Markkula Center of Applied Ethics

The Role of the CEO in Building an Ethical Organization



High Tech CEOs discuss how leaders can influence the ethical tone of a company. (L-R) Robert "Bo" Ewald, Radha Basu, Ken Denman, Mark Lonergan

From a panel featuring:
Radha Basu, Chair and CEO, Support Staff
Ken Denman, CEO, Openwave Systems
Robert "Bo" Ewald, CEO, Silicon Graphics
Mark Lonergan, founder and managing partner, Lonergan Partners (moderator)

Mark Lonergan, whose firm specializes in CEO and board placements in technology companies, convened a panel of three CEOs at the February meeting of the Ethics Center's Business and Organizational Ethics Partnership and asked them to reflect on the role of top executives in building and maintaining the ethical culture of their organization.

Ken Denman kicked off the discussion by reminding the group that employees come to the workplace with their own values. "You can put in controls and structures," he said, "but from a leader's perspective, ethics is something you bring with you." To Denman, "ethics is all about what happens on the edges in times of stress," and he suggested that leaders could reduce bad behavior by reducing unproductive stress by assuring employees that "the world would not end because of any single issue." If you have an ethical problem, he went on, "You take the pain and move forward."

Bo Ewald offered what he described as four simple principles for CEOs who want to set the right ethical tone at the top:
o The CEO's job is to lead. Model the behavior you want to see.
o Do the right thing and do it in the right way.
o It is impossible to communicate too much. Talk frequently about the company's values in a way that appeals not only to employees' intellects but also to their emotions
o If you can't figure out what to do, that's baloney. Usually people know the right thing to do, but sometimes it is difficult!
As he summed it up, "You lead it, you live it, and people watch."

Radha Basu advocated "consistent and continuous grounding in values," which she said executives accomplish not only through formal employee training but also by spending time "roaming the halls" and talking with employees. Like her colleagues, she did not think CEOs could simply legislate ethics. "You have to believe in the ethical principles in your core, and you have to exemplify them," she said.

Basu stressed the importance of role models in the development of a company's ethical culture. "I was fortunate to 'grow up' at Hewlett-Packard" when founders Bill Hewlett and Dave Packard were still active in the company and "the H-P Way," the basis of the company's values and management philosophy, was a part of how all employees thought about the company. She offered this example, where she learned something about how to treat employees from Packard. Basu had just been appointed the general manager of HP-India, and she and Packard had an appointment to see the Indian minister of defense. Although the minister kept them waiting 45 minutes, Basu remembers that Packard remained gracious, telling the minister, "I'm so grateful that you agreed to see me and my esteemed colleague Radha Basu."

Basu saw this introduction as Packard's way of acknowledging and supporting her, a lesson she has taken with her to her own work as a CEO. "As great a man as Packard was, he was not full of himself," she said. Such an attitude is hard, she continued, for a CEO to maintain. "When you take a company public, there are the corporate jets and the analysts, and there's just a tendency to say, 'Oh, I'm so important. I'm so good that it's okay for me to be on the ethical edge.'" That attitude, Basu described as "the kiss of death" for ethical behavior.

Ewald and Denman echoed Basu's comments on the importance of role models. Denman appreciated the opportunities he had been given to spend time with leaders in his previous jobs at Battelle and US West Media and to learn how they made ethical decisions.

Ewald cited his exposure to Seymour Cray, the "father of supercomputing," who was the founder of Cray Research, where Ewald was president and COO. Like the HP Way, Cray Research promoted the "Cray Style," which was a distillation of Cray's values. As CEO of Silicon Graphics, Ewald also referred to "The Spirit of SGI," which affirms that SGI is "a company that stands for leadership that has excitement, that is action-oriented, and that has respect for people and their ideas." If the CEO stands by these statements when it comes time to make decisions, Ewald said, he or she can be a powerful tool for connecting employees with the company's core values.

The question of whether ethics can be taught brought general agreement from the CEOs that it can. However, Denman cautioned there are variances among individuals regarding their willingness and ability to learn, so a CEO must be prepared to be ruthless in addressing deviation from the organization's values and norms of behavior.

Basu made an interesting comparison between building an ethical culture and the challenges of introducing a quality program or creating a framework for diversity within an organization. Quality and diversity seem like "old hat" today, but the obstacles they faced in the "early going" were significant. Changes such as these require emotional and intellectual commitment; most importantly they require on-going behavioral changes.


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