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Ethical Standards need to be spelled out in plain language

My latest Real Life Leadership column- Ethical Standards need to be spelled out in plain language - is online.

It deals with the failure of Krispy Kreme's Code of Ethics to effectively guide them through their rapid growth.  I also write about it here.

The Life Skills Coaching Association of British Columbia list the following reasons for having a Code of Ethics.

·        to define accepted/acceptable behaviours

·        to promote high standards of practice

·        to provide a benchmark for members to use for self evaluation

·        to establish a framework for professional behaviour and responsibilities

·        as a vehicle for occupational identity

·        as a mark of occupational maturity

Is producing a code of ethics for your business a good idea?  If it is, then what should you include?

Ethicsweb of Canada has a number of informative articles about creating your own Code of Ethics.

To create your own Code of Ethics, my suggestion is that you test drive various ones that you find at this site.  Instead of "buying" a code off the shelf, it is far more important to come to understand what the effect of a code should be.

For example,  go to the CAUX Roundtable website, and look at their Principles for Business.

One of the principles concerns creating an environment of trust.  Here's the principle.

Principle 3. Business Behavior:

Beyond the Letter of Law Toward a Spirit of Trust

While accepting the legitimacy of trade secrets, businesses should recognize that sincerity, candor, truthfulness, the keeping of promises, and transparency contribute not only to their own credibility and stability but also to the smoothness and efficiency of business transactions, particularly on the international level.

To live up to this standards requires commitment on the part of the leadership of the organization to spend the time necessary to make a Code of Ethics an effective guide for the company.

The value of a Code of Ethics is not that it keeps the company and its leadership out of trouble. The value is that it provides a means for creating long-term success by focusing on the strength of the business and the development of the human relationships and resouces required for sustainability.

Update: the column is no longer online. Here it is.

Ethical Standards need to be spelled out in plain language

What must leaders do to make their company’s written Code of Ethics an effective tool for managing the company?

This seems to be a question that a local favorite business and popular North Carolina company should consider. Last week, Krispy Kreme, founded and headquartered in Winston-Salem, announced the retirement of their Chairman and CEO, Scott A. Livengood. The Associated Press reported, “Livengood's departure came after the once-high-flying Krispy Kreme endured months of bad news, including plummeting profits, a federal securities probe and allegations of padded sales that forced the company to restate earnings.”

In my experience, Krispy Kreme is right up there with mom and apple pie. Where other coffee and pastry businesses seem more adult, Krispy Kreme is a family brand.

Written Codes of Ethics tend to be written for the purpose of keeping the company out of trouble, and having a way to remove people when needed. They are not guidelines to improve company performance.

Go to the Krispy Kreme website and find the Investor Relations page listing for their Code of Ethics. This is a very perfunctory list of ethical guidelines. For example, leadership should "Engage in and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships" or "Promote ethical behavior among peers, and employees under his supervision."

These are not statements that stir the passion for high ethical behavior. The Krispy Kreme Code of Ethics assumes that everyone knows and shares a understanding of what right ethical conduct is.

I don’t believe that this is ever a safe assumption. Ethical standards have to be spelled out in positive, constructive and proactive terms. They should promote the kind of healthy behaviors that make the organization a better place to work. They should be practical guidelines for ethical practice, not legalese that leaders just give a wink and a nod.

Tom Morris writes in his book If Aristotle Ran General Motors that ethics is not about avoiding trouble, but about creating strength. Strength to grow a business effectively. Strength to manage the challenges of change. Strength to create a diverse, creative, highly motivated, committed workforce. And it begins with the ethics and character of the leader.

In the rush to maximize their growth potential over a very short period of time, the leadership of Krispy Kreme lost touch with what made them a company kids and families love. Their Code of Ethics was ineffective in guiding the company through its rapid growth.

Wherever I walk into Krispy Kreme, I am reminded of Saturday mornings as a kid selling boxes of doughnuts to my neighbors to raise funds for our high school football team. Scott Livengood was on that team. Sadly he is off the team that made it possible for so many more kids and families to experience the simple pleasure of a hot Krispy Kreme doughnut.

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