How do you create an ethical workplace?

That was the gist of a question we got from a newsletter reader who wanted some advice on how managers can help employees act ethically, particularly when cutting corners could lead to the sorts of short-term gains against which employees are measured. For example, if acting unethically would boost profits, and employees are measured on how much they contribute to company revenue, how do you incentivize ethical behavior?

For an answer, I reached out to Maryam Kouchaki, a professor of management and organizations who researches ethical behavior at work. We’ll hear from her today.

If you have a leadership question for us, please let us know at insight@kellogg.northwestern.edu. We’ll try to find a professor to answer it.

How do you create an ethical workplace?

Here is a condensed version of our reader’s question:

How do managers establish the benefits to an individual employee of following an ethical path, even when it may come at the expense of short-term performance?

Kouchaki: This is a great question!

We know from research that elements of a work environment such as performance pressure, aggressive goals, anxiety, and stress can lead to employees cutting corners and engaging in morally questionable behaviors. My colleague and I have written two Harvard Business Review articles that address this question from the perspective of an employee and a leader.

In the article “Building an Ethical Company,” we outline a few ideas for how organizations can encourage a culture of integrity and ethics. For example, through institutionalizing ethical premortems and elevating discussions about ethics before a decision is made or a project is started, employees get a chance to think about ways that ethical lapses can happen and come up with ways that they can be prevented. This way the company is able to make ethics salient and ensure that everyone upholds the stated values.

There are other ideas like creating incentive systems based on ethical performance. For example, in April, Mastercard CEO Michael Miebach announced that ESG targets will now be considered when calculating employee bonuses. The rule applies to everyone in the company now, not just executive-level staff.

However, thinking about what a company can do is only part of the issue. I also believe that employees (all of us) need to take charge and make sure we build an ethical career and do not simply wait for our leaders to guide us to be ethical. In our article “Building an Ethical Career,” we discuss ways that you can be in charge and take ownership of your own actions.

For example, plan ahead with some “if-then” statements, such as, “If I’m asked to do something unethical, then I will reach out to a friend for advice before acting.” Or seek out ethically minded mentors whom you can call on for advice if you’re facing a dilemma. Or, if faced with a difficult decision, run your possible choices through a “publicity test,” where you ask yourself if you’d be comfortable having your choice, and your reasoning behind it, published on the front page of your local newspaper.

These strategies are examples of ways you can help yourself to act ethically and stay true to your own values, even if it means forgoing some gains.

How to prepare for tough conversations at work

Nobody likes delivering unpleasant feedback. And few relish being the one to point out a thorny issue on your team. But that doesn’t mean you as a leader should shy away from tough conversations. Instead, you should prepare for them with the same thought and discipline you’d use to prepare for other important events, like presentations or negotiations.

Kellogg clinical professor Brooke Vuckovic has coached countless executives through these challenging moments. In our next The Insightful Leader Live webinar, she will share three critical—and often overlooked—ways you can prepare for the difficult discussions that are so essential to strong leadership.

The free webinar takes place March 9 at noon central time. You can register here.