Invest in Culture to Reach Gold Standard of Ethical Governance

Ethics Center Sep 11, 2017

Invest in Culture to Reach Gold Standard of Ethical Governance

Katie Lawler is Senior Vice President, Global Chief Ethics Officer at U.S. Bank. In the following interview, Lawler spoke about why small businesses should focus on building a sustainable ethical culture as a competitive advantage. 

When it comes to ethics—what do you see as the gold standard? Can it ever be achieved? 

Lawler: I think that the gold standard is having a strong values-based culture in which employees and leaders understand what is expected of them. They understand the company’s values and how important it is to live by those values. In my opinion, what it doesn’t mean is being perfect. I don’t think being perfect is achievable. Companies are made up of human beings, and they act through people. People are fallible, they make mistakes. 

You will always have employees who will make ethical mistakes, either innocently or willfully, and to me, the gold standard is how companies respond to and handle these issues where they take ownership and accountability and they make it right. In a nutshell, it’s about striving for perfection and making it right when you miss. 

People often ask me if you can teach someone to be ethical. If you have a strong culture and clear expectations, the vast majority of people will do the right thing. If you subscribe to the 10-10-80 Rule, which says that 10 percent of employees will never steal, 10 percent will always steal, and 80 percent may steal depending on the situation—generally speaking it’s about being able to help that 80 percent make the right decision, follow our social norms and help them to understand our culture. You do that by fostering an environment that makes it easy for employees to do the right thing. 

What’s the value of an ethical culture to a small business? Is it even necessary for small companies? What does it mean for leadership? 

Lawler: An ethical culture is imperative and the value is the same for a business of any size, because in today’s marketplace, you have the opportunity for instantaneous customer feedback—social media can take things and get them out to a broad audience almost instantly. Having an ethical culture where people strive to do the right thing, and building trust with customers, employees and communities, is a competitive advantage. And in this case, the

size of a company doesn’t matter. Your reputation is your calling card—it takes a long time for it to be built, and can be lost almost instantaneously. I strongly believe having a strong ethical culture is no less important if you are a small or large business. 

Small businesses starting up are relationship-oriented, and that relationship requires a level of trust. For example, when you are looking at personal interactions, especially as you are growing your business and trying to figure out how you are going to grow your customer base, there’s a lot of engagement happening to build those relationships to get the word out. The personal relationships are really important and you have the opportunity to establish trust. When you are dealing with a large company—a behemoth— it sometimes does not feel as personal, and in some ways, this is an opportunity for small businesses to build and leverage trust. 

How can small businesses use technology/software to foster a robust ethical culture? 

Lawler: With one exception, I don’t think small businesses should feel an obligation to invest in software technologies to foster their culture. Small businesses, however, should have some way for employees to confidentially raise concerns, such as having a voicemail box that doesn’t have caller ID or a third party manage your hotline. Large companies invest in fancy tech platforms, but in many cases especially at a smaller company it can be as simple as how you talk to your employees through written communications, an all-employee newsletter with thought-provoking questions, or a memo from the CEO talking about organizational justice. Storytelling and sharing narratives are powerful and you don’t need a lot of technology to do that. Simple can be effective. 

In essence, it’s how you communicate what your values are, expectations and really set those social norms to help people know how to behave. 

How does U.S. Bank measure the success of ethics in its business practices? 

Lawler: There are a number of ways we measure success. We measure our reputation with all of our stakeholders, we want to know what they think of us, and we measure employee sentiments. We want to know how employees feel about us in a variety of ways. We looked at a series of measures—and some of it culminated in the World’s Most Ethical Companies® recognition. Do we have a culture where our employees know what to do? How to do it? And live by our values? 

That’s ultimately what we are pushing for with success. 

Can you walk us through some practices that you’ve found to work when trying to keep employees engaged and aware of the company’s ethical principles? 

Lawler: Going back to storytelling, we try to have regular communication points with our employees. We try to make our training program scenario-based, where we cover topics that are relevant to employees. For example, every month we put out a Q&A for employees to read, and think about how an ethical dilemma would affect him or her at work—around the holidays, we focus on gifts and entertainment policies, in summer it is the dress code. Other topics include behavior in the workplace, sensitive subjects such as elections. We tell real stories that have happened and we focus on the positive and negative where someone spoke up in a constructive way, and that would be a focus for us going forward— encouraging people to speak up to help the company achieve better results. Keeping employees engaged is really about cadence and not only talking about Ethics Week once a year, but making it a year-long conversation. 

Most small businesses look up to larger companies to set an example in this space. As the Global Chief Ethics Officer, how do you keep employees on the same page with ethics? After all, ethics can hold different meanings. 

Lawler: This is something we are working on right now as we move from country-specific to a global approach. You have to be culturally relevant. In Europe, for example, you have a great deal of distrust in certain countries related to ethics hotlines because of events that occurred in their history. So you have to make sure that activities are culturally relevant, understand what the norms are and create initiatives that align and can drive better employee understanding. You have to help your employees understand that they are part of a global organization, but your messaging should be country/ culture specific. 

Small businesses should use risk assessments to help tailor their activities to their areas of highest risk. Thinking through the nature of their operation and their business-specific risks, there are several questions you can ask to identify your largest risk areas: What does my business do, where I do it, who are my suppliers and who are my customers? For example, a retailer may be focused primarily on the risk of employee theft, while a manufacturer may be more concerned about integrity in their supply chain. A company that only does business in the U.S. faces different risks than companies that do business in certain parts of the world. And companies that do business with the government have additional risks to address. 

Do you have any programs/ethics initiatives that you are specifically proud about at U.S. Bank? 

Lawler: The bank had the foresight to establish a dedicated Ethics Office. This is 100% our job—to think about how we should continuously champion ethics. Not regulatory compliance and how we comply with the banking regulations, but instead, how we conduct our business, and how we engage our employees to live out our core values. One way we have engaged our employees to provide us with feedback is through our annual engagement survey, where we get feedback on elements of our culture and reputation. We have 88 percent of our employees that respond to this survey, which is an unheard-of number in some industries—the fact that our employees are so committed to providing their feedback speaks a lot about our program. And part of that is because we have done a good job at sharing the feedback gathered with them and taking action based on the survey responses. We value their opinions and it helps

make our initiatives and the business better.

View the full Ethisphere e-magazine in pdf format.  

Call Outs 

  • “If you subscribe to the 10-10-80 Rule, which says that 10 percent of employees will never steal, 10 percent will always steal, and 80 percent may steal depending on the situation—generally speaking it’s about being able to help that 80 percent make the right decision, follow our social norms and help them to understand our culture.”

  •  “Storytelling and sharing narratives are powerful and you don’t need a lot of technology to do that. Simple can be effective.” 

  • Tailoring Your Risk Assessment: (1) What does my business do?; (2) Where do I do it?; (3) Who are my suppliers?; (4) Who are my customers?