New generations are looking for a more balanced purpose for business – one that seeks to profit by enhancing societal wellbeing. At the same time, an increasingly diverse range of external stakeholders are asking for more social accountability from listed companies, led out by institutional investors and their demands for ESG accountabilities. This movement suggests that adopting virtues-based business ethics will provide executives with engaging new ways of enhancing the sustainability of their enterprises and mitigate against conduct risk.
Those seeking to build more ethical business cultures must work through both individuals and organisational systems. Virtue ethics asks each of us to clarify our ethical ambitions. It leverages off our identities as ethical people and enlists everyone’s commitment to building and safeguarding ethical standards. At the personal level, virtuous conduct involves ‘finding a way’ to respond to what might seem competing interests, such as:
- an ethical orientation vs pragmatism
- shareholder vs customer interests
- balancing short and long-term goals
- duty of care vs target or goal setting
- fairness vs opportunistic or exploitative practices
- self-interests vs organisational interests
- truthfulness vs PR spin
- being responsible for company assets but also a risk-taker
- being respectful of others vs achieving goals
- sustainable business growth vs unsustainable growth
At the organisational level key steps in building virtues into systems involve:
- Identifying how the existing culture promotes individualism rather than collaboration – the systemic cause of conduct risk. Developing plans to dismantle existing cultural barriers.
- Recognising our human needs to feel safe at work by building systems to, enable more inclusive and collaborative orientations to emerge.
- Measuring the existing trust gap between where you are and your trust goal and the virtuous path to close the gap.
- Insisting that all leaders develop personal action plans to promote desired virtues and embed in day-to-day actions.
- Use regular ethical culture reviews to learn what’s not working; track progress, provide feedback and feed into personal performance appraisals to embed accountability.
Sustainable enterprises depend on virtues similar to those identified with personal flourishing including self-awareness, honesty, fairness, trustworthiness and dependability. These same virtues that underpin employee and customer loyalties and build social capital and brand value. Honesty, for example, is a core virtue that enables positive relationships between individuals and organisations and between them and their customers. Leadership relies on the virtues of trust, accountability and integrity; being a productive team member depends on the virtues of cooperation and dependability and, at the managerial level, on virtues of fairness and empathy.
Embarking on an organisational journey to embed virtues will act as an accelerator for building trust and a shared language in which a renewed culture based on personal behaviour change can emerge. This strategy leverages our identities as ethical people and responds to our need to be our best selves.
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