New generations are looking for a more balanced purpose for business. They want one that seeks to profit by enhancing societal well-being. At the same time, the range of external stakeholders is increasingly diverse. These people are asking for more social accountability from listed companies. Leading this movement are investors and their demands for ESG accountabilities. This shift suggests that adopting virtues-based business ethics will make companies more sustainable. Plus, it provides executives with engaging new ways of mitigating conduct risk.
Ethics at the Personal Level
Those seeking to build more ethical business cultures must work both through people and systems. Virtue ethics asks each of us to clarify our ethical ambitions. It leverages off our identities as ethical people. It enlists everyone’s commitment to building and safeguarding ethical standards. At the personal level, virtuous conduct involves responding 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-interest vs company interests
- truthfulness vs PR spin
- responsible for company assets but also a risk-taker
- respect for others vs achieving goals
- sustainable business growth vs unsustainable growth
How to Build More Ethical Organisations
At a higher level, the critical steps in building virtues into systems involve:
- Identifying how the existing culture promotes personal gain rather than working together. This focus on personal reward is the systemic cause of conduct risk. Developing plans to dismantle existing cultural barriers.
- Recognising our human needs to feel safe at work. This involves building systems to enable more inclusive and collective orientations to emerge.
- Measuring the existing trust gap between where you are and your trust goal. Then define the path you can use to close the gap.
- Insisting that all leaders develop personal action plans to promote desired virtues. Embed these 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 make people accountable.
Sustainable enterprises depend on virtues similar to those related to individuals flourishing. Such traits include being self-aware, honest, fair, trustworthy, and dependable. These same virtues underpin employee and customer loyalty and build social capital and brand value. Honesty, for example, is a core virtue. It enables positive relationships between staff and businesses. It also facilitates trust between companies and their customers.
Leadership relies on the virtues of trust and integrity. Being a productive team member means being dependable and cooperative. At the manager level, you should expect to see the virtues of fairness and empathy.
A company embarking on a journey to embed virtues will accelerate the building of trust. It will create 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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