Loyola University Chicago School of Law, JD 2020
Corporate success was once measured by the numbers on a balance sheet. Today, however, corporations have entered a new era where morals and ethics are increasingly important. Whether this change is a product of outside influence or internal conflict, there is a new trend in corporate culture. Given the business expertise and media-friendly personalities of many CEOs, they may be the leaders chosen to lead the change.
It is no surprise that companies with strong ethical cultures tend to outperform those without. A classic example of one of the most successful businessmen of our time, Warren Buffett, proves this point. Throughout his career, Buffet has made a point of stressing how important ethical values are to a company’s success. But what makes a CEO ethical? Lead Read Today explains that because a CEO has multiple stakeholders to answer to, it is difficult to discern what it means to be ethical. When we think of ethics and CEO’s, the general public likely considers how the CEO treats his or her employees and customers. Following the Enron scandal, the Bernie Madoff scandal, and the financial crisis of 2007-2008, companies launched themselves into discussions surrounding ethics and corporate culture. Today, in the wake of the #MeToo movement, corporations and CEOs are under an unprecedented microscope as it relates to corporate culture and ethics.
Where does it begin?
Dan Amos, Chairman and CEO of Aflac, says your corporate culture begins at the top. The leaders provide the moral compass, setting the tone for an ethical culture. “Ethical companies will always display strong governance and compliance” says Amos. Aflac is an eleven-time recipient of Ethisphere’s World’s Most Ethical Companies award. To be considered for Ethisphere’s list of the 124 most ethical companies, companies answer a dense survey and must explain how it addresses ethics in the business. The results are gathered and findings are fact checked against various other sources like reputation, track record, etc. Each company is given an Ethics Quotient (EQ) score, with 35% of its EQ score comprised for its ethics and compliance program.
Trends in corporate ethics
In recent years, Ethisphere’s results have uncovered a new trend of companies disclosing information about misconduct to their own employees, something that was not done in the past. This data might suggest businesses are becoming increasingly transparent. It is unclear whether this trend is due to internal issues or outside movements, however, transparency is essential to an ethical culture.
Change is happening
Moreover, after the 2007-2008 financial crisis, studies showed trust in large corporations and its CEOs was on the decline. More recent movements to combat harassment in the workplace have sparked new speculation over many powerful CEO’s practices and company cultures. A 2016 CEO Success Study found that “CEO dismissals for ethical lapses have increased by a whopping 36 percent over the past five years.” Bribery, sexual indiscretions, fraud, insider trading, and negligence were some of the ethical lapses the study measured.
The new era of leaders
Compliance, regulation, and ethics are and will continue to be a vital aspect of running any business. With this understanding in mind, some of today’s top CEOs have emphasized their views on morals and ethics in the workplace. Amazon CEO and richest man in the world, Jeff Bezos, knows that there is a new era of leadership on the rise. Despite some harsh criticism for Amazon’s vast takeover and allegations of a hostile workplace, Bezos understands that company culture will make or break a business. The Amazon creator makes it known that he believes happy employees are a key ingredient to business success. While Bezos has certainly mastered the art of leadership, he has not yet taken steps to separate himself as a model for corporate ethics during this movement.
Corporate ethics of the future
Patrick Quinlan, CEO of Convercent, may be the burst of creativity and innovation needed to launch today’s leaders into the new era. Convercent is an ethics software company that helps businesses measure the ethical health of their organization through an online platform. Among other things, this ethics and compliance software assists companies to manage their helplines, training programs, whistleblowers, and even process complaints of workplace harassment. This platform, says Quinlan, shows a real link from ethical health to business results. Not only does Convercent provide an innovative ethics platform to aid other companies, it fulfills the mission of its product within its own workplace. Convercent’s values include open and honest communication and embracing the “uncomfortable” as a catalyst for innovation. Companies like Convercent are pioneers in the ethical transformation of corporate America.
Ethics as the center of business
Fortune 500 companies have stepped into the conversation by driving ethics into the center of business, says Quinlan. Companies like Microsoft, Salesforce, and Delta, recognize the connection between ethics and improved business performance and embrace it. In recent years, Microsoft has taken a stand on immigration issues, Salesforce on LGBTQ rights, and Delta on the NRA. These companies are some of the forerunners of today’s ethical transformation in corporations. Many believe that as corporate culture changes, so will business outcomes. Not only will business outcomes change, but it will be interesting to see the impact these shifts have on the compliance community as well. It may be sooner than we think that compliance officers are sitting on boards and part of the conversation surrounding the corporate culture.