LEADERSHIP

Ethics dissemination - response from Skip Vaccarello

Skip is an excellent leader, entrepreneur, friend and mentor. He is involved in the following organizations

www.brereton.net

www.searchofsiliconvalley.com

www.svpb.net

Ethics starts at the top of an organization.  Standards and values need to be articulated by the CEO and his/her management team.  And they must personally be lived out.  Any hint of hypocrisy on the part of the CEO and any unethical deeds of top management left unpunished serve to destroy whatever values were articulated.  In Collins’ book Built to Last, he identified a number of common factors among those firms which had sustained success.  One of those factors was a set of values that were not just identified, but constantly reinforced.  Interestingly, Collins says that the actual values are not important.  What is important is that those values became part of the fabric of the organization.

All forms of corporate communications (Web, annual reports, management meetings) are opportunities to communicate values.  A way to see if a company is living out its values is to see how it makes important decisions.  Is the decision put through the filter of the company’s values?  Another way to see how closely a company is adhering to its values is how it deals with a crisis (e.g., slow down in business, loss of a major contract, an ethical breach, a product recall, etc.)  Problems happen.  How the company deals with it is the true test of its values.

So the first step in making sure middle managers act ethically (i.e., adhere to the company values) is that top management articulates and lives out those values themselves.  Second, values and ethics must become part of the hiring criteria.  They should a screen through hiring decisions are made.  Third, top management must hold middle managers accountable for enforcing those vales.  They become part of performance reviews, decisions, and the actions middle managers take when their subordinates violate a corporate value.  Middle managers will “get it” when top management and their peers live out those values day to day.  Only then, will it become part of the corporate culture.

I have personally identified the following ethical principles in presentations on ethics I have done:

1. Ethics starts at the top
2. Ethical Companies care about relationships – encouragement, forgiveness, and servant-leadership
3. Integrity is the chief value in ethical organizations.
4. Ethical companies foster “open” communications
5. Ethics are an essential ingredient in every important decision.
6. Ethical companies and ethical people are guided by core values.

Here are some practical considerations:

n       Value ethics and integrity

n       Practice servant-leadership

n       Even if you are not the owner, act like the owner

n       Encourage open communication

n       Assume everyone knows everyone else’s salary

n       Assume every vendor knows the terms of every other vendor

n       Truly care about people and relationships

n       Help your employees lead balanced lives

n       Strive for win-win negotiations

n       Don’t be afraid to walk away from a deal you don’t feel “right” about

n       Keep your promises

n       Make integrity your highest value

n       Never lie and do not tolerate lying

n       Never exaggerate claims

n       Make sure your products do what you say they will do

n       Promote accountability

n       Join a small group to help keep you accountable

n       Expect excellence, but be willing to forgive

n       Codify ethics in your organization

n       Encourage community volunteer involvement

Right people on the bus

I have been teaching a strategy course and I used the book Good to Great by Jim Collins. It is an excellent book to know how to transform a good company into a great company.

One key lesson in the book is to get the right people on the bus, get the wrong people off the bus and put the right people in the right place in the bus.

One way to find out who the wrong people are: If  you have to actively manage the people they are the wrong people.

Disseminating ethical culture - response from David Bookout

David Bookout is a  good friend and advisor to me.  You can know more about him at www.Effetti.us 

Having co-founded a company that grew from 3 to 600 + employees in five years, I can fully appreciate your questions, and at the same time say that there are many facets that need to be aligned, or re-aligned within the enterprise.

Perhaps, first, are all the strategic / tactical layers within the enterprise. In my practice I try to avoid hierarchical referrences, as it can imply that some things are more important than others, which I don't think is the case. But, in working with your example of "top", "middle", etc., within the structure, each strategic level needs to "link to" and support the tactics above it in the structure. While additionally being client / revenue focused the strategies and tactics need to be fairly macro and small in number. This makes it easier for people to make the right choices, and remember why they are making them.

Next, all compensation needs to be designed to reward people for fulfilling committments that support the strategies and tactics. Too often, companies have new goals, but are structurally constrained in achieving those goals by old habits and practices. For example, as companies grow by acquisition, great cross selling strategies can never be effective if the team isn't compensated and incentivised for the cross sale. This isn't just in sales, in general people need to be able to win.

Third, being a long time fan of linquistics and language, the organization needs to spend some time defining it's own difference between "ethics" and "morals". There are many ways to think about these two words. One way, that I have found both powerful, and effective is to hold ethics as a set of mutually agreed upon standards, and morals as an individual's assessment of a specific action.

American Heritage:

Ethical - 2. The rules or standards governing the conduct of the members of a profession.

Moral - Of or concerned with the judgement of the goodness or badness of human action and character.

Such group definition of standards brings what is expected into the open.

Fourth, the enterprise needs leaders everywhere that understand the standards, observe behavior and teach effective action that is consistent with those standards. Of course compensation design here is another key factor.

Finally, honest, open communication is essential, but difficult even if the already mentioned pieces are in place. Culturally, particularly here in the valley, we can have a tendancy to move too fast, not "really" hear what people are saying, and not "really" being able to understand where they are coming from. To foster ethics in an organization, people need to feel that they can descent and still be heard. That their perspectives are valued and included, while at the same time understanding that they are not entitled. It is a continual process of; ideation, design, implementation, observation and refinement.

Ethics Question

How does an organization create and maintain an ethical culture overcoming the communication obstacles that exist? How must we engage middle management, especially in large companies? How are they empowered and held responsible for "tone at the middle" consistent with "tone at the top", given they believe (and usually are) divorced from both the real decision-making and heirarchical power, and the action and results where the "rubber meets the road"? These middle managers have the bulk of the direct reports in corporate organizations and professional partnerships. Therefore, they are a major influence on their reportee's understanding of and belief in ethical conduct.

Please give your comments here or email me at cyril@mindbrook.com

Good Attitude will help you scale altitudes

I was watching the US open finals yesterday and it was an excellent match. Federer maintained a calm attitude even when he was in a position to lose set 1 and set 2.  He overcame with his attitude and won the 1st 2 sets in tiebreak.

He was attacking and serving aggressively even when he almost lost set 1. The key lesson is we need to keep the pursuit of vision with a good attitude even when things seem not to be moving in the right direction and you will win.