The manager or leader is responsible for saying, “Thank you for bringing me a problem,” and working through it with the employee.

Byrne often reminds leaders that a “speak up” culture does not end with ethics-related issues. It is an essential element of an environment where employees feel safe to share their new product ideas, client challenges and more. Teams perform better across the board in these kinds of environments. Creating such an environment is not only the right thing to do, but it’s also a solid business reason to ensure the team’s success.

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