Corporate Ethics Transformation — Part II: The Better Way Forward
Business can’t do well AND do good without better behavior: Here’s how.
Capitalism is nothing if not adaptable and resilient. Change often comes not from executive ranks but from unexpected disruption. Just ask Blockbuster.
A more profound paradigm shift, however, is already in motion.
Gen-Zers and their younger cohorts (e.g., the future consumers and policy-makers of the world) increasingly demand corporations do more than just make money: A survey of 11,000 U.S. adults by Bloomberg News and Morning Consult shows Generation Z, or the iGen, is more willing than its predecessor to put its money where its values are:
“If they’re paying money to corporations, they have to align with what they believe in,” says Corey Seemiller, an associate professor at Wright State University who became a lecturer on Gen Z after a student asked to skip a community-service requirement because she was running her own nonprofit.
Past studies regarding Generation Y show that the millennial generation deeply values companies practicing corporate social responsibility, many indicating that more than 50% of this cohort feel they are responsible for making a difference in the world. Collier put words to it:
“If capitalism is to work for everyone it needs to be managed so as to deliver purpose as well as productivity.”
There it is. Purpose. The new, better way of doing business, emerging right before our eyes.
Becoming a Purpose-driven company is the “why” behind the new model of conscious capitalism, the new, better corporate mantra, boardroom mandate, and organizational North-Star. Purpose defines why the organization exists; it provides actionable meaning to Mission, Vision, and Values in guiding a company forward. Purpose illustrates to everyone how to do good AND do well; how the company can make the world better for others while at the same time generating sustainable profitability. Purpose puts everyone in the shoes of customer. It is the company’s philosophical heartbeat.
Purpose is Unachievable and Empty Without Ethics
Purpose alone, however, will not ensure the organization does good in a human or humane way. Purpose can help but does not alone solve for bad behavior. It doesn’t adequately address “how” good business gets done.
Which is why we need to talk about corporate ethics.
Compliance. Governance. Regulation. Corporate Ethics has traditionally been beholden to these regimes. As discussed above, to-date, they’ve failed to reign in bad behavior. Why?
Good corporate behavior cannot be mandated top-down, nor is it possible to deter bad behavior from the outside. Ethical behavior is an inside-out, expressly individual thing that lives within the hearts and minds of us all. Each of us — not a government law or corporate regulation — determines the extent to which our behavior aligns with an ethical code or moral compass (of our own making or one we ascribe to adopt). HR and compliance be damned.
There has to be a better way. What would that look like?
The better way is for organizations to transform not just what they do but how they do it, ensuring they do (new) good things (for society) as well as themselvs the right way. To succeed at doing well and doing good, a code of ethics must be inculcated into the core of what it Values and how it goes about achieving its Purpose. Every stakeholder needs to be inspired not just by making money or helping the world; they must become inspired by doing those things in the right way, however the business defines that right way.
Accountability must become as important a driver of how the business works as the profits that come from what the business does. Done well, Purpose is the organization’s philosophical heartbeat, the “why” behind the company’s existence. Ethics, then, puts Values into motion the right way; it is the siamese twin of Purpose, its behavioral heartbeat, a good “how” behind achieving Purpose.
Patrick Quinlan, CEO of Convercent, a SaaS software solution that helps organizations of all types bring the management of corporate ethics and compliance to every action, in 2017:
“We’re entering an era in which every single company has to go from self-protective, “check-the-box” compliance to a long-term focus on ethics as well as values and compliance. Ethical issues are gaining more attention and prompting more outrage than ever before. Ethical transformation — the application of ethics and values across all aspects of business and society is as impactful and critical as digital transformation, the other megatrend of the last 20 years. You can’t have one without the other. The internet stripped away barriers between consumers and brands, meaning that transparency and attention to ethics and values is at an all-time high. Brands have to get on board, now. Ethical transformation pushes us into a better future, one built on genuinely ethical companies.”
