Tone at the Top: How Leaders Can Create a Company Culture of Integrity

Posted by Amanda Nieweler

on February 2, 2015

A Proposed Code of Ethics “Was a Colossal Waste of Time” – Bernie Ebbers, Co-Founder WorldCom

We all know where that statement got him. Every employee under Mr. Ebbers got the same message – find creative ways to make the numbers.

Sadly, this is all too common a belief. The process of ‘cooking the books’ is an evolutionary process, accomplished over time by the expectation of meeting analysts’ expectation, wanting to achieve certain compensation and incentives, and the pressure to reach financial goals. graphic video clip image tone at the top

Those caught up in this evolution of illegal and unethical behaviour don’t see it as such. What they see is an immediate problem that needs to be fixed, and pressure from upper management to make it so. They see it as a little white lie that can be remedied over the long term.

But what employees under management see is direction to engage in wrongdoing.

Lead by Example

Employees take their cues from the top. What leaders do reflects the creation of the company culture within an organization. If management does not lead with integrity, employees are not likely to report on any unethical conduct. Here’s five reasons why:

  1. They don’t believe any corrective action will be taken by management
  2. They don’t believe their reports will remain confidential
  3. They fear retaliation by supervisors
  4. They fear retaliation by co-workers
  5. They don’t know who to contact

Something else to note is that employees who participate in wrongdoing, approved by management, tend to take their actions outside the organization in a kind of revenge against the organization. They do this because they feel they aren’t getting feedback or compensation that they deserve from management. A negative working environment can increase the risk of fraud. So now the situation changes from defrauding clients, to defrauding the organization for personal gain.

Once employees start travelling down this path, there’s seemingly no way to hit the brakes, and the wrongdoing escalates.

It’s important that organizations clearly state their Code of Ethics and Organizational Values, and of course, management needs to abide by this – walk the walk. Management needs to convince employees that the content in their ethical structure and organizational values isn’t just random meaningless words. Employees need to know that the Code and Values are important to the daily operation and attitudes throughout the organization.

It’s also important that organization implement or create a place where employees can come forward and report any wrongdoing they see. Employees need to know that when they see wrongdoing, those unethical actions affect everyone negatively in the organization. And for those who do uphold integrity when going about their daily business in the organization, it’s important to reward that positive behaviour.

6 Steps to Implement an Ethics Reporting System

Source: ACFE.com