Job hunters are prioritizing ‘ethical’ companies. But what does ‘ethical’ actually mean?

Job hunters want to work for ethical companies, but what does that mean?

ESG (environmental and social governance), a close counterpart of DEI, is on the minds of many job seekers. Beyond compliance, employers can take ethics seriously in order to attract socially conscious employees. But what defines an ethical company?

Environmental and social impact, governance principles, workplace well-being, legal compliance track record, and structured compliance programs are some of the fundamental criteria used by researchers at the nonprofit Ethisphere to create a list of gold-standard companies when it comes to ethics. This year’s list of the “world’s most ethical companies” includes employers from a variety of industries, including Apple, Ecolab, HP Intel, PepsiCo, and Workday. 

What are the common characteristics of these ‘most ethical’ companies?

According to Ethisphere’s report, which was released on Monday, the majority of the companies on the list had a chief ethics and/or compliance officer.

Similarly, 99% of gold-standard companies said they keep their board of directors up to date on benchmark progress. Furthermore, 93% of companies reported involving their ethics team in pre-acquisition discussions.

Where do ethics fit into talent management?

The researchers at Ethisphere framed their data analysis as a guide to “future-proofing” businesses — essentially, protecting them from the cancel culture. They pitted honorees against Boohoo and its “modern slavery” allegations in 2020, FTX and its impending demise in 2022, and Silicon Valley Bank, which went bankrupt in March. 

Additional research confirms that, in addition to increased consumer interest in a brand’s ethics practices, workers are increasingly interested in the values of a potential employer. According to PwC, 83% of consumers polled in 2021 believe companies should be honing their ESG best practices; 86% of workers polled “prefer to support or work for companies that care about the same issues they do,” researchers said.

HR managers looking to retain and attract millennials and Gen Zers for their multigenerational workplace should be aware that ESG is especially important to these groups, according to a report released by Society for Human Resource Management in March this year.

What can HR do to make a company more ethical?

Developing a more ethical corporate culture is a critical responsibility for human resource professionals. They can shape the organization’s values, behaviors, and decision-making processes by taking proactive steps. Here are some specific steps HR professionals can take to make their company more ethical:

Establish a strong code of ethics: 

Human resource professionals should collaborate with senior management to create a comprehensive code of ethics that establishes clear expectations for employee behavior. The code should include provisions for integrity, respect, diversity and inclusion, confidentiality, and adherence to laws and regulations. It should be communicated to all employees and used as a guideline for making ethical decisions.

Integrate ethics into hiring and selection: 

Human resource professionals can incorporate ethical considerations into the hiring and selection process. During interviews and reference checks, this can include evaluating candidates’ values, attitudes, and ethical judgment. HR professionals can help to build an ethical workforce from the start by hiring people who share the company’s ethical values.

Encourage an ethical leadership culture: 

Human resource professionals should concentrate on developing ethical leadership within their organizations. This includes providing leadership development that emphasizes the value of ethical behavior, integrity, and leading by example. Human resource professionals can collaborate with senior leaders to ensure that ethical considerations are incorporated into performance evaluations, promotions, and rewards systems, encouraging ethical behavior at all levels of the organization.

Create reliable reporting mechanisms: 

Human resources professionals should put in place and promote mechanisms for reporting unethical behavior, such as anonymous hotlines or confidential reporting channels. Employees should be able to access and communicate through these channels, ensuring that reports are handled impartially and without retaliation. Human resource professionals should promptly investigate and address reported concerns, as well as take appropriate disciplinary action when necessary.

Improve transparency and accountability: 

Transparency can be promoted by HR professionals by ensuring open lines of communication throughout the organization. This includes openly and consistently sharing information about company policies, decisions, and performance. HR professionals can also set up accountability mechanisms, such as regular ethics audits and reporting, to monitor adherence to ethical standards and identify areas for improvement.

Integrate ethics into policies and procedures: 

To incorporate ethical considerations, HR professionals should review and update policies and procedures. This includes revising the employee handbook, code of conduct, and other relevant documents to clearly outline expected ethical behaviors as well as the consequences of violations. To ensure compliance with applicable laws and regulations, HR professionals should collaborate with legal and compliance teams.

Promote ethical decision-making: 

Employees in ethical quandaries can benefit from the guidance and support of HR professionals. This can include providing frameworks or tools for ethical decision-making, establishing ethical consultation processes, and encouraging open dialogue about ethical challenges. HR professionals can assist employees in navigating complex situations while upholding ethical standards by creating a supportive environment.

Regularly assess and revise ethical initiatives: 

HR professionals must constantly assess the effectiveness of the organization’s ethical initiatives and programs. Surveys, focus groups, and feedback sessions can be used to gather employee perspectives and identify areas for improvement. Ethical policies and practices are reviewed and updated on a regular basis to ensure that the company remains in line with evolving ethical standards and expectations.

Apart from the above mentioned ways, Ethisphere and other sources also suggested some steps that HR professionals can take to make their company more ethical.

Stakeholders said at a summit last week that HR should work to hold the C-suite accountable for meeting DEI goals, whether through performance reviews, increased data collection, or a revamped executive compensation strategy.

Employers should also consider developing formal ethics and compliance programs if they do not already have one, according to the Ethisphere report.

“Providing the head of an ethics and compliance program with some variation of the Chief Ethics and Compliance Officer title is becoming a baseline expectation,” according to Ethisphere Sr. Compliance Counsel Jodie Fredericksen in the report. Previously, the research firm discovered that this role was “dual-hatted” with the general counsel role; however, this is becoming less common, according to the report.

According to Ethisphere, when it comes to shedding light on misconduct, HR can examine how it’s reported (think: a hotline), investigated, and ultimately resolved. The same is true for ethics and compliance training, audit best practices and risk assessments, and all related communication.

Finally, Ethisphere emphasized transparency throughout its report. Organizations that lead the pack in ethics and compliance programs “routinely” inform any “overseeing governing authorities” about programs, according to Fredericksen. Beyond reporting and investigations, the goal is to ensure that governing bodies understand how the compliance program works, according to Fredericksen.

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