In the recent corporate history, there are several cases of large-scale corporate meltdowns that in one way or another hurt its employees, shareholders or in many cases both. Most of these scandals such as Enron, the largest bankruptcy scandal in American history, ended up in financial loss and subsequent legal actions. However, regardless of the legal or financial impact, the common denominator of such organizations is the lack of ethical leadership by the senior executives.
While the above example is a showcase of the crumbling effects of unethical leadership, there can be numerous other scenarios where organizational integrity is at stake even if there may not be any large scale financial or legal repercussions. It is typically generalized that the organizational culture, which is ethically responsible, is shaped or defined by the personality traits reflected by the employees and workforce recruited into the organizations. As a result, much of the efforts are directed towards finding specific personality types and the same behavior is seldom reflected pre-existing internally within the vertical hierarchy.
Organizational culture and integrity are intertwined with the personal ethics of the executive management as well as functional management within the organization. A company’s code of ethics and standards will be meaningless if the leadership is not walking the talk. The development of internal trust and culture formation is only successful if the top management of the company is delivering on the same promises of integrity that they seek from their workforces.
These promises could either be:
- Transparency in pay raises.
- Work-life balance for the staff.
- Weighing the potential impact of strategic decisions made behind closed doors.
The most difficult part is the cross-hierarchical communication atmosphere that fosters a uniformly visible and applicable culture that is based on integrity and ethical leadership. So how do organizations overcome this challenge, more specifically in companies that are geographically spread out in different regions of the world where cultural sensitivities vary? It starts with the executive initiative to be open and realistic about the overall organizational affairs and make accessibility to such information available to everyone in the organization. Open and transparent communication will build trust internally and, by extension, this trust will be reflected in how each employee performs individually. On the parallel side, there should be systems in place for advice and reporting at the functional level as well as central level. All employees should feel comfortable in seeking advice on issues of their own or their functional areas at large that may be legal but ethically questionable.
Human interactions, even outside the context of a work environment, are based largely on dependencies derived from trust. One has to trust the other’s ability to cater to his / her expectations to become dependent on their perceived or actual ability. Similarly, the leadership in the workplace can strengthen this equation of trust and dependability by evaluating the effects of their decisions on individuals down their hierarchy.