Focusing employee attention on a company’s mission promotes workplace values.

Texas McCombs
Jun 5 · 5 min read

Ethical scandals in business are often attributed to “bad apples” in a company, but a Texas McCombs marketing professor thinks they may be a result of a company-wide approach to ethics.

To help companies promote an ethical culture, Assistant Professor Amit Kumar suggests that businesses organize themselves to encourage ethical behavior.

Kumar says people want to be good and act morally — and it actually makes them happier. Everyone has a conscience and shared values, he says. “We can build off of that shared set of values not just by reiterating the fact that those values exist,” Kumar says, “but by actually structuring an environment in such a way that makes people more likely to do the right thing.”

Kumar and his fellow researcher, the University of Chicago’s Nicholas Epley, reviewed the wider body of research on the topic to formulate their own conclusions. The resulting article, “How to Design an Ethical Organization,” was published in the May-June issue of the Harvard Business Review. According to Kumar and Epley, there are several ways a company can work to change its workplace to encourage people to be more ethical.

Streamline your mission statement

In many organizations, if you asked any employee what the company’s mission is, they may not be able to tell you. Kumar says this is a problem: A company’s mission statement isn’t effective if people don’t actually know what it is.

“A mission statement should be ‘sticky,’” Kumar says. “It should be simple, it should be short, it should be actionable. It should be emotionally resonant, which means you should make people feel something rather than just think something.”

Mission statements are too often long, drawn out, and aren’t unique. Both Tyco and Enron, companies that underwent severe ethical crises, had long mission statements that were almost identical and both too vague to “stick,” Kumar says.

Short, clear mission statements help employees see how their actions can further that mission. It’s not enough to just write a good statement, though it also has to be implemented.

Remind people of their purpose

Encouraging ethical behavior would be easier if companies could influence how their employees were thinking while doing their work. This might seem impossible, but it can sometimes be as simple as reminding them of their purpose, Kumar says.

“The human mind is pretty complicated,” Kumar says. “We have multiple goals in life. We have lots of things that we could be thinking about. Things within our environment tend to determine what it is we’re thinking about at any given moment.”

For example, Kumar says, if a company were to post its stock price throughout the office, it might suggest to employees that money is the company’s most important goal and cause them to act accordingly.

Offering employees ethical reminders can have a different effect, such as requiring them to fill out ethics checklists as they do their job.

“If you get people to do an ethics checklist beforehand, it gets some thinking about something that they might not have been thinking about beforehand.” — Amit Kumar

Filling out an ethics checklist before starting a task can make employees more conscious of possible pitfalls. “It might get them thinking a little less about return and a little bit more about risk, for example, which is also important in making these decisions,” Kumar says.

Use incentives but not the ones you think

Incentives don’t always have to be financial. Kumar says prosocial incentives, or those geared toward the betterment of others instead of yourself, can sometimes have more of an impact.

“It turns out that incentives that are actually more about the other people that you’re impacting can have a bigger benefit.” — Amit Kumar

For example, Kumar cites another researcher’s study in which hospital employees were shown two different signs: one warning them that not washing their hands could get patients sick, and one warning them that not washing their hands could get themselves sick. The sign promoting patient welfare over the employees’ own was more effective and led to more doctors washing their hands.

This signals that people are just as inclined, if not more, to act on incentives that promote the welfare of the community, Kumar says.

Look at the ‘tone in the middle’

Many people prioritize the “tone at the top,” or the actions of a company’s executives. But most employees do not often interact with their CEO or upper-level managers, Kumar says. They do, however, interact with the colleagues on their level.

Kumar says if an employee’s colleagues are acting unethical, they are more likely to think acting unethically is okay.

“These cultural norms can be incredibly important,” Kumar says.

Companies can shape this “tone in the middle” by enforcing their mission statement around the workplace and using subtle reminders, such as asking questions during the hiring process that align around core values and implementing ethical factors in employee evaluations.

It pays to be ethical, too, Kumar says. He cites pharmaceutical company Merck & Co. as an example.

A few decades ago, Merck was posed with a quandary: invest in an unprofitable treatment for river blindness, a truly debilitating disease and risk losing money, or instead focus only on short-term profit maximization. In the end, Merck chose to follow its mission statement, which was oriented toward saving lives and serving others. That decision not only boosted the company’s reputation, but it also led one of its employees to discover the cure for river blindness and subsequently win the Nobel Prize in 2015.

Kumar says ethical issues are often systemic — they’re reflective of a greater problem within that company, and changing the environment that employees work in may be able to prevent some of these issues from happening.

“Think about the barriers that exist and remove those barriers by making it easier for people to engage in the actions that you want them to engage in,” Kumar says.

Story by London Gibson

Big Ideas

Research and insights from Texas McCombs

Texas McCombs

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News, business research, and ideas from the McCombs School of Business at The University of Texas at Austin. Learn more at www.mccombs.utexas.edu

Big Ideas

Big Ideas

Research and insights from Texas McCombs

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