Take It From the Top: How Leaders Foster an Ethical Culture (or Not)

Usually, an organization’s ethics are only as good as its leaders’. To create an organizational culture that promotes ethical conduct and personal responsibility, leaders need to serve as role models for others.

As part of its commitment to the people and communities associations serve, ASAE has developed standards of ethical conduct based on six core principles for its members to adhere and aspire to. Among the principles are these two:

  • Foster an ethical culture through one’s work.
  • Take responsibility for one’s conduct.

Many people naturally think of ethics first as guiding individual behavior, and of course it does. But ethics applies to organizations as well, and in order to foster an ethical culture—one in which individuals take responsibility for their own behavior—it’s important to understand what organizational ethics is.

Organizational ethics refers to the responsibility of an organization to conduct its business in an honest, respectable, and appropriate manner. An organization’s ethical climate is important because it can improve employee morale, enrich organizational commitment, and foster an involved and retained workforce.

Organizational ethics are primarily driven not by policies and procedures but by the actions of its leaders. Good leaders model the ethics they’d like to see reflected throughout the organization. If staff members see a leader being less than truthful and honest in business dealings, then they may believe that they can conduct themselves in the same way.

If staff members see a leader being less than truthful and honest in business dealings, then they may believe that they can conduct themselves in the same way.

What can leaders do to produce a positive ethical culture in an organization and encourage staff to be responsible for their conduct? A 2010 article published in The CPA Journal—“How to Instill a Strong Ethical Culture” [subscription required] by Shele Bannon, Kelly Ford, and Linda Meltzer—offers some advice inspired by the National Business Ethics Survey, conducted every two years since 1994 to measure how employees feel about ethics within their organizations.

The authors make several recommendations:

  • An organization’s board of directors and management must comply with the organization’s rules. Creating clear boundaries for risks and ethical business standards provides a framework for employees to make the right decisions.
  • Character evaluation should be a part of hiring, retention, and promotion practices. Employees need to understand what the organization values from the start, and this should be embedded into the performance evaluation and reward system.
  • Leaders should convey, through their actions, that the organization’s reputation and long-term success are more important than short-term gains.
  • Leaders should regularly examine complaints by employees and other stakeholders to determine whether the organization’s operations are in alignment with its values.
  • Leaders can establish trust through transparency and accountability. They should provide open access to information about strategies and performance, keep their promises and commitments, be open about decision making, accept responsibility for wrongdoing, and reward behavior that supports transparency and truthfulness.

In short, they must lead by example, provide a safe mechanism for reporting violations, and reward integrity.

Training can also help instill an ethical culture, Bannon and her coauthors note. It should begin during employee orientation to demonstrate the organization’s commitment to ethical conduct. Later, surveying employees provides insight into how the ethical culture is perceived. Finally, training programs should be monitored and updated frequently to incorporate changes in society’s values. Training can also help staff members understand the importance of accepting responsibility for their conduct.

In this segment of the ASAE ethics video series, Robert Uttenweiler of the ASAE Ethics Committee and Michael Butera, executive director of the National Association for Music Education, discuss the impact leaders make on the ethical culture of their organization:

Now I invite you to share your thoughts in the comments below or in the ASAE Collaborate community (member login required). What is your organization doing to foster and sustain an ethical culture? What does it mean for the leaders and staff of your organization to take responsibility for their conduct? Please join the conversation.

(illustration by Ernie Smith; icon by Erin Gillaspy/The Noun Project)

Lori Porter, MBA, IOM, CAE

By Lori Porter, MBA, IOM, CAE

Lori Porter, MBA, IOM, CAE, is a nonprofit and association management professional with experience in leading efforts related to volunteer management, education, professional development, certification, and accreditation.  She is currently working to complete an Ed.D. in organizational leadership. MORE

Got an article tip for us? Contact us and let us know!