What defines the ethical organization?

I’ve been studying public relations ethics for more than 20 years and leading seminars on the topic for 15.

My favorite seminar exercise asks participants to identify organizations they consider “ethical” and those they consider — well — less than ethical. I won’t be naming the bad guys in this post, but I’ll describe the exercise and some of the conclusions I’ve drawn since 1993.

I call this exercise the “Ethical Organization.” Participants break into teams of 5-6 and spend 20 minutes identifying organizations the consider “ethical” and those they consider “unethical.” Teams establish their own criteria for labeling the organizations. We don’t define ethics in advance.

Each group nominates an organization in each category, “ethical” and “unethical,” and they list reasons to support their nominations. A spokesperson from each group then presents its nominees. As moderator, I post the names and the reasons on the whiteboard.

Over the years, the Ethical Organization exercise has produced a list of “usual suspects” on both sides of the discussion.

The list of “unethical organizations” is populated with companies that have abused their relationships with one or more key publics. Sometimes this abuse involves deceit and deception, but other times companies become villains because of poor quality and service. Banks are favorite whipping boys in the exercise, owing to complex fee structures and inflexible customer service policies. (Wonder how they’ll fare after the mortgage mess?) One or two major retailers are singled out for mistreatment of employees, abuse of customers and lack of community conscience. And you know, almost no one likes their cell-phone service provider.

The “ethical organization” list is heavy with nonprofits that raise money or provide services to help people in need. Often selected are the Red Cross, Salvation Army, and Susan G. Komen Foundation. Rarely do for-profit businesses make the “ethical” list, unless the companies have a track record of supporting the public interest. Ben & Jerry’s Ice Cream has been the for-profit favorite for years, showing the power of Rainforest Crunch!

What makes an organization ethical? Yeah, I know this exercise oversimplifies the complex issues of ethics. That’s precisely why I do it. As consumers, investors and citizens, we often act based on perceptions of organizations. We prefer to buy from companies we respect, though price and convenience do influence us, as the folks at Wal-Mart can attest. But in end, we would like to support and patronize organizations based on ethics and social responsibility, given the option. (There’s a body of research to support this notion, but I don’t have time today to locate and link to it.)

After 15 years of staging “The Ethical Organization” 4-5 times a year, here’s a short list of what people tell me they respect in organizational behavior:

Respect for people over profits. Even in my seminars loaded with students from the College of Business, this one shines through. Ethical organizations respect their employees and their customers, putting their well-being ahead of the bottom line. You can see why the do-good nonprofits score so well in this exercise.

Respect for the communities where they live and work. Ethical organizations are involved in the community. They encourage and reward employee volunteerism and often they donate money and resources to enhance quality of life for those around them. Management is visible, and shows leadership in the community. They are corporate citizens.

Respect for quality. The quality issue comes up in almost every session I lead, but is quality really an ethical issue? Maybe not, but people respect organizations that strive to “get it right.” Quality of a company’s product or service tells us a lot about how much that company respects its publics and itself.

Respect for communication — 2-way communication. Organizations needn’t be perfect to be ethical, but they must be willing to talk about and correct their mistakes. It could be something as simple as customer service programs that empower employee to “make it right.” It could be a company that uses social media as a listening post, then uses the input to align its policies with the public interest. It could be a quick and transparent response to a crisis. Let’s face it, Johnson & Johnson remains one of the most revered companies in the world based on how it handled a historic crisis 25 years ago.  J&J frequently makes the “ethical” list in my seminars as well.

Respect for the environment. It’s clear, particularly among GenX and the millenials, that we respect companies that respect the planet. Seminar participants frequently place polluters and oil companies on their black list. And yes, Exxon still suffers from the errors of Valdez, just as J&J benefits from Tylenol.

Finally, the virtuous organization is led by role models. Seldom do companies whose executives earn 9-figure bonuses make our seminar’s “ethical” list, no matter how financially successful those companies may be. People simply distrust companies that shower a select few executives with obscene riches. Ethical organizations keep their greed in check.

I’ve conducted the Ethical Organization exercise with more than 1,000 participants since 1993, from college students to seasoned professionals. The outcomes are remarkably similar. We respect organizations who respect us. We respect organizations that do right.

Does this surprise anyone?

Now, if only we could show conclusively that ethical behavior translates directly to profitability. It may just  get our battered and bruised free enterprise system back on track.

(Ethics graphic from Belmont University)

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9 Responses to What defines the ethical organization?

  1. Rob Jewell says:

    An extremely informative and insightful post, as usual. It’s a shame that as consumers, employees, investors, voters, citizens, whatever, we don’t demand more from all organizations in the way of ethical conduct. I thought we learned some lessons less than a decade ago when the morally — and legally — corrupt leaders of Enron, Tyco, WorldCom, etc. crashed those companies, damaging our economy and the lives of thousands. Apparently not. Now we are at it again, with the “Maestro,” Alan Greenspan, telling members of Congress last week that he was “in a state of shocked disbelief” that business and financial leaders couldn’t self-regulate — couldn’t be trusted to do the right thing (my words) — with billions of dollars on the line. Alan, all of us share your pain — and shocked disbelief. Let’s hope we learn something from this latest debacle. Ethical conduct — and leadership — matter.

  2. Ed says:

    This post from you has presented what I truly felt for a long time. Although I am currently not practicing PR, I have been a social media junkie most part of my times and it has never failed to amaze me of how Marketing/PR agencies are growing audacious in unethical conducts.

    Unethical conduct is such a broad term, and it includes anything from creating fake blogs to hidden benefits for individuals who stand to do publicity for them. Favoritism is also another commonly seen behavior, and it fascinates me to see agencies or even in-house professionals doing this openly with little guilt and conscience of what values they are contributing as a whole to the industry.

    For a long time, fellow associates have often shared with me that such practices will eventually be eradicated by self-policing of involved parties. However, I find it highly unlikely. Especially in an environment (eg; small saturated marketplace) where such companies are gelling together to form a “united front”, which makes ethic-policing even harder to achieve its intended objectives. Except in your disclosure of not-for-profit organizations, where they are answerable as to how public funds are being used.

    If there’s any hope of breaking unethical practices, what would you have in mind then?

  3. Bill Sledzik says:

    Thanks for the kind words, Rob. As veteran practitioners, we both have learned the importance of ethical behavior in building trust and corporate sustainability. The lesson is so damned simple I cannot for the life of me understand why so many fail the test.

    Now to Ed. Let me suggest a few things I “have in mind” for fixing this mess.

    1) PR must assert itself as the voice for ethical conduct in the organization. No one else has stepped to the plate, so we must. Fact is, PRSA and IABC, the world’s two largest professional associations have long been advocates of ethical conduct — for over half a century in the case of PRSA. Problem is, only about 20% of PR practitioners in the U.S. and Canada belong to those groups. That isn’t to say you must belong in order to be ethical — only that our professional associations do a pretty good job of advocating on these critical issues — at least among their own memberships. They also present a good many seminars on the topic, and a good many articles in their publications.

    2) PR must preach transparency at a higher volume than ever. I know that’s a trendy word, transparency. In the old days we used to simply talk about being honest with our publics. But in the old days, it was fairly easy to get away with lying and deceit. You just shut your mouth and most times no one would find out.

    The advent of social media gives everyone a voice, which makes keeping secrets really, really difficult. If we fudge the numbers or scam the system, there’s a good chance someone will rat us out. So you need to start a file in which you collect case histories of companies that have been outed by blogger and whistleblowers. Use those cases to show your management that unethical behavior — now more than ever — often constitutes a “career ending move.”

    3) Preach the gospel. Host ethics seminars inside your organizations. You don’t have to get fancy. Bring in pizza on a Friday lunch hour and invite an ethics discussion leader to give a presentation. (Hell, I’ll work for pizza!) In the next lunch, do ethical problem-solving exercises. In another session, brainstorm ways to bring ethical discussions out in the open. Point is, you gotta talk about this stuff.

    4) Promote ethics in your professional groups. If it’s PRSA, IABC, AMA — whatever. Call on your program chair to include at least one program relating to ethics every year. Bring in a speaker who can lead an exercise like the one I describe in this post. And be sure the program includes plenty of examples of how ethical lapses lead to lost investments and shortened careers.

    5) Get your clients on board. If you work for a counseling firm or ad agency, take a lesson from Joe Epley. Joe, when he was CEO of Epley & Associates in Charlotte, included a clause in client contracts — a clause that said clients agreed never to ask an Epley employee to violate the PRSA Code. A copy of that code was attached to the contract and it was discussed in the presentation. While such a system isn’t foolproof, it allows you to take ethics advocacy beyond the walls of your own business or employer. Use any code of ethics you’d like to ensure you and your clients are dealing fairly and honestly with their constituents.

    That’s a start, Ed. I hope others will decide to chime in with more suggestions. But you know, looking at my own stats, I’m not convinced many folks are reading blogs anymore. This isn’t the kind of discussion you can do on Twitter.

  4. Bill Huey says:

    Yes, I believe that quality is an ethical issue. It is socially irresponsible and ethically reprehensible to make a schlock product , sell it for the highest possible price, and not provide any meaningful service support. I can’t name the company I have in mind, but it rhymes with SicroMoft.

  5. Judy Gombita says:

    Bill, do you suggest to your students (and practitioner colleagues) that they subscribe to the (free) e-newsletters, produced by Ethical Corporation? As it covers corporations across the globe (although the publisher is based in the UK), perhaps the information will help to give your students a more rounded worldview on what constitutes (and defines) an “ethical” organization.

  6. Bill Sledzik says:

    Have not used that, Judy, but I also haven’t taught the Ethics class for a while. In the future.

  7. Judy Gombita says:

    Glad to hear you will recommend them in future.

    Those not wanting to commit to an email subscription can view the current and archived issues here: http://www.ethicalcorp.com/newsletters/

  8. April says:

    A magazine called corporate board member actually interviewed a whole buch of CEOs about where morality and ethics fit in running a company http://www.boardmember.com/magazine/current-issue/the-moral-high-ground/

  9. [...] Unethical conduct by appointed and elected officials is a discussion for a much larger forum than this blog. But we all must be part of that conversation. This post, for example, will become a lesson in my “Ethics & Issues” class next semester. Maybe you can use it to spark conversations in your offices, your PRSA chapters, and even your families. I write about ethics a lot, like here and here. [...]

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