Tone at the Top: how much does it matter?

Several months ago, I attended a lunch session at the Markkula Center for Applied Ethics at Santa Clara University.  The speaker was Jack Domme, the CEO of Hitachi Data Systems, and the topic was “Maintaining an Ethical Culture in a High Performance Organization.”  HDS has won accolades for its ethical culture, and I was hoping to learn some best practices to share with my clients.

It was a great session.  Domme is a dynamic speaker, and the culture that he’s built at HDS is impressive.  HDS has managed to embed ethics into every decision that gets made there, including weaving an ethics component into every aspect of the performance review.  The lesson that I took away from the presentation, though, was tough.  What I learned is that for companies to have the kind of culture that HDS does, the first step is to have a CEO who prioritizes creating and maintaining that ethical culture.  This means that creating and maintaining an ethical culture can’t just be somewhere on the top 10 list – it has to be the first thing on the top 10 list.

Domme shared a story about what happened a few years ago when revenues took a tumble.  Instead of laying employees off, he asked everyone, including and especially the top-earning executives at the company, to take a pay cut to preserve headcount.  To Domme, this was the ethical, moral thing to do, and his strategy paid off when employees worked harder and revenues came roaring back.  Based on what I saw and heard, HDS and Domme deserve every accolade they’ve received.

We can’t drive tone at the top from C&E; we can only harness and leverage it.  In some of the more cynical, late evening conversations I’ve had with other practitioners, because of this, tone at the top is just another box that needs to be checked.  HDS and Domme show us that this underestimates the executives at our companies, and it underserves the cultures we’re responsible for stewarding.

Tone at the top is crucial to making substantive improvements to a company’s culture.  If you have it, take advantage of it by helping the CEO and others in the C-suite weave ethics and integrity into all of their conversations.  Show them the opportunities they have to provide leadership in an arena that needs additional visibility.  If you don’t, maybe the story of HDS and what Jack Domme has achieved there can help make the case that tone at the top needs more attention and weight.

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