by Benny Buller*
In recent years, increasing numbers of consumers and employees have been calling on businesses to lead in new, more ethical ways, but organisations still have a lot of work to do on this front.
In the US, 21% of workers report that their business has a strong ethical culture, according to the 2021 Global Business Ethics Survey. Of those employees who have witnessed misconduct, 86% have reported it, up from 69% in 2017. The number who felt pressured not to report ethical violations more than doubled to 30% over this time period, however, and the number who said they experienced retaliation for reporting nearly doubled to 79%.
Global figures are similar. While likelihood to report violations is up (81%), more employees also say they have felt pressure to compromise their standards (29%). Among those who report violations, 61% say they have experienced retaliation, the highest levels since 2015.
Ethical practices aren’t just a nice idea; they can make businesses more successful. By empowering workers to speak up when they see problems, businesses ensure that they are pulling through for all stakeholders, including customers, shareholders, employees and communities. As the World Economic Forum’s Global Future Council on Transparency and Anti-Corruption notes, there are strong business and moral cases for ethics and integrity beyond compliance.
I’ve found that when ethical problems arise, it is usually because people are trying to achieve important goals but lose their way. This is why it is so important for work cultures to operate with radical transparency. The more employees know about what is going on and know that they are free to bring up any issues that concern them, the more ethical pitfalls are avoided.
There are concrete steps businesses can take to help instil this kind of transparency. The results can be powerful.
The new transparent, equitable office design
At Velo3D, our 150 employees do not sit with their teams. They are sprinkled out. This helps prevent silos and allows people to learn much more about what’s going on in other departments. When two people from the same unit want to discuss something, they usually do so within earshot of people from other units, who are encouraged to speak up if they hear something that could present a problem.
Everyone also has the same type of workstation. We have no fancy corner offices for executives. Everyone is equally approachable. Everyone’s calendar is also open so all employees can see what meetings are taking place, who will attend, what the agenda is, and any material sent out for it.
Structured social experiences
Our employees also cannot eat at their desks. We provide lunch, and they can only eat it in social spaces, including what we call our "beer garden". On Fridays after work, we provide beer there. During meals and the weekly happy hour, employees naturally strike up conversations, share what they’re up to and give each other feedback.
Concerns not just welcome, but expected
Once the pandemic began, I started holding group video meetings every few days with between five and seven employees. They chat with me and with each other, striking up deeper relationships and learning about what each is up to.
Business leaders often say they have an “open door policy" but research shows that it’s up to leaders to actively encourage people to bring up problems. In a case study of a US utility company conducted by the Society for Human Resource Management, the organisation discovered its employees "perceived that managers were discouraging open communication and punishing nonconformity". To tackle this issue, the power company undertook multiple initiatives, including training led by line managers, to instil new practices.
I take a proactive approach. In meetings with me, employees may discuss things that are going well, but they must come prepared to discuss any concerns they have. I take every concern seriously and take action on it. I also insist that they never worry about "stepping on someone else’s toes". Employees can and should mention anything, even if it does not involve their department. When I speak with managers, I also ask them about concerns and problems their employees have brought to them and what steps they’ve taken in response.
Empower ethical board oversight
This same ethos is reflected in my reports to our board. There are no rosy presentations – I discuss successes and setbacks.
My staff also have direct access to the board. In fact, I make sure that each board member has regular one-on-ones with the executives whose challenges they would be able to understand best. One of my executive staff members once asked me: "What should we not tell the board?" My response: "Not tell? Tell them everything! Especially anything you’re worried about."
A recent study from LRN, a US company that advises on ethics, regulatory compliance, and corporate culture, shows that when boards actively push ethical leadership, "those expectations cascade through the organisation and translate into action". For example, it discussed how the WeWork board was "widely discredited for not proactively or adequately questioning its business model or outlandish corporate vision".
On the flipside, LRN says that Uber’s board "took swift and comprehensive action in prompting independent investigations into the sexual harassment claims that eventually led to the ousting of founder Travis Kalanick and initiated a new era of leadership and cultural transformation at the firm".
The world has seen the disasters that can occur when a "culture of secrecy" plagues organisations. Avoiding this takes more than just statements in support of transparency, it requires concrete work. When businesses do this work, they build the kinds of organisations that people across the world want to join.
*Founder and CEO, Velo3D, Inc.
**first published in: www.weforum.org