The Link Between Ethics and Innovation By David Gebler

David GeblerMost ethical companies don’t have ethics officers. An indicator as to whether a company is ethical may be linked more to the happiness of the people who work there than it is to the state of the company’s formal ethics program.

There is in fact a strong correlation between innovative companies and ethical companies. Companies that foster one will likely foster the other because critical values of respect and trust are protected, encouraged and rewarded. These organizations are flexible and able to take risks. They actively garner employees’ ideas and opinions and strive to create a climate where everyone feels his or her voice is heard.

To be able to have values such as respect and trust flourish, managers and leaders must be accountable, to themselves and others. For example, when they are able to admit they do not have all the answers themselves, they invite employee participation. A manager who can admit a mistake creates a powerful example to others, saying, in essence that it’s OK to make mistakes, so long as one speaks up and takes corrective action, whether that action is to report misconduct, or is essential to the company’s creative process.

Specific behaviors that connect ethics and compliance with innovation and productivity must be encouraged to achieve both cultural and business objectives: accountability, respect and open communication all lead to trust within an organization. However, until leaders see ethical conduct as essential to achieving business goals, ethics will always be on the margins in business decision-making. Many companies are not able to integrate ethical behavior with the core behaviors that drive business success. Too many leaders still talk about ethical culture as an “add-on.” For example, several clients I’ve worked with have added “acting with integrity” to soften aggressive values like “act with velocity” or “play to win” as a reminder that “killing the competition” should always be done while adhering to the code.

So how do we draw tighter connections?

The majority of ethics and compliance leaders seek a workforce where everyone demonstrates high levels of personal accountability. Employees at all levels feel a sense of commitment to the organization. If they see something that doesn’t feel right they will take some action, not because they were told to, but because they want to safeguard the organization that they care about. They don’t want to sit idly by and they want to feel safe in making their voice heard.

Similarly, the creative process is built on respect and trust. Innovation and productivity can only be brought about when creative people feel safe in an ethical work environment where their ideas are listened to and respected. Whether encouraging new product design or new processes to make workflow more efficient, creative people need to feel that their contributions are worthwhile, and they suffer because they are trying to make things better.

If we can show how accountability, respect and open communication lead to trust and can drive performance and creativity, we can certainly show how they help maintain higher standards of integrity. In assessing the success of their programs, owners of the ethics responsibilities should be as mindful of the levels of employee engagement and innovation as they are of other indicators, such as help line calls and number of reported incidents.

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