Question

As a strategic leader, what actions could you take to establish and emphasize ethical practices in your firm?

Answer 1

Ethical practices should be institutionalized within the organization by being an integral part of the organizational culture. Sustaining an effective organizational culture is one of the key leadership actions and one aspect of an effective culture is that it promotes ethical behavior in the organization. Strategic leaders also develop explicit codes of conduct and provide ethics training to disseminate those codes. Examples of specific actions taken by strategic leaders to develop an ethical organizational culture include:

(1) establishing and communicating specific goals to describe the firm's ethical standards (e.g., developing and disseminating a code of conduct),

(2) continuously revising and updating the code of conduct, based on inputs from people throughout the firm and from other stakeholders (e.g., customers and suppliers),

(3) disseminating the code of conduct to all stakeholders to inform them of the firm's ethical standards and practices,

(4) developing and implementing methods and procedures to use in achieving the firm's ethical standards (e.g., use of internal auditing practices that are consistent with the standards),

(5) creating and using explicit reward systems that recognize acts of courage (e.g., rewarding those who use proper channels and procedures to report observed wrongdoing), and

(6) creating a work environment in which all people are treated with dignity.