I have always been struck by the “feel good” advocacy and advice from so-called ethics “experts.”  Sure, it is great to talk about moral values, ethical principles, and other high-minded ideas that inspire an audience to embrace the value of an ethical culture.  But that is not really the point of promoting an ethical culture as part of a corporate culture.

Let’s start with a few basic ideas.  A company is an organization that is formed to sell products or services and ultimately to make a profit.  A company is not a substitute for a democracy or for our political system.  However, companies are not people (sorry Mitt Romney) and they reflect the collective values and principles of its constituencies — the board, senior management and employees.  Shareholders and other stakeholders have legitimate expectations as to how a company is going to operate and how it is going to advance its mission – to sell products and services.

I am not so naïve to think that companies do not operate in our political context and do not have an important role to play in our communities.  A company has to define its ethical principles as a means to define its role and mission for its employees, shareholders and other stakeholders.  A company does not operate in a vacuum and has to interact with key constituencies including the government, the community and its business partners.

Assuming that a company is willing to define its ethical and organizational values, a company has to align its values and principles with its senior executives, managers and employees.  In other words, a company has to define its ethical principles with the ultimate goal of securing buy-in from these important constituencies.  If a company fails to align its values and principles with its key constituencies, the company will suffer from an ethical disconnect – a situation where employees do not believe in the company’s mission and resist corporate definitions of purpose.  When this occurs, a corporate culture is sure to suffer from cynicism and discontent.

At bottom, employees want to believe in its senior leadership and its corporate mission.  Employees need to believe in the work that they do and the overall positive impact of the company and its products and services.

In the end, this raises the difficult question for every company – while the company has defined its ethical principles and values, how do these values and principles translate into every employees’ daily responsibilities?

Employees want to know – okay, the values and principles all sound good, but tell me how this impacts my job?

This is the essential question for ethical cultures – what do the company’s ethical values mean for its employees?

A company has to answer these questions with real and tangible explanations.  For every employee, a company expects the employee to:

• Act with honesty
• Treat co-workers, business partners and customers with respect
• Report colleagues and business partners who engage in misconduct
• Seek guidance from your supervisor or compliance staff when an employee wants to understand how to handle a specific business situation

A company has to bring reality to the equation and explain how its ethical principles work in practice.  Senior management has to conduct themselves in a manner that promotes the company’s ethical principles.  Such conduct serves as a teaching example for every employee.  These examples of conduct show that the company is committed to its ethical principles and that it lives by its word.