Are you creating an ethical culture? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Are you creating an ethical culture?

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in Best-Practices Leadership,Leaders & Managers

When CEO Bob Diamond resigned from his post at Barclays, it sent a message to other bankers: Even the head honcho’s job isn’t safe if the company gets ensnared in an ethics scandal.

Diamond, who left in 2012 over questionable actions among his bank’s traders related to manipulating interest rates, may not have realized a tenet of ethical leadership: It’s not what you’re doing that counts as much as how you’re judged in the court of public opinion.

An ethical culture rarely comes about by accident. Leaders set the tone by reinforcing the importance of integrity at every opportunity.

It’s easy to declare, “We’re an upstanding company.” But it helps to examine what messages cascade down to all levels of your workforce.

Recently, executives at many big banks have behaved unethically. News of their dubious decisions—and rule breaking—fill the financial pages.

Leaders at these banks often claim that they want to run an ethically sound organization. They express disappointment at a few bad apples and insist that such behavior will not continue.

Yet they send mixed messages by the way in which they incentivize employees: dangling promotions to those who earn money quickly and breeding a dog-eat-dog culture.

Instead, enforce a no-tolerance policy for breaches. Rather than fear regulators or outside auditors, communicate to your staff that you will terminate individuals who violate the law, period.

—Adapted from “Cheating business minds,” Shelley DuBois, www.fortune.com.

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