Strengthening Value-Centered Ethics (Part 3)

Developing behavior standards: what, why, and how?

2005 Volume 8 Issue 1

This article, the final installment in Dr. Kerns’ series on “Strengthening Value-Centered Ethics,” focuses on setting behavior standards. The first article focused on identifying core values as a leader (“Strengthening Values Centered Leadership”), and the second focused on executing values in leadership (“Managerial Leadership Action Roles: What, Why, and How“).

In one of his earlier articles, Dr. Kerns identified a set of six core values that he refers to as “virtuous values.” These virtuous values have been defined and discussed at some length in the article entitled “Creating and Sustaining an Ethical Workplace Culture,” which appeared in the Graziadio Business Review in 2003. In this article Dr. Kerns points out that these values appear to have nearly universal appeal across cultures. He also demonstrates how they relate directly to ethical behavior through the Values –> Attitudes –> Behavior Chain.

Behavioral standards can be a valuable resource in building a strong ethical workplace. For example, standards might include a statement that “All personnel will accurately report expenses.” This standard is based on the organizational values of honesty and integrity and should help discourage dishonest expense reporting. Standards to guide behavior are used to strengthen an organization’s espoused values by offering tangible ways to reinforce living those values. This article offers a description and some benefits of behavioral standards and a practical seven-step approach to developing them. (For a more extensive discussion, see note.)[1]

What Are Behavioral Standards?

Behavioral standards signal what is important in an ethical organizational culture. Ethical decision making and behavior are facilitated by these standards. Within a value-centered ethical framework, behavioral standards stress a virtuous values-centered approach to guiding behavior. Beyond offering external guidance, behavioral standards are meant to connect with an individual’s internalized virtuous values. They become antecedents to encourage people to do what is right based on what they have learned from their dealings with ethical challenges. For those people whose internalized value systems are misaligned with their organizations, behavioral standards can provide external prompts for ethical behavior.

Why Bother?

The establishment of a strong ethical workplace operating environment is strengthened by formulating effective behavioral standards. Listed below are six ways in which behavioral standards reinforce important aspects of the ethical workplace:

  1. Highlight Desired Behavior. Behavioral standards communicate that ethical behavior is considered a priority and that your firm’s espoused virtuous values will be operationalized. Such standards take into account the most important ethical circumstances and index expected behavioral outcomes associated with these circumstances. Behavioral standards increase your people’s awareness of ethical challenges in the workplace and highlight desired response behaviors.
  2. Promote Trust. Organizational trust is enhanced when managerial leaders focus attention on what is good and right and develop behavioral standards in collaboration with employees. Senior management further enhances trust when they implement reward structures that are aligned with the organization’s espoused behavioral standards. Leadership actions must also reinforce the established behavioral standards to promote trust and credibility among the workforce.
  3. Maintain Accountability. Behavioral standards foster a sense of accountability when the standards are supported by management. They are also strengthened when appropriate recognition for following behavioral standards, as well as consequences for not following them, are provided. Clear standards linked to virtuous values translate into clear behavioral expectations.
  4. Link Theory to Practice. Behavioral standards connect theory to real world practice by indicating how virtuous values can be operationalized through encouraging key ethical behavior patterns. Ethical action is more likely to surface as behavioral standards become widely known, accepted, and acted upon.
  5. Reduce Legal Threats. Proactively establishing behavioral standards can reduce the incidence of ethical and legal transgressions within the firm. Such standards can in some cases also provide legal proof of good faith efforts to prevent legal transgressions and may thus reduce the risk of financial and other types of penalties in the event of such transgressions. Legislation such as the Sarbanes-Oxley Act of 2002 requires public companies to implement codes of ethical conduct. Legal counsel can advise managers regarding when a good faith effort to avoid illegal behavior is necessary or otherwise might be used to reduce potential penalties.
  6. Enhance Ethical Decision Making. Behavioral standards offer criteria on which to base ethical decisions. They provide a rational context within which to effectively review questions concerning ethical conduct.

How to Develop Behavioral Standards

Ethical behavioral standards need to be generated with full involvement from organizational participants and must address specific key behaviors and ethical circumstances in need of attention. In most cases, behavioral standards should be specified for each key work area. The following seven-step approach outlines the development of value-centered behavioral standards:

Step 1: Lay the Groundwork. During this step, top management must assert its commitment to this process and affirm the importance of establishing behavioral standards throughout the organization that link with the firm’s core virtuous values. In addition, an organization-wide “Behavioral Standards Steering Committee” (BSSC) should be put in place and should feature membership from all key areas within the organization. The BSSC becomes a key mechanism in the development and delivery of the firm’s behavioral standards. Select two members of this Steering Committee as co-chairs, one who is mainly charged with leading the Committee in developing and organizing a plan to write the behavioral standards and obtain needed approvals. The other co-chair should serve as the “Strategic Project Manager” who coordinates and facilitates the Steering Committee’s work.

Step 2: Link Virtuous Values to Specific Behavior. To get started, the BSSC reviews and clarifies each of the organization’s virtuous values. (If organizational values have not been identified, the BSSC in collaboration with top management must identify and fine-tune the organization’s virtuous values.) Given the organization’s expressed virtuous values, the BSSC will then note key ethical circumstances in each organizational area that require attention. The BSSC should then identify various key behaviors to expect from individuals and groups in the overall organization and in specific departments or areas within the organization. The behavioral standards must link to the organization’s virtuous values.

Step 3: Seek Input Regarding the Greatest Ethical Challenges. Using the ethical dilemmas and behavioral standards compiled in Step 2 as talking points, the BSSC next collects information from various parts of the organization to identify key ethical issues and areas of potential problematic behavior associated with specific work areas within the organization. For example, areas that could perhaps benefit from behavioral standards in a purchasing department might include vendor relationships, profit margin management, and bonuses.

In completing these tasks, the BSSC will organize the enterprise into key work areas, typically according to functional areas. Each member of the BSSC will be assigned to a specific work area to facilitate the gathering of appropriate and helpful information. These “work area coordinators” will establish effective “work area project teams” to develop practical approaches to obtaining and processing information from key stakeholders in their respective areas. The project team and the area coordinator will collect the information relating to the identified key ethical challenges and other areas of relevant behavior and then organize the information received. The coordinator will report this information to the BSSC.

Step 4: Shape a System of Value-Centered Behavior Standards. In tackling the key areas identified as relating to potential ethical situations, each work area coordinator will produce an initial draft of value-centered behavior standards for that work area. Standards should be written for specific work areas within the organization and should link each behavioral standard to one or more of the organization’s virtuous core values. In formulating the organization’s behavioral standards, managers and members of the Behavioral Standards Steering Committee should consider the following actions:

  • Spotlighting recurring issues
  • Identifying behaviors that can differentiate this organization from others
  • Noting relevant areas in which to specify compliance standards
  • Specifying non-negotiable behaviors

By considering the above four areas, ethical issues and situations that frequently occur (Recurring Issues) will receive appropriate review. Opportunities for setting you apart from your competitors and/or typical industry practices (Differentiating) will be considered and deliberated. Areas of zero tolerance for actions outside of the stated standard (Non-negotiables) can also be clarified and asserted. Finally, areas that require conformity to regulations and laws (Relevant Compliance) will not be overlooked in your behavioral standards.

Procedures should also be developed to help employees feel comfortable and confident in inquiring about the behavioral standards and in bringing forth possible transgressions. Processes must be implemented that ensure that confidentiality is maintained for those who reveal transgressions and that standards for thorough and fair investigations are followed in examining reports of transgressions. Scrupulous care given to carrying out these processes is critical, given the common observation that people in organizations are frequently less likely to report behavior at variance with standards due to their concern regarding possible reprisal.

Mechanisms for highlighting and recognizing exemplary ethical behavior also need to be put in place by senior management. Recognizing “positive performance role models” can help shape ethical behavior that is aligned with an organization’s stated behavioral standards.

Step 5: Provide and Encourage Feedback, Approval and Commitment. Work area coordinators will provide the BSSC with their proposed standards for review and will coordinate and finalize the behavioral standards submitted. In turn, the BSSC will submit a final draft to top management for their review and comment. Obtaining feedback from other key stakeholders may also be beneficial.

The CEO or the top management team will provide the obtained feedback to the BSSC, which will make appropriate edits and revisions. Legal counsel should then examine the behavioral standards document to give input regarding compliance with applicable laws and regulations. The revised document is then ready to be distributed to select organizational members for feedback regarding clarity, relevance and importance to maintaining the organization’s highest level of ethical standards. When these last suggestions are incorporated into the document as acceptable to the BSSC, the document is then ready to present for final approval to the appropriate person or body.

Upon the BSSC’s approval of the final document, the BSSC will meet and commit to working together to carry out procedures outlined in Step 6. This commitment will underscore the importance for personnel in all work areas to link specific behavioral standards to performance outcomes.

Step 6: Implement and Support Standards From the Top. As you implement your newly established program of ethical behavioral standards within the organization and specific work areas, the way in which you introduce the program and train your people in its application is critical. Start with a presentation from top management or the CEO. Discussions and implementation of these standards must follow and should be integrated to the greatest extent possible into existing communication structures and training mechanisms.

Use training seminars to explicitly link each behavioral standard to your organization’s virtuous values and performance goals/outcomes. This integration of standards, values and performance goals will provide practical application and reinforcement of those values as part of employees’ internal value structures.

Step 7: Provide Continuous Review and Fine-Tuning. The development, implementation and fine-tuning of your organization’s behavioral standards constitute a dynamic process. Even though the behavioral standards have been built upon your organization’s stable virtuous values, these standards must be reviewed regularly and fine-tuned appropriately based upon the implementation experience of key stakeholders with the written standards. Standards’ updating that reflects new information and circumstances must also be regularly scheduled.

Group Meeting

It is advisable to form a new BSSC every 12 to 36 months to monitor and perhaps further fine-tune your organization’s program. Publicly held companies in particular need to review compliance with relevant key requirements and reporting obligations.

With the completion of the first six steps and the ongoing monitoring (and fine-tuning as appropriate) of Step 7, your organization’s program of identifying and carrying out behavioral standards should be given a strong boost. “Operationalizing” organizational values through creating and observing behavioral standards will be bolstered through an effective system of rewards and consequences.

Conclusion

Behavioral standards encourage ethical behavior, offer guidance in facing ethical decision points, and help strengthen your organization’s value-centered, ethical work place culture. Your organization’s behavioral standards must be continuously linked to the organization’s virtuous values and be supported by senior management’s actions and reward structures. To help you in your efforts with the behavioral standards development process, work through the following “Behavioral Standards Development Checklist.

The Behavioral Standards Development Checklist
(Short Form)
Printable PDF version

Instructions:

Consider each task as you formulate and implement your behavioral standards development process. Check off each task as you complete it during the process. Use this checklist as a springboard for further discussion about your organization’s process of developing and implementing behavioral standards.

Task Done
1. Obtain top management’s commitment to the process. _________
2. Establish an organization-wide Behavioral Standards Steering Committee (BSSC). _________
3. Review and clarify (or establish, refine and/or update) organization’s virtuous values. _________
4. Establish “work area coordinators” and “work area project teams.” _________
5. Gather input and information concerning key ethical issues and problem areas within each area of the organization. _________
6. Draft behavioral standards for each work area. _________
7. Link the behavioral standards to virtuous values. _________
8. Establish mechanism for people to inquire about standards. _________
9. Establish mechanism to ensure confidentiality for people reporting ethical violations. _________
10. Ensure that behavioral standards comply with regulatory requirements (especially for publicly held companies). _________
11. Present the program to the organization and develop effective communication and training programs to practice and apply behavioral standards. _________
12. Establish a program for continuous review, fine-tuning and updating standards. _________

[1], Charles D. Kerns, Value-Centered Ethics: A Proactive System to Shape Ethical Behavior, (Amherst, Massachusetts: HRD Press, 2005).

About the Author(s)

Charles D. Kerns, PhD, MBA, is a professor of applied behavioral science at the Graziadio School of Business and Management. He has more than 30 years of business, management, and consulting experience. Through his private consulting firm, Corperformance, he has implemented performance management programs and systems to help companies from many industries maximize their results. Since 1980, he has taught in almost every program in the Graziadio School, first as an adjunct faculty member, then, since 2000, as a member of the full-time faculty. He has also served as the associate dean for Academic Affairs. Dr. Kerns holds a Diplomate, ABPP, in both Industrial-Organizational Psychology and Organizational-Business Consulting Psychology.

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