by Robert Chesnut – Harvard Business Review
July 2020
For decades, leaders were expected to focus on one thing: financial results. But we are now in the midst of an ethical revolution. Leaders are increasingly held accountable for poor behavior, and companies are pushed by employees, governments, and customers to step up and adopt a multi- stakeholder approach that serves social purposes as well as investor demands.
Canned codes of ethics that ask employees to check a box to certify that they’ve read the material and third-party online ethics training courses might be all that is required to comply with the law, but they don’t move the needle. Employees see them mostly as a nuisance they have to suffer through.
Business leaders need to do more. I’ve spent more than 30 years as an attorney studying workplace issues, as the head of Trust and Safety at eBay, and as general counsel at companies including Chegg and Airbnb. I’ve seen too many workplaces in which it seemed that legal and HR were just reacting to one problem after the next. Over the years I’ve developed the following six practices to help leaders be proactive, inspire their workforces, and stay ahead of the ethical revolution.
Lead by example.
Leadership must openly and directly embrace integrity. The CEO and others on the leadership team are powerful role models who set the company’s ethical tone. If they cut corners, don’t follow the rules, or ignore bad behavior by top performers, it gives everyone implicit permission to act the same way. Leaders must openly and directly talk about integrity, embrace it as part of the culture, and be ready to do the “right thing,” even if it appears to hurt business in the short run.
In a crisis, fear runs high, and everything a leader does is amplified. An “integrity moment” can happen anytime, and a leader has to be committed to the right principles or risk losing a team’s trust forever. Take CEO Kevin Kelly, of Emerald Packaging. During a meeting in the early days of the pandemic, an employee asked, “What if I’m the only one who can operate a particular machine, and it goes down?” In that moment, Kevin’s leadership was on the line, and he handled it perfectly. “Stay home,” he said, and asked the employee to repeat his words. Everyone laughed, but everyone got the message — he cared for employee health above immediate business needs.
CEOs have to be particularly careful about setting ambitious targets and using powerful language to motivate employees. Audacious goals can create fear (what happens if I don’t deliver?), and they may be interpreted as giving implicit permission for bad behavior. Unrealistic goals played a key role in the infamous Volkswagen emissions scandal, for example. More recently, a scandal erupted when six eBay employees were criminally charged after allegedly engaging in an aggressive cyberstalking campaign against critics of the company. According to an affidavit released by prosecutors, an eBay executive had told the team to deal with the critics by doing “Whatever. It. Takes.”
Make your ethics code your own.
Too many companies treat their code as a legal box to check. They download another company’s code and put their logo at the top. Or they delegate the task to lawyers, who understandably draft a document designed to protect the company from liability. Don’t depend on something that someone else drafts — you can’t outsource integrity.
Your code of ethics should reflect input from a broad cross section of employees and be based on your company’s core values along with the norms of your particular industry, geographic location, and culture. You don’t want to get bogged down with too many rules, but there are usually a dozen or so issues that come up over and over. Clear guidance on how to handle them is important so that individuals aren’t making up their own code as they go.
We built the Airbnb code of ethics with input from employees around the world and on diverse teams including finance, marketing, data, and customer experience. Titled “Integrity Belongs Here,” it is based on our core value of promoting human belonging through travel. It discusses issues such as whether it’s appropriate to accept gifts from third-party vendors or grateful hosts. We also review conflicts of interests around side gigs, because our employees are often approached about consulting and board work.
Talk about it.
It’s not enough to simply go about your business and assume integrity will naturally occur. Leaders must talk openly, explicitly, and regularly about its importance. Orientation is a good place to start. Make a point of having your CEO or another top leader come into each orientation class and spend an hour personally talking with new employees about company values and ethics, using real examples from their career. This sort of authentic live discussion from a leader sets a tone and can make a lasting impression.
I give the orientation talk at Airbnb each week. It’s a 75-minute interactive session in which I go over specific ethical scenarios that employees have faced. The feedback I get is overwhelmingly positive. We talk frankly about challenging issues, such as how much alcohol you should serve — and drink — at a work-related function. We also talk about dating a colleague and planning team offsites in such a way that everyone will feel comfortable. Earlier this year, a woman sent me a note telling me that she left her previous job because her male manager kept propositioning her. She was afraid to report it, so she joined Airbnb. “If I had heard this message from a leader at my last company, I would have reported it,” she wrote me after her orientation session. “I’m happy to be at a company now that really cares about this.”
Make sure people know how to report violations.
Too many companies bury their reporting system in a link deep in the company intranet and don’t talk openly about how the investigation process works. That silence breeds suspicion, distrust, and an environment in which employees aren’t comfortable using the process. Companies that want a culture of integrity must make the process of reporting all problems, especially violations of the code, easy, straightforward, and clear. You need to create a culture that isn’t afraid to have people raise ethical questions, that welcomes bad news, and that celebrates employees who speak out about problems. I once had an IT security person walk up to me in the office and point out that I had left my computer on and unattended at my workstation for five minutes while I went to the restroom. Rather than getting annoyed, I gave him an award for having the courage to call out a senior leader (me) for a lax security practice. A year later, he still cites that recognition as the highlight of his career at the company.
I hear leaders of some companies proudly say that their employee ethics hotline has few or no reports. That could be a sign of a problem. Try this: Pull random employees into a room and ask them to show you how to file an ethics report. Time how long it takes them to get to the right place. Or do a quick anonymous survey and ask how comfortable employees are reporting violations and whether they feel the company walks the talk when it comes to ethics. Explore new tools. For example, Vault Platform, in the UK, designed a mobile phone app that allows employees to securely and confidentially submit incidents of misconduct that they have experienced or witnessed. It includes a unique feature whereby an employee who is reluctant to speak up alone can submit a report only if another employee independently submits a complaint against the same person.
Demonstrate the consequences.
Ethical violations must be investigated, and when they are substantiated, fair and reasonable consequences must be handed out. Leaders and top performers cannot enjoy immunity. Even in companies with a robust reporting and investigations protocol, employees may be skeptical that reports will be acted upon and may cynically assume that nothing ever happens. That sort of culture erodes trust and discourages everyone from reporting issues.
One way to fight this problem is to build transparency into the process. Companies such as Airbnb and Cisco talk to employees about what happens when a claim is filed, and they issue regular “transparency reports” that, while respecting privacy, give employees data on the number of reports, types of complaints, how many are investigated and substantiated, and the range of consequences. Providing windows of transparency into a good process can build trust.
Remember that repetition matters.
Integrity can’t be handled by a once-a-year email or a couple of pages in a forgotten employee handbook. As former NBA Commissioner David Stern told me, it’s like a television advertisement — you can’t run it once and expect to get your point across. Repetition matters.
Be creative; don’t rely on canned, outsourced videos to make a difference. Challenge someone on your team to make funny videos about ethical scenarios, and get leaders to participate. At Airbnb, we created short (three- to five-minute) iPhone videos exploring scenarios such as a recruiter asking unethical interview questions, a team planning a wild holiday party, and an employee stealing bags of coffee to fuel a side business. Watching them is voluntary, but they are entertaining enough that a third to half of employees view them each month, and leaders and managers often suggest topics and ask to appear in them. If videos aren’t your style, try something that fits your culture. Make an “integrity minute” part of each company meeting, or (as we did at Chegg) hold a game-show-style test in which leaders have to answer tough questions about your code of ethics. Or create an “Ethics Ambassador” program like the ones at L’Oreal and Airbnb, in which volunteers from across the company are given special training and provide ethics advice to other employees.
Make a point of adding ethics as a dimension of your business decisions. In addition to asking “What does it cost?” and “What’s our profit margin?” ask about the impact of a product’s supply chain on the world, or how the product affects employee health or climate change. The key is to create an environment in which it’s seen as good to talk about ethics, a program designed to create an integrity environment through repetition, or what I call a “constant drumbeat.” Embrace an environment in which values are top of mind in words and deeds.
Integrity is a powerful double-edged sword for companies today. Lapses can spark employee rebellion, customer blowback, and government investigations. But handled correctly, integrity can be a superpower that inspires employees and resonates with today’s values-minded consumers. And integrity is contagious. Create an environment in which it is openly embraced by leadership and woven into the fabric of your culture, and it will be a powerful asset.
Robert Chesnut is author of the book Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution and Why That’s Good for All of Us. He has spent his entire career working on issues relating to integrity in the workplace and the global marketplace, first as a federal prosecutor who handled espionage cases like the Aldrich Ames case, later as the founder of eBay’s marketplace trust and safety system, and most recently as the general counsel and chief ethics officer at Airbnb.
