Wednesday, January 4, 2023

Seven Ways for Corporations to be Ethical

Photo by Riccardo Annandale on Unsplash
I believe in a world where corporations can balance being good with being profitable. It's why I focus on Customer Experience for a living. But it's also undeniable that corporations frequently act to the detriment of customer health and safety.

What does it take for corporations to be ethical? Entire books are written about that, and I'm not going to definitively answer that question here, but I think it's a topic worthy of exploration with some obvious top-level solutions.

Leaders of companies often make customer-hostile decisions in countless ways, from tiny (like difficult return policies) to enormous (that harm people's wellbeing). Some of the largest ways corporations act to hurt people involve producing dangerous products, for example: 
We could make a much lengthier list of examples; in fact, the tobacco industry was so effective at obscuring the health dangers of smoking that today, other industries are said to take a page from their “playbook,” including energy companies, the NFL, alcohol companies, Facebook, vaping companies, and more.

I even see evidence of this same decision-making in today's corporate #COVID19 policies regarding work in offices, conferences, and store policies. It will take months to tabulate the data, but as of Fall 2022, COVID was on track to the third leading cause of death in the US for the third year in a row. We know COVID is mutating, that vaccine immunity is fading, and that COVID can cause longer-term chronic damage. There is no question that the world remains in the grip of an ongoing pandemic (with dangerous new variants rising at present.) So, why is virtually every company willingly permitting and urging risky activities and environments?

The argument seems to be that each employee or customer is informed and can make their own decision about COVID risks. But, if employers knowingly asked people to subject themselves to a chemical that was the third-leading cause of death, we would not consider that acceptable. And yet, corporate leaders are collaborating with employees and customers to continue exposing large numbers of people to a virus that continues to fill hospitals and is harming the economy.

I'm not here to criticize companies; my job is to help them. While the examples above may be greater in scale, are the drivers of these corporate decisions really that different from the self-interested decisions most people make every day?

We know that driving our car or taking a flight harms the environment. We also are aware that failing to wear a mask while in crowds lifts risks for everyone else. Yet, we do these and other things for personal finance, convenience, and social acceptance. So do companies. Upton Sinclair once said, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” We'd all like to believe we'd make better decisions, but if we were executive leaders who find our profitable product harms people, how eager would we be to sacrifice our income, security, reputation, and job to rapidly abandon that product?

Which raises the question in the title of this post: What does it take for corporations to be ethical? There are things companies can do to be better, but in some respects, the answer starts with you (and me and everyone else.) As consumers, we need to hold brands to higher standards and realize every dollar we spend and minute we dedicate is a vote for the brand. (For example, after 13 years on Twitter, I've joined many others who made the personal decision to stop participating on the platform.) And, as voters, we should consider the role of government oversight in regulating the safety of our products (be that the mental health implications of social media, the security of our financial systems, the safety of the cars we drive, the long-term impact of or the energy we produce, or the dangers of products on store shelves.) Some believe in “laissez-faire” corporate policies, but I believe history tells us our economic, financial and public health are greater with the proper level of government oversight and corporate participation.

Within corporations, there are many things we can do to improve ethical, employee- and customer-centric decisions: 
  • Strive for greater transparency, collaboration, and employee empowerment: It helps to improve the transparency of information and how decisions are made. This means allowing people both inside and outside the organization to raise concerns without fear of retaliation. It also means sharing more information, both inside and outside the organization. Reporting, for example, on your DEI initiatives is one way to bring light to your corporate actions and values. It is much harder to make dubious decisions when more people are informed and involved.
  • Commit to improved customer listening: The more you listen to your customers and understand their needs and perceptions, the easier it is to make customer-centric decisions. Too many companies collect and then largely ignore the voice of their customers. Make it a priority to listen and emphasize the needs and expectations of your customers in important decisions.
  • Focus on corporate reputation and long-term success: Short-term focus can kill companies. Decisions made to drive today's revenue and profit at the expense of an organization's reputation or long-term success shortens the lifespan of corporations. Boards and leaders must consider the ways in which leader performance is measured and rewarded to be sure top-level decisions are made with an eye toward the future and not just this year's stock performance.
  • Define and reinforce corporate values: Many organizations have values, but fewer live by them. Make sure your values aren't something locked (and forgotten) in employee handbooks, but are ever-present and repeatedly reinforced expectations to which employees and leaders hold themselves accountable. Promote examples of times when leaders or employees rely on your values to make decisions that might have seemed wrong had only short-term financial concerns been considered.
  • Consider ethical employee recognition and rewards: Too often, virtually all employee performance and rewards are based around short-term financial goals of efficiency, cost savings, and immediate success. You don't encourage ethical behaviors by demanding one thing of employees and then rewarding another. Consider ways to balance your performance appraisals, promotions, and incentive programs so that people are encouraged to make decisions aligned with your values and not just dollars.
  • Model ethical behaviors: There is no substitute for top-down ethics in an organization. Everyone watches and repeats the way leaders behave because they believe that is what is expected, what's accepted, and what gets them promoted. Too many leaders think they lead with words and policies when, in fact, every leader (great and terrible) leads by the example they demonstrate in their daily interactions throughout the organization.
  • Be open about mistakes and missteps. Finally, it's important for ethical organizations to learn, and there's no way to do that if people feel they must hide mistakes or deflect blame. Many leaders talk a good game about embracing failure, but many employees fear that mistakes, if acknowledged, will become a “can tied their tail.” If we allow people to think they must be perfect, or they'll sacrifice their reputations and careers, we encourage dishonesty and self-interest.
As consumers, can demand more of the brands we buy (and don't buy). And as employees and leaders, we can implement the processes that encourage ethical actions and model the behaviors we expect of others. But will we? That's up to you.