Beyond tone at the top: building an ethical culture that lasts requires a foundation of practices that continue even when leaders change.

• Author: Harned, Patricia
• Position: United Technologies Corporation

We've heard it so often it's almost become a cliche. Ask how to build an ethical organization or instill a commitment to playing by the rules and invariably you are told "tone at the top." Certainly, senior leadership matters. When the boss performs with honesty and grace, others in the organization tend to follow suit. When leaders are less exemplary, are believed to cut corners or wink at misconduct, then our own behavior may get sloppy as well.

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But tone at the top is just the starting point, not the whole answer. For one thing, tying organizational culture to the CEO or even a board chairman exposes a business to a roller coaster ride of ethical dips and turns that shifts, sometimes dramatically, with every transition in leadership. Building an ethical culture that lasts requires a foundation of practices that continue even when leaders change. Indeed, if strong enough, the practices that undergird an ethical culture will not only endure, but can also help mold the leaders themselves and fortify their own ethical instincts.

The UTC story

Our research at the Ethics Resource Center (ERC) reinforces this concept. ERC's findings indicate that the creation and maintenance of ethical cultures require more than words. One sure approach is performance standards that encourage employee behavior that contributes to an ethical culture. A case in point is United Technologies Corporation (UTC), which reinvigorated its ethics and compliance program with initiatives to drive employees and leaders to a higher standard than mere compliance. Boards of directors looking to raise standards at their company might examine the UTC program.

Prior to this effort, UTC had a strong regime of conduct rules, and it punished employees who broke them. But to UTC's leadership, that traditional approach was insufficient because it used only one set of tools for shaping positive behaviors. Although its programs discouraged employees from wrongdoing, UTC didn't actively promote positive behaviors that enhanced performance. Working with ERC metrics that identified methodologies for fostering ethical behavior, UTC set out in 2005 to blaze a new trail by connecting ethical conduct to employees' annual performance reviews.

To make clear that an ethical culture is a core responsibility of every employee from the mailroom to the C-suite, UTC launched two companion initiatives--the "CEO's Ethics Objectives," which hold executives accountable for driving...