Ethical leadership in a global marketplace.

• Author: Raymond, Chris
• Position: Viewpoint

* "Relativity applies to physics, not ethics."

Albert Einstein is credited with that powerfully simple statement, which helps explain how we must operate in an increasingly competitive global defense industry.

Business has always been a contact sport. However, winning at any cost isn't winning at all. What's more, cutting ethical corners simply isn't necessary. We know, and research supports, that companies with strong ethical cultures outperform those whose ethical cultures are weak.

The Corporate Executive Board recently released data showing companies with strong ethical cultures, open communication and managers who model corporate values, delivered shareholder returns that averaged 5 percent higher than peers; improved worker productivity of more than 12 percent. And such companies were 67 percent less likely to observe instances of business misconduct than those at companies with low integrity cultures.

Shaping an organization's culture is a fundamental leadership task. When it comes to ethics that involves:

Establishing and supporting a formal ethics program by committing the necessary resources to ensure a robust program; a written code of conduct, ongoing training, an ethics hotline with anonymous reporting (where permitted), periodic reviews of business policies, procedures and internal controls, dynamic internal communications and giving the ethics organization the necessary independence to fulfill their responsibilities.

Modeling ethical leadership, especially when the going gets rough, can be seen as leading ethics and modeling company values. Keeping promises and commitments, to your team, your customers and your shareholders, is important--especially when there is pressure to compromise values. Tony Simons, in the Harvard Business Review, stated, "Organizations where employees strongly believed their managers followed through on promises and demonstrated the values they preached were substantially more profitable than those whose managers scored average or lower"

Setting clear expectations of employees for ethical behavior for both modeling and explaining company values, and desired conduct. Ensure that tools and training are provided to help employees make the "right" decisions. This includes maintaining clear and accessible policies and procedures as well as knowledgeable ethics and compliance personnel who can coach and...