In today’s business world, it is essential to have a strong ethics program in order to form and maintain a positive rapport with customers. Due to the instant and global nature of the media, customers are more aware of business practices than ever before.
The two main types of ethics programs revolve around either integrity or compliance. In order to choose which is more beneficial for a company to adopt, the characteristics and the outcomes of both types of programs need to be explored.
Compliance-Based Ethics Programs
When a company or business has a compliance-based program, they establish their rules of conduct, and there are penalties put in place for anyone who disobeys those rules. Employees adhere to the rules in order to avoid the repercussions which makes fear the driving factor for compliance-based ethical programs. Basically, the incentive to not receive punishment is strong enough to get the employees to obey the established rules, but it isn’t necessarily enough to get them to believe in them.
Many people liken compliance-based ethics programs to window dressing. Sure, it looks good on the outside, and it may get the government of their backs. However, it is rather short-sighted. The employees of a compliance-based company are not motivated by an interior moral compass or from an ethical place, they are simply avoiding punishments.
When a business simply adopts a moral code in order to avoid fines or other punishments from the government, it is simply a reactionary response. Many experts refer to it as “taking the low road” because their business itself doesn’t have an ethical standpoint of its own.
It is only following the guidelines set down by the government as to what constitutes ethical behavior.
Integrity-Based Ethics Programs
Companies or businesses that employ an integrity-based program have developed their own set of core principles, and they ask that their employees govern their behavior according to these principles. These principles actually become a core part of the company’s mission, and the success of the business is tied to maintaining these ideals. The approach to an integrity-based program starts at the very top with those in managerial positions demonstrating the principles on a consistent basis.
When employees are expected to act according to the company’s defined principles, they are more likely to conduct themselves in an ethical manner. Also, they are more likely to report any behavior that is not in line with the company mission. The focus in an integrity-based ethics program is on the positive instead of the negative, and it is easier to see the results of the program.
Putting the focus on the positive means that the company will reward employees for acting in an ethical manner using either financial awards or simple recognition techniques. This focuses on uplifting the good results in a company culture that is rooted in ethical behavior.
One of the biggest complaints about the integrity-based system is that it provides for too much gray area. Without very clear guidelines on what is and isn’t ethical, employees can lack direction or understanding of how they should act in various situations. Integrity-based systems also require more training than compliance-based systems because there is no concrete set of rules to be applied across the board.
What Does this Mean for a Business Leader?
In order to maintain success and be competitive in the modern business world, a company needs an advantage over the competition. The biggest advantage that is available to a business is its strategic resources, and a company that is able to blend an integrity-based ethics program with a compliance-based program will find that the strategy gives them a substantial advantage over other businesses in the same industry.
This blending of the two strategies will reap plenty of rewards including increased profits. Customers will respect a business that shows integrity and follows an ethical standard. Customers seek brands that show good citizenship to society and the environment, and they want to make purchases from companies that reflect their own moral views.
The business leaders of the company must maintain profit-growing goals while instilling an ethical approach to business within the organization. By establishing a baseline of conduct and showing positivity toward the integral mission, leaders can create a culture of ethics within the company.
This ethical culture within the company cannot remain solely on the top tiers, however. Employees at all levels must be held responsible for their own commitment to the mission of the company. As this culture moves through the ranks, it will impact the behavior of every current and future team member. Any ambiguities must be eliminated with goals and development.
Business leaders within the company should be responsible for finding ways to motivate employees to want to adhere to ethical policies. A good leader will set goals and inspire team members to achieve them. This is achieved by example, guidance, and recognition.
The entire process can be achieved by a trickle-down effect. When the business leaders model ethical behavior and adherence to policies that support the business mission, those on a supervisory level will start to mirror the same behavior. This movement will continue to move downward as those on the tier beneath the supervisors begin to model the behavior and so forth.
It should be stressed at all levels that making ethical choices and making profitable choices are one in the same. Those two are never in competition with each other. Adherence to an ethics policy has been shown to increase productivity which, in turn, will show an increase in profits.
At the End of the Day
When all is said and done, it is important for a company to have an ethical program in place. Failure to do so can lead to severe consequences from the loss of profits to being fined by the government. It can even go so far as to cause members of a company to be charged with crimes and face jail time.
Developing an ethics policy has been narrowed down to two main styles of thinking: compliance and integrity.
While both were proven effective to some degree, they do both have their drawbacks. However, when the two styles mesh into a hybrid ethics program, it can have a more impactful result. Compliance and integrity seem to need each other when it comes to the world of business, and it is most beneficial for companies when they use a blend of the two.
Business leaders will need to forge the path when it comes to ethics by working with integrity and complying to the moral guidelines developed in the mission plan. The adherence to this blended ethics program will then trickle down to the rest of the employees creating a new culture within the organization.
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About the Author
Ethics and compliance leader providing tools, education, and advisory services for global companies to inspire principled performance. LRN’s overall approach recognizes the inherent limitations of rules and regulations in influencing behaviors. In our view, focusing on actions that help build and maintain a values-based culture will mean more compliance and reduced costs as a result of tangible and sustainable behavioral change.More Content by LRN Corporation