EPISODE #4.5:
Build Your Values at Bettina Palazzo’s Corporate Ethics Gym
Or listen to this episode on Apple Podcasts.
Why do we hear so many fancy words about company values while corporate scandals rage?
According to ethics expert and corporate consultant, Bettina Palazzo, leaders love to talk about values because the exercise creates a nice fuzzy feeling. Yet lists of corporate values will not move the needle on company decisions nor affect day-to-day behaviors. Why?
Leaders must work from the ground up. Their role is to engage the organization in clarifying a values vision and inventing the plan for making it real throughout the organization.
In this episode, Bettina lays out the problems and solutions to the corporate ethics dilemma so prevalent in our world today.
In the words of my guest, Bettina Palazzo, “because anyone can come up with fancy feel-good words. But you can’t merely throw a beautiful values “cherry” on top of a questionable culture.”
She refers to ethics as “subversive activities.” And she says strong values underpin ethics.
Ethics that matter emerge from the engagement of diverse points of view. However, these discussions can lead to conflict because everyone holds values close to the heart. Finding common ground with those whose values differ from our own isn’t easy.
Bettina says the secret is to control defensiveness and approach the ethics discussions with a curious mindset. She maintains that strong, workable ethics depend on hearing all voices. And she claims we aren’t very good listeners.
She offers advice to leaders, and to all of us, on how to become better listeners when engaged in the ethics discussions. And she shares steps leaders must take to set the direction for ethics that come alive in relationships, decisions and everyday behaviors.
Here is a snapshot of a few topics we cover in this podcast…..
- Comparison of corporate ethics from then to now.
- Do ethics play out differently in the US vs. Europe?
- The relationship between employee oppression and gossip and whistleblowing.
- How leaders can set the stage for addressing values differences.
- Why speaking up is critical and how leaders can create an environment that makes speaking up easy.
- Universal biases in listening
- How leaders can and should show up in leading the charge for corporate ethics.
Timestamps:
- 1:52 How attitudes about corporate ethics have changed.
- 3:19 The relationship of values to ethics
- 5:16 The dictator game – words frame behavior.
- 6:23 Why values statements may not lead to behaviors.
- 8:14 The pyramid of ignorance within organizations
- 9:08 Why people are afraid to speak up in organizations.
- 10:03 Ethics as a subversive activity
- 11:08 Gossip as a reaction to oppression of voices
- 12:25 Creating the groundwork for exploring diverse opinions.
- 13:17 Biases that affect listening.
- 15:43 Bad habits when listening
- 17:05 The importance of guarding against assumptions
- 18:26 Individual differences in listening behaviors
- 19:24 The importance of leaders making public commitments to values and ethics
Dr. Bettina Palazzo
Bettina stumbled on the topic of business ethics in the early 90s and soon found out that it is such a rich and exciting topic that she never pursued anything else – at least professionally. She suffered through the cumbersome but rewarding effort of getting her head around the philosophical and economical foundations of business ethics, won an award for her PhD. thesis and rode off into the sunset to join KPMG. There she helped to build their business ethics consulting services. Tough pioneer work at that time! After a short detour into strategic management consulting, she returned to her true passion and started her own business ethics advisory. Over the years Bettina has learned that you cannot press ethics into checklists and processes and that unethical companies make unhappy people. The desire to create corporate cultures that make work fun and meaningful instead of dreadful and depressing drives everything she does.
Find Dr. Palazzo online:
BettinaPalazzo.com
@BettinaPalazzo
LinkedIn
Facebook
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EPISODE #4.5 TRANSCRIPT
Kathy Miller Perkins:
Welcome to the Conscious Culture Café, the podcast that explores how you can lean into your purpose, live your values and enhance your social impact through your work. I’m your host, Kathy Miller Perkins.
Have you noticed that corporate scandals seemed to fill the news these days? Yet, at the same time in great numbers, corporate leaders talk about their values and commitments. So, what gives? How can commitments to values and scandals increase at the same time? Are leaders talking of their values, merely to burnish their reputations?
My guest today is Bettina Palazzo, and she has been addressing these tough questions for years. Bettina won an award in the ‘90s for her PhD dissertation on the topic of business ethics. And after she obtained her degree, she helped KPMG build their business ethics consulting services. Currently, she has her own Business Ethics Advisory. Bettina calls Lausanne, Switzerland home. And that’s where I met her. We both taught in the Sustainability Doctoral Program at the Business School of Lausanne.
Welcome Bettina.
So, you’ve been working with companies around the globe on business ethics for many years. What’s your take on what is happening currently? Are the scandals worse now, than when you started? Are companies headquartered in the US, worse than their European counterparts? What do you think?
Bettina Palazzo:
That’s very difficult to say, because empirically, we cannot really prove it.
Kathy Miller Perkins:
Right.
Bettina Palazzo:
What definitely has changed, is the way we look at it. And what society’s expectations are.
Kathy Miller Perkins:
Oh, very interesting.
Bettina Palazzo:
Yes, and the perception of it got so much sharper. I still remember when I started in the beginning of the ‘90s finding cases, or newspaper articles that would really talk about ethics and companies was always complicated and you always had to remove some layers, because the ethical issues were hidden under legal stuff, and-
Kathy Miller Perkins:
Ah.
Bettina Palazzo:
It wasn’t so clear cut. So, this is much more obvious and out there now. And also, in my consulting work in the beginning, when we were trying to find clients, you had to really explain everything from the very beginning. And also, with my audit colleagues at KPMG explaining ethics to an auditor with so much numbers, was a big learning experience for me. So, in a way we don’t know if it’s worse. A general big discussion, there are some people who say in general, the world does better now than 100 years ago, because we tackled this and that. But then, there are other voices who say, it’s worse. So, what-
Kathy Miller Perkins:
Yeah.
Bettina Palazzo:
Empirically hard to prove, but definitely-
Kathy Miller Perkins:
Yeah.
Bettina Palazzo:
The attitude has changed.
Kathy Miller Perkins:
Good point, yeah.
Bettina Palazzo:
And the world is definitely a much more complex place.
Kathy Miller Perkins:
Well, and plus with social media and with the transparency that no one can hide anymore. So, that may also have something to do with it. You talk about the relationship of values and ethics. And one of the things that you and I both witnessed over the last many years now, is that companies are coming out with all value statements. Even companies that are caught in scandals, usually they have a value statement. Where’s the disconnect? What’s happening with values versus ethics?
Bettina Palazzo:
Values are very attractive. I mean, everybody gets this nice fuzzy feeling when you talk about value, so that’s why companies and often the communication people in the company think, “Oh yeah, we need to do values. Values are tricky. Everybody can come up with some fancy terms, integrity, excellence, or what are the other usual subjects.
Kathy Miller Perkins:
Those are two that I see everywhere.
Bettina Palazzo:
Teamwork.
Kathy Miller Perkins:
Yes, right.
Bettina Palazzo:
Empowerment.
Kathy Miller Perkins:
Right.
Bettina Palazzo:
Agility, is a big one at the moment.
Kathy Miller Perkins:
Really interesting. I wonder, if people even know what it means. Yes.
Bettina Palazzo:
Yes. So, very often people don’t even know what values are. And so, they throw in all nice sounding words and think that they are values, that’s not always the case. Open communication, is more an activity than a value. But of course, I mean, I don’t want to be too technical on this.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
Yeah. And that’s a broad field, we don’t want to go there. What’s a value? What not? And there are people who make lists of the values.
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
But then, the question is how can you have a set of values? Which is nice, because it can help to define the name of a game in a company.
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
Yeah? There is this great experiment that I came across that people did, where they let two groups play the same game, where you can win, or lose. If you co-operate, both people win. But, if you are a competition, only one of them wins.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
So, it’s called The Dictator Game.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
And it’s often used in game theory. There are two setups. In the one setup, they told the people, “So, this is the community game.”
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
And in the second setup, they told them, “This is the Wall Street game.” And that’s all they said. And then, they let them play for a while. And I let you guess, in what setup people co-operated more?
Kathy Miller Perkins:
I’d say community game. Isn’t that interesting?
Bettina Palazzo:
Yeah. So, I found that fascinating. It’s 70% that co-operated in the community game and only 30% in the Wall Street game.
Kathy Miller Perkins:
So, there’s something about the words that set the expectations-
Bettina Palazzo:
Exactly.
Kathy Miller Perkins:
For how to act.
Bettina Palazzo:
Right.
Kathy Miller Perkins:
Isn’t that interesting? Very interesting. Why is it then, if these companies have the value statements, they have the right words, why don’t the behaviors follow?
Bettina Palazzo:
Yeah.
Kathy Miller Perkins:
What’s the problem?
Bettina Palazzo:
Well, because you can’t just throw a beautiful cherry on a toxic culture.
Kathy Miller Perkins:
Oh, okay. So, it’s about the culture?
Bettina Palazzo:
So-
Kathy Miller Perkins:
Yeah.
Bettina Palazzo:
You really have to work it from the ground up.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
And you can’t just invent… Well, you can, but then you have to really also know where you are and make a plan, how you get there.
Kathy Miller Perkins:
Uh-huh (affirmative).
Bettina Palazzo:
But, you can’t just throw some icing on a cake. It’s like you’re putting on makeup and not washing your face.
Kathy Miller Perkins:
Right, yes. Very good. Yes, that’s interesting. And I want to come back to something you just said, because I find this in my work all the time. You have to know where you are.
Bettina Palazzo:
Right.
Kathy Miller Perkins:
Before, you can figure out what you have to do to get to where you want to be. We do a lot of cultural assessment work, and what we find, is that top level leaders almost always are wrong about what people within their culture-
Bettina Palazzo:
Exactly.
Kathy Miller Perkins:
How people within their culture view it. And yet, they assume that they know. And so, they can’t get anywhere, because they have really no idea what people are really thinking about their culture. Do you find that-
Bettina Palazzo:
Yes.
Kathy Miller Perkins:
In your work as well?
Bettina Palazzo:
Definitely. I mean, we are not the only ones who experience this, but-
Kathy Miller Perkins:
Right.
Bettina Palazzo:
Probably, as an outsider to organizations, have a sharper look and that-
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
As the insider. That’s why consultants are useful.
Kathy Miller Perkins:
Yes, right. [crosstalk 00:08:05]. Right, right.
Bettina Palazzo:
And you can say things that insiders are maybe too afraid to say so bluntly.
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
And yes, I think there’s lots of research about how come we have this pyramid of ignorance that people at the bottom are much more aware of reality, or problems, than the ones at the top. They have usually a rosier picture of it, because… Well, people don’t really want to communicate the, not so nice parts about the organizations-
Kathy Miller Perkins:
Right.
Bettina Palazzo:
To the powerful people.
Kathy Miller Perkins:
Well, you said something in one of your blogs that really caught my attention. And that is, that in some of these companies that have these really visible scandals, when researchers have dug into it, they found that there were people in the company that knew about it years before it broke. Is that part of this issue, that people aren’t telling what they know? They’re not speaking up and why not?
Bettina Palazzo:
Well, I think speaking up is just the hottest topic in business ethics and probably, in corporations in general, at the moment. Because, we’ve been talking about agility before, it just doesn’t work anymore to have this hierarchical structure, whether the people at the top know everything and they know best. Nobody knows best anymore in this [inaudible 00:09:34], in this highly volatile world we’re living in. So, there’s this big talk about collective intelligence and agility. But, the thing is, this only works if all the voices are heard.
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
All the voices count the same. That’s why we have all these problems, in making diversity work and having more female leaders. It’s just moving away from this dominant mainstream thinking.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
I also think business ethics is super hot at the moment, because if you do with an ethics part, right – because, ethics is in itself also a subversive activity, you get so much more, you get more open culture, you get more critical thinking.
Kathy Miller Perkins:
Uh-huh (affirmative).
Bettina Palazzo:
And you have to deal with constructive – of course, it has to be constructive, yes? Respect and constructiveness. You don’t want to just complain about what’s going on, that’s an important point to make. If you have to differentiate between the speak up, which is constructive to help advance the company and also to help the people feel heard.
Kathy Miller Perkins:
Yes, right.
Bettina Palazzo:
That is good for innovation. And it’s not about whistle-blowing and snitching and gossiping, because that’s a behavior, if you are in an oppressive system. Because, you can’t really say what you think, then you do it under the card and you gossip. So, that’s a big thing.
Kathy Miller Perkins:
Uh-huh (affirmative). And that is something that I’ve been reading about, is that there’s some believe that what’s called tattle-tailing-
Bettina Palazzo:
Yeah.
Kathy Miller Perkins:
In the US, is on the uptick. What do you know about that? What do you think about that?
Bettina Palazzo:
I think we really have to differentiate there. And of course, when you have gossip, people don’t feel heard, so they talk amongst each other.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
It’s a reaction of the oppressed.
Kathy Miller Perkins:
Oh, okay. That makes sense.
Bettina Palazzo:
Yeah, if you are empowered and that’s what companies pretend they want, I’m not sure they’re really want it-
Kathy Miller Perkins:
Well, right.
Bettina Palazzo:
Right? Then, it’s a different ball game. Then, you make the voices count, you don’t react defensive, because you are the big authority, but you want to hear from them. And these things, can’t always be nice.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
That’s why there’s so much movement in company, but if you want to do this, you create more conflict.
Kathy Miller Perkins:
Oh, say more about that. What do you mean, you create more conflict by doing that?
Bettina Palazzo:
If you want to be more inclusive, so you have more voices-
Kathy Miller Perkins:
Okay, uh-huh (affirmative).
Bettina Palazzo:
But, more different opinions that, “Yes, diverse teams are much more creative.”
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
But, only if you create the groundwork, so that you understand each other, right?
Kathy Miller Perkins:
Right.
Bettina Palazzo:
You have to know more about the other side. For instance, if you have a team where women are in minority, women tend to say less, if they feel not so much taken seriously in a more male environment. And if you want these voices heard, you have to create things, have rules about interruptions-
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
Or, speaking times. It just doesn’t work the traditional way anymore, where you had different opinions. But then, it was the authority that decided.
Kathy Miller Perkins:
Right.
Bettina Palazzo:
Today we have different opinions. That’s why self-empowered teams are struggling with this.
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
We need new structures, in a way, to deal with different opinions. Also, value conflict in a way that can be inclusive and creative. And that’s hard, because my personal values are close to my heart. And if somebody else sees them differently, I get defensive.
Kathy Miller Perkins:
Sure, yeah.
Bettina Palazzo:
So, how can we move away from this? And say, “Oh, this is interesting. What can we do with this?”
Kathy Miller Perkins:
Right. Yeah, it’s a different mindset altogether.
Bettina Palazzo:
Right.
Kathy Miller Perkins:
It’s a mindset that says that differences are good, rather than differences have to be overlooked, or… It’s tough, it’s complex, as you said.
Bettina Palazzo:
It’s tough, and it’s also hardwired in us. And we found out there’s all this big talk about unconscious bias. And one of those biases is similarity bias.
Kathy Miller Perkins:
Yes.
Bettina Palazzo:
And it seems like, if we hear people in a group who we identify more with, that are like us, we think they are smarter and better. And if, in our in-group, it seems – there’s been research on this – it’s hard for me to understand you. Sometimes, you don’t even hear these voices, I mean, physically.
Kathy Miller Perkins:
That’s right.
Bettina Palazzo:
Yeah.
Kathy Miller Perkins:
How would a leader create, or leaders as the case may be, create an environment where people do appreciate differences and don’t feel reluctant to speak out? You talked about silence being contagious. How would a leader-
Bettina Palazzo:
Yes.
Kathy Miller Perkins:
Create an environment where that is not the case?
Bettina Palazzo:
Again, the starting point for this is the leader, because he, or she sets the stage.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
And that, this starts long before you have that critical conversation, you have to create a whole culture over a longer period of time where you also model yourself, so that-
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
Your people see yourself speaking up to your boss, for instance.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
Or, yeah. Or, at least tell them some stories, or notice that you are not only following what comes from above, but you have a critical distance there.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
Listen a lot.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
That’s the hardest part. Because, most of the time we are not really trained to listen well.
Kathy Miller Perkins:
Right.
Bettina Palazzo:
We often listen to respond.
Kathy Miller Perkins:
Yes, right.
Bettina Palazzo:
But, while still listening, we already make our little plan, bullet point three to five, to win this fight.
Kathy Miller Perkins:
Yes, I say that. I bet, I’ve probably done it.
Bettina Palazzo:
And everybody does it. My training field for doing this better in active listening, is my teenager at the moment.
Kathy Miller Perkins:
Ah, yes.
Bettina Palazzo:
Which is tough, because he triggers me a lot, and then-
Kathy Miller Perkins:
Right.
Bettina Palazzo:
Not getting defensive and just think, “Oh, this is interesting.” And ask him a question and not being judgmental. I’m not giving advice instantly.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
It’s so crucial, because if you manage not to do this, you are giving so much more appreciation to the other person, because you don’t say, “Well, this is, because you are lazy and you should do this and that.”
Kathy Miller Perkins:
Right. Right, right.
Bettina Palazzo:
Because, we all grew up like this. It’s a very hard habit to break.
Kathy Miller Perkins:
Yes, it is. And I can see clearly, how this relates to values and ethical behavior in companies. If you can’t talk about these things and can’t talk about the differences, different assumptions that people make about ethics, then it’s going to be a mess. It’s going to be chaos. So, no wonder these scandals come about.
Bettina Palazzo:
Yes, I think again, as so often, communication is key. And very often we also tend to make assumptions about the other person-
Kathy Miller Perkins:
Right.
Bettina Palazzo:
Without just simply asking, “So, how would this work for you?”
Kathy Miller Perkins:
Right.
Bettina Palazzo:
And not just think, “Oh, she just had a baby. She probably doesn’t want this promotion.”
Kathy Miller Perkins:
Right, yeah. We make so many assumptions without checking-
Bettina Palazzo:
Yeah.
Kathy Miller Perkins:
On the validity of those assumptions.
Bettina Palazzo:
Yeah, educate yourself. So, I started to do some work on male ally-ship. So, one of the big things I think that men need to do here, is just to be more curious about women. I mean, we all grow up in School reading, mostly male authors.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
Why don’t you read some female authors for once?
Kathy Miller Perkins:
Good suggestion.
Bettina Palazzo:
Because, I don’t understand it.
Kathy Miller Perkins:
Bettina, you’ve worked in both, the US and Europe, in several countries in Europe. Do you see differences in how we go about this? Sometimes, I think that we, in America, are worse about listening, than in other countries. That we are so anxious to express our own opinions, that we don’t listen. Do you see differences in the countries? Or, is this a universal thing?
Bettina Palazzo:
I think the difficulty to listen well, is probably pretty universal-
Kathy Miller Perkins:
Okay.
Bettina Palazzo:
From what I observe.
Kathy Miller Perkins:
Mm-hmm (affirmative).
Bettina Palazzo:
I think it’s more a personal thing. So, some people have it less than others. Introverts tend to be better listeners than extroverts.
Kathy Miller Perkins:
Really?
Bettina Palazzo:
In my experience.
Kathy Miller Perkins:
How interesting, how interesting. That makes sense, I hadn’t thought about that before, but that certainly makes sense. So, if you were the leader of a company, trying to get your arms around this, what would be the first steps you would take? Suppose, that you’re the leader of a company that has had some problems, has had either some scandal, or some obvious cultural issue. What would you advise a leader in that situation to do? What would the steps look like?
Bettina Palazzo:
That’s of course, a dream project of mine, since forever.
Kathy Miller Perkins:
I bet. Of course.
Bettina Palazzo:
I’ve been there. On the other hand, it’s very, very hard as a consultant to do this. But, if you are a leader, you’re much better than this. As a CEO, or the top manager, you should definitely start with yourself-
Kathy Miller Perkins:
Good, good advice.
Bettina Palazzo:
Yes, and do some soul searching. And I know they don’t like this. I recently coached an executive team and they got forced by their compliance officer to come up with a statement on the newest code of conduct. And they were resentful to expose themselves on these topics of ethics and on speak up. And we ask them for some personal stories, why they think, what is the most important topic in the code for them? Or, what experience with speak up? Even negative one, they had in their career. And it was a not-so-easy coaching project to give them the courage to come out with the sensitive topics, because they had the feeling, it makes them look vulnerable-
Kathy Miller Perkins:
Yes, right.
Bettina Palazzo:
Which of course, is a great force, because if the top leader goes out there and says, “This is my experience with this, this is how I want it for our company. And this is what I’m committed to do for it.” That’s really super important to do this in the beginning. And what annoys the hell out of me when I read codes of conduct, is that very often the leadership message is, “This was very important for our reputation. And I expect you all to do this and that.”
Kathy Miller Perkins:
Uh-huh (affirmative).
Bettina Palazzo:
And not saying, “And I will do this.” Something which would be the proof to the pudding, in time and resources and engagement that they would do, because why should their people do this, if they don’t start?
Kathy Miller Perkins:
Absolutely. Absolutely. And it seems to me that, that would be the most critical step.
Bettina Palazzo:
Definitely.
Kathy Miller Perkins:
Absolutely. Well, this is wonderful. You have put some challenges to the audience out there, I would say. Before we sign off, do you have any last words, or any other comments, or advice that you would give the audience?
Bettina Palazzo:
Yes, definitely. So, one of my missions for this year, is to make a marketing campaign for ethics, because it has this party pooper reputation. I think it-
Kathy Miller Perkins:
True.
Bettina Palazzo:
Shouldn’t have-
Kathy Miller Perkins:
That’s true.
Bettina Palazzo:
Because, in reality, it’s really a super power and it can really help you to have a happier life. But of course, like with the values for the companies, it’s not something that just comes to you, you need to practice it. So, that’s why, my new signature product is also the Ethics Gym, because we need to work our muscle on ethics-
Kathy Miller Perkins:
Uh-huh (affirmative), I like it.
Bettina Palazzo:
Daily.
Kathy Miller Perkins:
That’s good.
Bettina Palazzo:
Yeah.
Kathy Miller Perkins:
That’s great. Well, thank you so much for joining us. And I would say, it’s both reassuring to know that the US isn’t any worse than Europe, in terms of listening. And it’s also disturbing to know that this is universal. This problem with listening.
Bettina Palazzo:
Yes, I’ve been thinking a lot about it. And one of the explanations I came across, is that when we were kids, it was often so hard to get heard, that when suddenly as adults, somebody listens to us, we just can’t stop ourselves.
Kathy Miller Perkins:
That’s probably right. That’s a good place to stop. Thank you so much again Bettina, for joining us.
Bettina Palazzo:
Yeah, it was a pleasure. Thank you Kathy.
Kathy Miller Perkins:
Thanks for listening to the Conscious Culture Café. If you’ve liked what you heard, connect with us at millerconsultants.com. You can access the show notes and receive our free materials. See you next episode.