89 Reading: A Culture of Accountability

At the beginning of this module we discussed the 2015 revelation that Volkswagen installed emissions-altering software in eleven million diesel vehicles worldwide, which caused the cars to pass emissions tests they should have failed. Consider, for a moment, how many employees would have to be involved in order to achieve this level of fraud?  This was not the handiwork of a single employee but the result of a pattern of unethical behavior in the company. When the Ethics & Compliance Initiative (ECI) released the results of its 2018 National Business Ethics Survey, it noted that these types of broad, organizational breaches are fairly common.

The survey shows that a significant amount of misconduct involves continuous, ongoing behavior rather than one-time incidents: Employees say that more than a quarter (26 percent) of observed misconduct represents an ongoing pattern of behavior. Another 41 percent said the behavior has been repeated at least a second time. Only one-third (33 percent) of rule breaking represents a one-time incident. In the case of Volkswagen, an early internal investigation pointed to a “culture of tolerance” for ethical compromises. Employees were pushed to do what was needed to meet corporate objectives at any cost.

The organizational culture is comprised of the values and beliefs that an organization shares, which create its social environment. The culture of a large organization can be difficult to understand since it is influenced by many different factors. Still, many research studies point to leadership and policies as being instrumental in building an ethical organizational culture.

Policies That Encourage Ethical Behavior

Many companies have a specific policy that defines appropriate behavior. The policy is often called the Standards for Business Conduct. As the name suggests, the policy is intended to set the standards for acceptable behavior; it’s not meant to be an exhaustive list of every type of ethical behavior.

Many of these policies do the following:

  • Define the threshold for behavior: While it should go without saying that employees are expected to be law-abiding, companies choose to be quite explicit about stating that they require their employees to follow the law.
  • Create expectations for behavior: The policies identify common issues that employees may encounter—such as accepting gifts from suppliers—and explain how they should be handled.
  • Set policy: establish company protocols for handling confidential information, including customer data, etc.
  • Give guidance on making judgment calls: Companies often define how they would like employees to make decisions when guidelines do not adequately cover them.
  • Describe reporting and enforcement procedures: There is generally a process for reporting and addressing issues, as well as information about how the company will protect those reporting concerns.

Let’s examine some examples from company policies to see how some of these components are addressed.

The Legal Threshold

The ethics policy generally begins by reminding employees that they are required to act in accordance with the law. For companies that engage in business across the globe this can be complex. Starwood Hotels and Resorts address this issue in their Code of Business Conduct and Ethics:

You must, at all times, obey the laws of the jurisdictions where we conduct business. Starwood conducts business all around the world. Our associates are citizens of many countries. As a result, our operations are subject to the laws of many jurisdictions. It is often challenging for us to understand how those various laws apply to our businesses. However, whether you are a Starwood associate or member of the Board of Directors, you are expected to conduct yourself in accordance with applicable law.

Starwood is a company organized under the laws of the United States and is generally subject to U.S. federal law. From time to time, the laws of the United States conflict with laws of a city, town, country or other jurisdiction where we conduct business. If there is a conflict between the applicable laws, seek guidance from the Office of the General Counsel (Legal). 

Starwood has established a clear expectation to follow the law, acknowledged the complexity of their business environment, and provided direction when employees need help.

Creating Expectations for Behavior

In the course of a normal business day, many service employees receive tips. Where is the line between an appropriate tip and a gift? Starbucks has defined this for employees in its Standards of Business Conduct:

A gift or favor should not be accepted or given if it might create a sense of obligation, compromise your professional judgment or create the appearance of doing so. In deciding whether a gift is appropriate, you should consider its value and whether public disclosure of the gift would embarrass you or Starbucks.

A gift of money should never be given or accepted. (Some retail partners, however, may accept customary tips for service well done.) As a general rule, partners should limit gifts to or from any one vendor or business associate to US $75 per year. A gift of nominal value may be given or accepted if it is a common business courtesy, such as coffee samples, a coffee cup, pens or a similar token. However, during traditional gift-giving seasons in areas where it is customary to exchange gifts of money, such as China, Japan, Malaysia, Singapore and Thailand, partners should not solicit but may exchange cash with nongovernmental business associates in nominal amounts up to the equivalent of US $20.[1]

It is very common for companies to set a threshold for giving and receiving gifts. These specific guidelines help employees navigate what would otherwise be a judgment call and make it easier to identify an ethical breach and initiate corrective action.

Setting Policy

United Parcel Service (UPS) groups the sections of its Code of Business Conduct into stakeholder groups: our company, our people, our customers, our shareholders, and our communities. This enables the company to address a range of workforce expectations, such as workplace safety:

UPS is committed to a safe work environment that is free of threats, intimidation, and physical harm. Everyone has a right to work in a safe environment and everyone shares the responsibility for ensuring the safety of others. We have zero tolerance for workplace violence, and we will investigate and take appropriate action up to and including dismissal regarding any threats to a safe workplace.

UPS prohibits violent behavior in the workplace including, but not limited to, physical assaults, fighting, threatening comments, intimidation, threats through electronic communications including social media, and the intentional or reckless destruction of property of the company, employee, UPS representative, or customer. Comments or behavior that reasonably could be interpreted as intent to do harm to people or property will be considered a threat. We also prohibit the unauthorized possession and/or use of weapons by any employee or UPS representative while at work, on company property, or while on company business.[2]

The UPS policy is very specific about its expectations of employees in ensuring a safe work environment.

Judgment Calls

No policy will address every issue, nor should it try. Most policies try to guide employees in the way they should make judgment calls. In its Standards of Business Conduct, American Airlines addresses this issue specifically:

Remember, your best resource about what’s right or wrong is your own conscience. So if you find yourself in a difficult situation, think before you act. And ask yourself the following questions:

  • Is it legal? If it’s not legal, don’t do it.
  • Is it ethical? If it feels wrong, it probably is wrong.
  • How would it look in the newspaper? If you wouldn’t feel comfortable if your friends and family knew about your actions, you probably shouldn’t do it.

These policies are an important tool in building a culture of accountability and ethical behavior in a company, but the policies must be upheld by all the employees, and senior leaders play a significant role in reinforcing their importance.

Accountability and Crisis Management

A culture of accountability is critical in a crisis. Maple Leaf Foods faced an outbreak of a deadly bacteria in 2008: Listeria. It was a tragedy where 23 Canadians died. Michael McCain, CEO, stepped out into the press and immediately communicated with the public and its distributors about the contamination. Today, the crisis and the management of it is reviewed in business schools as a best practice.

“I can guarantee you, you won’t find any other major corporate training videos that show a hearse,” he (SVP of Operations and Food Safety) said, emphasizing that it’s important for new staff members to understand why the organization continues to raise the bar of food safety standards.

Maple Leaf Foods has been applauded time and time again for how it handled this tragic event. There was no complex communications strategy or a huge PR crisis team enlisted, instead they kept close to home and close to their values.”[3]

  1. Starbucks. (n.d.). Business Ethics and Compliance. https://globalassets.starbucks.com/assets/eecd184d6d2141d58966319744393d1f.pdf
  2. UPS. (n.d.). Code of Business Conduct. https://www.ups.com/media/en/code_bus_conduct.pdf
  3. Urgency. Accountability. Transparency: Lessons from Maple Leaf Foods SVP Randy Huffman. (2014, November 26). Ivey.https://www.ivey.uwo.ca/news/news-ivey/2014/11/maple-leaf-foods-urgency-accountability-transparency/


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Introduction to Marketing - MKTG 3433 Copyright © 2022 by WCOB Marketing Faculty is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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