Let’s be clear, there is no such thing as corporate ethics. People are either ethical or they aren’t and people determine the ethics of an organization. The good news is that solid ethics naturally align with corporate interests in most cases. Treat employees well and you have a more engaged and higher-performing workforce. Put client and customer interests first and you have a long-term, loyal base of supporters who buy what you’re selling. Even the pursuit of profit, in its truest form, has altruism at its core – do well so you can do good. For most companies, the formula that ethical behavior equals better business performance has been a pretty simple equation.
Yet, coronavirus seems to be challenging this construct in unexpected ways. And the right formula isn’t always a simple one.
We’ve seen headlines about large companies making a grab at millions of dollars intended for small business relief. Is it allowable and legal? Yes. Is it ethical? Well, Shake Shack’s CEO Randy Garutti came to the conclusion that it, perhaps, was not and has said the company will return the $10 million government loan it received. That decision has been widely praised, particularly as it triggered similar – if belated – action by others that include Ruth’s Chris, AutoNation, and the L.A. Lakers. Combined, companies are returning as much as $200 million dollars to allow it to flow to small business owners.
Is it wrong that these organizations applied for government stimulus money in the first place? Clearly, the action is aligned with their own self-interest but isn’t that what business does? Most people have a gut sense of the right choice in this situation. However, the goodwill payoff for giving back the stimulus money – or reputational damage for doing otherwise – are intangible enough that it doesn’t sit easily in a capitalistic economy.
Similarly, companies have struggled to find the right line sharing information about COVID-19 cases within their organization. A certain amount of transparency is clear – notifying those who have been exposed and protecting all others. But there are also important considerations around maintaining both privacy for individuals and confidence in the organization. Are the standards different for healthcare organizations, those caring for vulnerable populations or businesses with frontline workers? Or is there one universal standard that should guide how we all share this information?
And, of course, there are the literally life-and-death decisions being made about how we re-open the economy, provide medical treatment for those who are ill, and support those on the frontline – none of which have been clearly resolved.
While it would be easy to decry the absence of a moral compass within the government as the source of the problem, that’s not really the point. Fundamental ethics don’t come from outside an organization, they come from within. Remember – people are behind every decision. Is it easier to make high-minded ethical decisions when we see those decisions reflected in others? Sure. But that shouldn’t be criteria for doing so.
As our economy begins to come back online and employees return to work, decisions with ethical implications will continue to present themselves. And there are 3 fairly simple ways to improve the decision-making process.
- Establish an ethics council.
This not about creating a puritanical workforce or a committee that overrides management. It just speaks to the truth that humans make better, more sensible decisions as a diverse group. An ethics council exists to consider all internal and external perspectives, review values-based intentions, and increase transparency into how critical decisions are made. Participants are not the most high-minded employees, but those who are open-minded. And they should comprise individuals who represent different views, backgrounds, roles, seniority, ethnicities, etc. At the same time, the council’s purpose, reporting structure and should be clearly thought through and articulated.
- Create a formal feedback loop.
Not everyone is going to agree with every decision, particularly when ethical implications are involved. And those who have ethical concerns need to have a way to express them beyond traditional reporting structures, ensuring their issue is recognized, elevated and evaluated. This can help avoid employee complaints and the inclination to stir up dissatisfaction in others when an employee doesn’t feel they are being heard. Employees should have a way to advance concerns to the ethics council or a similar group, and then receive feedback about how that concern is being addressed. They may still not like the answer, but they will know their point of view was heard and considered.
- Add actions to values.
Almost every organization has a formalized set of values to which it adheres. But these values – things like integrity, transparency, accountability and trust – are only meaningful as demonstrated through action. Consider that, among its corporate values, Shake Shack says “we strive to be the best … citizens of each neighborhood we call home” while Ruth’s Chris cites humanity among its values as defined by “being generous in spirit and action, welcoming and caring for others, and reaching out to them when they are in need.” The debate about the degree to which each organization lived its values aside, it is much easier to connect with lofty ideals when they are accompanied by the specific actions that are relevant for the organization.
The path forward from the pandemic may be as challenging as anything we have seen so far. From our work with dozens of companies across as many industries, we know this: there is no steady state. Companies will emerge in a better or worse position, with greater or lesser trust. Those that are able to make – and defend – values-based choices will avoid the risk that today’s short-term expediency will damage the long-term security of their organization.