Ethics: Your Competitive Edge for Organizational Outperformance

Elizabeth Pittelkow Kittner CFO and Managing Director, Leelyn Smith LLC
Exploring Ethics in Business & Finance Today

Organizations and leaders strive to build and sustain successful businesses through high-performing teams. Of course, for organizations to achieve this goal, they need more than talent—they need ethical and responsible behaviors to exist at all levels within the organization.

While individual integrity and behaviors may be helpful in some instances, promoting these components as part of a team amplifies the impact across the whole organization. To foster an ethical and successful culture, consider these strategies.

THE EFFECTS OF ETHICAL LEADERSHIP ON TEAMS

Researchers at John Hopkins Carey Business School studied the effects of ethical leadership on team performance. The researchers contend that ethical leadership is a key component to creating and preserving high-performing teams and maintaining team connectedness and trust, even when performance may dip at times. In fact, they say a team’s perception of their ethical leadership and connectedness affects the team’s performance—meaning, if they believe the ethics and connectedness are strong, the team will more likely perform well consistently.

With this research in mind, it is essential for leaders to hone these following values to build confidence and trust in their ethical leadership:

• Honesty: Honest leaders who share appropriate transparency with their team members engender trust and help colleagues understand the bigger picture of organizational strategies and decisions.
• Fairness: Fair leaders operate without bias and favoritism; they celebrate the process and results. Results are important, and it is just as important to achieve those results honorably. Even if outcomes are suboptimal, a fair leader celebrates the journey a team takes and identifies model behavior as part of the experience.
• Respect: Respectful leaders ensure voices are represented across the team to encourage diversity of opinions, resulting in stronger problem solving and decision-making. Notably, this value takes intention and patience, as it takes longer to include more people in the processes.

ADDRESSING ETHICAL CHALLENGES IN TEAMS

Many of the ethical challenges teams experience stem from interpersonal dynamics (i.e., the ways in which people interact with each other—behaviors, emotions, and communication styles). Let’s look at a few behavioral-related scenarios and see how we might address them.

Scenario No. 1: An individual on a team prioritizes being recognized for their own contributions instead of fostering positive relationships within the team or caring about the overall outcome for the team.

One way to address this challenge is to recognize team wins and promote team goals over individual goals. Consider involving high-performing individuals in team development, including mentoring others and serving as role models for how to collaborate with others. These strategies may also be effective in curbing unhealthy individual competition within the same team.

Scenario No. 2: A team member is not working as much as others on the team. They are consistently benefiting from the efforts of others on the team while not contributing at the same level.

To address this behavior, leaders should clearly define roles and workload needs among team members and design accountability and feedback mechanisms to review their contributions (e.g., peer feedback, regular meetings with the team and individuals, etc.).

Scenario No. 3: A team member engages in untruthful behavior, including providing inaccurate information, exaggerating a positive or negative aspect, or withholding critical details.

To reduce this behavior, organizations can establish a process of verifying information communicated by the team members to ensure leaders can be confident in making decisions based on that information. For example, require communication methods like chat and email to have clearly documented records of communicated decisions. Leaders may also verify information received with additional team members. Additionally, organizations can enable whistleblowing opportunities without retaliation. When individuals feel safe to report harmful behaviors, leaders are more likely to learn from individuals about harmful behaviors occurring.

CHARACTERISTICS AND MINDSETS OF ETHICAL TEAMS

Organizations can shape their cultures to live with integrity by talking about ethics, communicating openly, and praising teams to promote positive team relationships.

Talking About Ethics

It is important for organizations to foster a culture that allows ethical behaviors to be regularly highlighted and discussed. To create this environment, leaders can conduct trainings on the values they want to see permeated throughout the organization. Additionally, organizations can prioritize incorporating ethics into their values and company documents (e.g., a code of conduct or employee handbook).

According to a June 2023 Think With Google article, there are five dynamics of effective teams. For organizations wanting to get people talking about ethics, they can work to implement these characteristics into their cultures:

• Psychological safety: People should feel comfortable around others within the organization, especially around asking questions, discussing mistakes, and speaking about their ideas and opinions.
• Dependability: Individuals want to consistently rely on their team members for responsibility, quality, and effectiveness.
• Structure and clarity: People want to know how the organization and team leaders define success for themselves and their teams and how they are expected to achieve goals.
• Meaning: Effective teams and individuals need to find a sense of purpose in their work, and this sense of purpose may vary from person to person and from team to team.
• Impact: Individuals and teams perform well when they know their work is creating a positive effect on others, including their team members, organization, customers, and/or overall community.

Communicate Openly

Encouraging open communication throughout an organization is one of the most influential ways to promote ethical standards and high-performing team characteristics. Importantly, it is good practice to encourage two-way communication by soliciting feedback from team members regarding how people throughout the organization are handling ethical behaviors. Once feedback is received, thank people for their feedback and communicate with the organization how that feedback is being addressed. Additionally, make sure to hold people accountable for ethical behavior, including those in leadership roles.

Praise Teams to Promote Positive Team Relationships

Genuinely thanking people for their work goes a long way toward making people feel valuable and motivated to do more and live up to ethical behaviors. As the Google article highlights, meaning and impact are significant factors in team dynamics, which can be worked into thanking teams for their work. Further, supporting a culture of peer recognition helps to encourage team member cohesion and connectedness. When a team navigates through a difficult project together, leaders can recognize the team’s effort, even if the results are not as expected. Further recognition should be given when actions illustrate company values. For instance, if innovation, collaboration, and resilience are behaviors the organization wants to see, acknowledge the people and teams demonstrating these behaviors.

Fostering high-performing individuals and teams demands a deeply embedded ethical culture that is upheld by everyone within an organization—and leadership dedicated to ethics sets the tone. Maintaining ethics may cost money, especially in the short term when making tough decisions like terminating a top contributor for unethical behavior; however, this focus on integrity is crucial to maintaining an enduring culture of ethics and growth. The most successful businesses are often those with leaders whose unwavering commitment to ethics ultimately create lasting and transformational impacts on the organizations and the people they serve.

Related Content:

• Become an Ethical Leader to Drive Crucial Business Results: Building a sound ethical foundation will not only keep your leadership from running aground, it’ll also be good for business.
• Culture: Your Firm’s Most Valuable Retention Tool: Empowering employees to be culture champions not only increases engagement and retention but can also foster a thriving work environment.