Many individuals appreciate working in an ethical environment, so management accounting and finance professionals who instill an ethical culture will boost their company’s ability to recruit and retain the best and brightest and help avoid reputational damage. So how do organizations achieve this? The first place to start is formulating a code of ethics and set of core values, the importance of which can’t be overstated.
Even organizations that don’t have a formal code of ethics are likely to have a statement of core values that encourages ethical behavior. For example, the following are the six core values of Saint Leo University, where I work.
Excellence. Faculty members work hard to ensure that our students develop character, learn skills, and assimilate the knowledge essential to becoming morally responsible leaders. The success of our university depends on a conscientious commitment to our mission, vision, and goals.
Community. Saint Leo University’s mission is to develop hospitable Christian learning communities. We foster a spirit of belonging, unity, and interdependence based on mutual trust and respect to create socially responsible environments that challenge all of us to listen, learn, be open to change, and serve.
Respect. We value all individuals’ unique talents and dignity and strive to foster their commitment to excellence in their studies and work. Our community’s strength depends on the unity of purpose and diversity of our people; the free exchange of ideas; and learning, living, and working harmoniously.
Personal development. Saint Leo University stresses the development of every person’s mind, spirit, and body for a balanced life. All members of the academic community must demonstrate their commitment to personal development to help strengthen their character and the reputation of our institution.
Responsible stewardship. We foster a spirit of ethical service to employ our resources to improve the university and community development. We must apply the resources of our community to fulfill the university’s mission and achieve our goals.
Integrity. Saint Leo University’s commitment to excellence demands that its community members embody its mission and deliver on its promise. Faculty, staff, and students pledge to be honest, just, and consistent in word and deed.
These core values are integrated into the courses taught at the university. Each course has at least one of the core values included in the curriculum’s learning outcomes, with specific assignments to ensure that students get more familiar with them.
TONE AT THE TOP
Having a code of ethics and a set of core values is generally useless if the tone at the top isn’t appropriate. Many employees take their cue from those in leadership whom they respect and seek to emulate. Therefore, leaders must always execute their responsibilities ethically to set a good example.
This responsibility includes not tolerating any type of misconduct from any employee, no matter how brilliant they may be or how well they perform. Failure to deliver consistent consequences for unethical behavior may cause ethical employees to leave the organization, leading to a decrease in morale and productivity. Additionally, the company’s reputation may be negatively impacted.
Another way leaders may fail at setting the appropriate tone at the top is by not being transparent in their communications. When important information goes unsaid by leadership, it creates an environment in which employees are left to create their own narrative, which is often negative. This leads to rumors spreading and distrust between employees and leadership. Therefore, leaders should communicate important information frequently with as much detail as possible without compromising the organization’s competitive advantage.
MAKE ETHICS ROUTINE
There are many ways that organizations can communicate the importance of the code of ethics and core values to encourage employees to live and work ethically every day. For example, employees could be publicly acknowledged when managers or peers notice ethical behavior. I worked in a company that encouraged employees to tell each other when we saw a good job being performed. The culture exudes ethics and fairness, which starts with the example set by executives at the highest level.
As a result, many employees stayed in this company for numerous years. Initially, I thought employee loyalty and longevity were inspired by the company’s compensation and benefits, but as I got to know my colleagues, I learned that they loved working there because of the ethical culture. Employees felt that they could trust leadership and were being treated fairly.
There was a time when the company needed to cut expenses, which included reducing the number of employees. As a result, senior management offered those who were close to retirement age an extremely attractive package, including post-retirement benefits. This not only benefitted the retirees who accepted the package but also employees who got to stay at the place where they loved to work. If organizations create a code of ethics and a statement of core values and communicate them to educate employees about the importance of living out these ethical principles and standards in their daily activities, it will make a positive impact on the organization’s culture and boost its attractiveness to current and prospective employees. It’s a best practice to weave ethics and core values into as many discussions and meetings as possible, as well as during interviews and hiring and onboarding processes. It’s of paramount importance that management accounting and finance leaders’ conduct exudes ethics.