By Robin Kolvek
As the financial industry has grown more globalized and complex, institutions increasingly face dilemmas that challenge established moral and ethical standards. In order to resolve such issues, credit unions must establish clear organizational policies and procedures that help their employees navigate and traverse complex ethical problems in a timely, efficient manner. Leaders have to be an unyielding moral guide and trusted confidant amongst their employees. To do so, leaders should create a set of ethical principles for their own decision-making process.
So, where exactly should credit union leaders start?
Provide Ethical Clarity
Whether an ethical issue is intricate or simple, leaders need to serve as a constant resource in providing clarity to their employees. Establishing clear boundaries for risks and ethical business standards provides a framework for employees to make the right decisions. Additionally, it is critical that credit union leaders take the necessary time to thoroughly describe the institution’s reasoning for policies and procedures, as well as recommend clear courses of action for employees to resolve issues.
Discuss Ethical Dilemmas
Numerous credit union leaders fail to discuss ethical dilemmas or questions they are facing. Many fear“that moral talk will threaten organizational harmony, organizational efficiency and their own reputation for power and effectiveness.” These concerns ultimately have severe repercussions for credit unions, includingthe “creation of moral amnesia….moral stress for individual managers; neglect of moral abuses; and decreased authority of moral standards.” Managers have to take into account the potential unintended consequences that could occur from their inability to converse with their employees about morality and ethics.
Set the Example
Credit union managers have to practice what they preach – 24 hours a day, seven days a week. For example, initiating a conversation with an employee about an ethical dilemma you are facing can have substantial benefits for you, your employees and your credit union. Furthermore, if you do not practice the very policies you are advocating for, why should you expect your employees to behave any differently?
As the institution’s leader, you must be cognizant at all times of how your actions are perceived and digested by your employees. Even the smallest of “ethical lapsescan have major impacts” on your perception as a leader as well as for the overall ethical fortitude of your organization.
Assess Risks of Incentivizes
Properly calibrated incentivizes can have a significant positive economic impact on your credit union. By providing employees economic benefits to achieve certain goals and objectives, credit unions can get the most productivity out of their employees. However, managers have to be aware thatthey are “not inadvertently providing rewards for behaviors you’re trying to discourage.” For example, leaders must be aware of any unethical behavior instituted to meet an incentivized goal. Managers can prevent such immoral behavior from occurring by not making the incentivizes overly strenuous or time sensitive. These safeguards will help to keep your employees on a righteous, ethical path.
The above principles establish an achievable framework by which managers can provide substantive, sustainable ethical leadership within their credit union. As new 21stcentury issues arise, credit unions with moral leaders and ethical cultures will stand the true test of the financial markets and time.
Robin Kolvek is CEO at EPL, Inc. For info: www.eplinc.com.