Topics:   Business Ethics,Compliance,Corporate Governance,Leadership

Topics:   Business Ethics,Compliance,Corporate Governance,Leadership

August 29, 2019

Creating and Perpetuating an Ethical Workplace: The Board’s Role

August 29, 2019

What defines a “good place to work”? Employees want to be respected. They want their ideas to be heard. They want clear expectations and goals to meet or exceed. They want to be rewarded for their hard work and dedication. And, perhaps most of all, they want to work for a company they can trust. Providing these workplace components creates happy employees, encourages good work, inspires loyalty, and ultimately leads to long-term success.

The first step to achieving all of the above? Ensuring the company’s culture is centered on good character. Acting ethically—doing right by customers and employees, and being clear and up front about individual and company actions—is the most important building block in developing a positive culture and solid reputation.

Company culture and company success are two sides of the same coin. When employees feel supported, heard, and respected—when a good company culture is lived and transmitted—they’re more likely to come up with creative ideas, to care about solving problems, and to remain motivated. This leads to success with customers, which in turn rewards employees, reinforcing the culture and creating a virtuous, self-sustaining cycle. Culture can truly make or break a company. Pay, benefits, and customers may draw people in, but it is the culture—the very core of a company, what it stands for and how it operates—that will keep employees or turn them away.

So, what role can a board play in promoting company culture? How does a board support the adoption and enactment of ethical behavior?

First, the board must support and contribute to the creation of strong teams. Is the board hiring the right people? How can you be sure? One essential way is to incorporate ethics and behavioral elements into the vetting and selection process of our teams. Be sure to ask the right questions; rather than simply asking what someone has achieved, also ask “how?” What drove their decision-making, and what effects did that have on outcomes? Were there any tradeoffs or compromises made during this process? Growing a business is never easy, but choosing leaders with good character is essential to ensuring that ethical behavior is built into teams’ DNA and the decision framework. It all starts from the top.

Second, the board must set expectations that employees will be offered certain resources that teach and reinforce a culture of ethics to and in employees. Ethics training must be mandatory but also engaging, which will enable employees to understand the importance of ethics and good character and then live it, not just parrot obvious responses. Interactive training, whether it be digital or in person, should facilitate discussion and incorporate real-life scenarios and dilemmas into its program.

An ethical workplace doesn’t stop at training. There must be a visible system in place for team members to escalate concerns. Does the company have an ethics hotline? Who monitors the hotline? Are management and other relevant parties checking to make sure it’s being used? How are they making sure that everyone knows how and when to use it? If it is never used, it may indicate that employees are afraid to escalate issues.

The board should ensure that management  always communicates to employees that they have access to the information they need about policies and procedures. Employees should know what conduct is expected of their role, and also understand how the company’s written code of conduct applies to their work life. Ensure that refresher training is readily available and accessible, that employees are instructed to escalate issues when necessary, and that they understand there is no threat of retaliation if they do so.

The third step is reinforcement. Accountability must be demanded from leadership by the board. Is there a review system in place to make sure top executives continue to follow the code of ethics? How can the board encourage ethical behavior? CACI established a board-level culture committee that is assigned to oversee management’s efforts to foster and institutionalize our culture at all levels of the company.

We also created and institutionalized our own award for ethical behavior to acknowledge and positively reinforce actions that align with our culture of good character. Our ethical culture is made visible in many ways, including through our robust community volunteering program, called “CACI Cares,” and our support of veterans through several nonprofit organizations. I am very proud of CACI’s strong and generous presence in both our nation and our neighborhoods through volunteerism and charitable giving.

Now, renew, repeat, reinforce. To be successful, a culture of good character must be a priority from the top down. Everyone must put in effort to ensure that it exists and persists. Make it a key piece of every single business decision the board makes—where to invest, who to hire, what policies to implement. At CACI, we expect the same ethical behavior from our suppliers and even our customers. Turning away from doing business with unethical organizations might cost the company in the short run, but it has certainly paid off for us over time.

Finally, it is the board’s duty to ensure that leadership and others in charge of decision-making not only understand but embrace the culture. It won’t always be easy, but the board decides who remains in positions of power—and who doesn’t. Acting ethically establishes trust, both with employees and with customers. And if you show customers that your company can be trusted, they will continue to give you their business. Creating an environment where individual and organizational character is the expectation, not the exception, will ensure long-term success.

Michael A. Daniels is a director of CACI International. He also serves on the boards of the Northern Virginia Technology Council, Two Six Labs, Mercury Systems, and Blackberry.