Dear HR Executive:
We got a huge response to the ethics survey in the last post. Nearly 400 of you shared your feelings about how ethical you believed the leaders of your company to be. The results are revealing. Here they are:
Q. If the leaders of YOUR company were in a position similar to the cement company described in the scenario, what do you believe they would do? IMPORTANT: Don't answer what they SHOULD do. Answer what they WOULD do, based on what you know about them. Your response is completely anonymous. (n=393)
- Throw the batch away - which would be murder on cash flow and require layoffs - 18.8%
- Tell customers the cement is substandard and sell it at a lower price -- which would also hurt cash flow and harm the brand - 62.7%
- Sell the cement and not say anything - 18.5%
Talk about a perfect bell curve. The percentage of HR execs who believed their leaders would take the highest of the high roads (throw the cement away) is almost identical to the percentage that would take the lowest of the low roads (say nothing).
So what's this mean?
I think it shows most companies are pretty ethical. Correction: It shows that most HR executives PERCEIVE their leaders to be ethical. That's a key distinction because one of HR's key roles should be to make sure that employees have faith in company leadership. I often cite a Hay Group survey about employee retention showing that the #2 reason people leave their companies is that they lost faith in leadership. I'm also fond of citing the famous Kouznes and Posner survey in their best-seller "The Leadership Challenge," which showed that the #1 quality employees seek in a leader is "honesty."
The research confirms what we know (but often forget) -- that good people simply don't want to work for a company whose leaders are perceived as unethical. If employees see leaders stretching the truth with customers, cooking the books, abusing vendors, and so on, they start thinking, "If they treat everyone else like that, there's a pretty good chance they're going to screw me over, too."
Ethics is a squishy topic. Advocates of ethical behavior -- e.g., "throw away the cement" -- will not always score points in the short term. But long term, it's in all our companies' self-interest to promote ethical behavior. And HR is ideally positioned to do it.
FYI, B21 conducted audio conference on "Ethics and HR" on June 5 that is now available on CD-ROM. I've never seen a conference on this topic (probably because it's so squishy), but it's important, and I thought I'd roll the dice. Check it out.
Also, see the comments below. I've cherry-picked some of the most interesting explanations you gave for your survey responses.
PS: By the way, in the Hay study, the #1 reason people leave companies is that they don't feel they're using their skills and abilities.
See comments below made by survey respondents answering the question, "Why did you respond as you did?"
Tell the customer and lower price - 62.7%
(I've only included two here because most answers were similar)
- We have extremely high standards at our organization. Integrity and client satisfaction remain top priority. We would try to make cuts in other areas to make up for the revenue loss. But the greater goal would be to continue our relationship with existing clients for long term growth.
- Company integrity and reputation are just as valuable as cash flow.
Not say anything - 18.5%
(I included a lot of these because they're the most interesting.)
- Cash flow, cash flow, cash flow
- Because I know how my "leaders" think. They are only interested in the $$.
- Because they have become very back stabbing and money hungry with this economy.
- It is the path of least resistance and if and when anything happens (it is above industry standards already) then you make good on it and say you're sorry.Unfortunately the bottom line is what controls business and not necessarily the right thing to do.
- So long as the quality exceeded the competition, the company would take a calculated risk to ensure future operations are not hindered. Cash is king... employees are gold and it is the company's duty to protect both and take every effort to thrive.
- If they (company leaders) thought they could get away with it, they would take the out that wouldn't hurt the bottom line. I disagree, I would pick tell the customer but unfortunately I think our leadership would not say anything.
- Because I feel that the leaders of the company would withhold the information from the client base and sell the product as is hoping that nothing would be discovered and no harm would be done.
- I answered the question this way for the following reasons: 1. The cement was above what the codes mandate 2. The company and its employees would suffer in the other two scenarios 3. I've answered the question honestly as to what our company leaders would do in this instance.
- As a business - the main goal is to make money and to be successful in the industry - I doubt that they would consider what they did as wrong because it is still above the legal standards.
- I have been party to other unethical and illegal things they have done.
- I think my company would rationalize that even though the batch is below our standards, it is above normal requirements.
Throw it away - 18.8%
- The partners in our business are ethical individuals and one in particular is so adamant that we do the right thing that there is no way any other decision could be made. He is the kind of person that will give our accountant a $2 receipt so the accountant can calculate and send the appropriate sales tax in to the state (we are very close to Oregon where there is no sales tax). This behavior is sometimes irritating BUT at the end of the day I know that I work for a group that will strive to be honest in every way they can. There is something really wonderful and rare about that.Because we have faced similar issues and this is what we did.
- Integrity is at stake here for now and for future business. Customers appreciate honesty and knowing they're dealing with a reputable company.
- Can always recoup funds, rehire employees, but cannot restore damaged reputation.