Search ‘customer ethics’ on Google and what do you find? Customer service ethics. Why limit it to service? While I agree that ethical service is part of customer ethics, I am wondering why the broader concept of customer ethics is not much spoken of. Perhaps some would argue it is indistinguishable from business ethics and maybe that’s true. However, I submit to you that customer ethics is worth its own spotlight.
What is customer ethics?
Simply put, customer ethics is about doing the right thing for the customer and ensuring mechanisms are in place to help people do the right thing every time. Customer ethics is a sub-set of business ethics. They are applied ethics that consider the moral principles and problems that exist when dealing with beliefs, decisions and actions that affect one’s potential and current customers.
In short, customer ethics is about two things:
- being acutely conscious about what is right for one’s customers in a variety of situations and
- ensuring that the structures and norms are in place to support the choice and execution of that which is right.
A Harvard Business Review article on business ethics last year provided good food for thought. They explained that unethical behaviour in business does four things:
- Blights reputation
- Hurts employee morale
- Increases regulatory costs
- Increases society’s distrust in business
Based on numerous research findings, I would add to this list. Unethical business behaviour also:
- Damages customer relationships
- Impairs long-term business success
Creating an ethical culture
One of the nuggets in this article (well worth a read at https://hbr.org/2019/05/how-to-design-an-ethical-organization) is that “creating an ethical culture … requires thinking about ethics not simply as a belief problem but also as a design problem.” It is not uncommon to perceive ethical culture challenges as “belief” problems only. In other words, it is assumed that once everyone believes that the same company values and ethical norms are sacrosanct, everyone’s behaviour will naturally fall in line. Not true. While we need a strong sense of common values that everyone believes in and tries to live by, there are issues of design that will either support or undermine a company’s values and ethics.
One example of design problems stems from a legalistic mindset. I have worked with business leaders who tried to tackle compliance to ethical codes and regulations with a such a mindset. They realised it did not have the desired cultural impact. The legalistic mindset logically concludes that people, once informed, are expected to know right from wrong and that they should suffer the consequences if caught doing something wrong. This approach focuses on individual accountability. And it is perfectly rational to do so – to make each person, especially leaders, personally accountable for their behaviour.
I believe in personal accountability and an approach that refuses to blame others or circumstance for my decisions, words and actions. But according to Professor Epley and Associate Professor Kumar, if one wants to build an ethical corporate culture, providing education and emphasising personal accountability is insufficient. The point is that when it comes to ethical corporate behaviour, context plays a more powerful role than we tend to appreciate. I remember facilitating management workshops on ethical thinking and actions with respect to customers several years ago. I graphically described the Milgram experiment (https://www.simplypsychology.org/milgram.html) and can still hear the aghast reactions of the audience – horrified at how beastly human beings could be. The point is this: to create a culture that consistently behaves ethically in all matters concerning the customer, we need to design in ethical supports and design out ethical underminers.
We human beings are less ethical in practice than we believe ourselves to be. It follows then that corporates, being a bunch of human beings, are less ethical in practice that Boards and Executive teams believe themselves to be. A recent article by Harvey and Arora supports this point – see https://boardagenda.com/2020/08/03/how-covid-19-could-cause-pandemic-misconduct/.
Humbly accepting this as true, the question is: How do we increase the level of ethics in practice? As a student of life, myself, I have the privilege of working with numerous financial services firms in this space. My focus is specifically on customer ethics.
One of the ways to increase the level of ethics in practice in an organisation is to design structures and norms that repeatedly raise the likelihood of ethical thinking and support execution of that which is right.
For example, we all know it is poor customer ethics to sell a product to a customer that is inappropriate for their needs. Yet, Sales teams revved up to earn greater commissions, along with their leaders under pressure to meet company targets, can be easily “forget” to ethically evaluate their actions in the heat of the moment. If we find novel ways to repeatedly animate a simple customer ethics message at the top of every sales admin computer screen, it brings ethical principles to the forebrain of sales people, which leads to more ethical sales behaviour. Numerous experiments underscore this point. There are many ways to raise the likelihood of ethical thinking i.e. having relevant ethical considerations top-of-mind in every business situation.
How does a company design structures or norms that support the execution of that which is right? In other words, how can we make it as easy as possible for people within an organisation to do the right thing or harder to do the wrong thing. At a basic level, there are some system process rules one can institute that simply disallow an action, such as a refund or a claim assessment cannot go from A to C without passing through B. Many companies have these are in place – some even too much so where insufficient thought has been given to the odd occasion where it would be more correct for an item to go from A to C via X and Y.
Here’s an example of a company that purposefully made it harder for themselves to do the wrong thing. I was honoured to be asked to initiate an Independent Ethics Board for a large financial services firm. Firstly, I salute the CEO who was willing to put money on the table to voluntarily impose such a structure on his executive team. This was a leadership team that appreciated the complexity of certain decisions that it faced and was mature enough to be open to facilitate ethical debate on matters that directly impacted its customers and the firm’s bottom line. If the Independent Ethics Board, which had no vested interest in the company’s profitability, did not support the ethical grounds for a decision, the company abided by the Board’s view of the matter.
The consequence was significant:
- It raised the ethical awareness of the leadership team.
- It strengthened the innovative thinking to incorporate a deeper sense of what’s right for customers
- It emboldened the confidence to move forward on matters that did get the nod from the Ethics Board
Another way to ensure structures and processes in place to support ethical behaviour is to make use of a Conduct Improvement Tool. While this could be adequate in Excel for SMMEs, it is more effective as a web app deployed across a company’s divisions and even third parties. Such a tool enables leaders to monitor, track and report on the extent to which the desired business practices are in place. Where not yet in place, the tool facilitates the assigning of responsible parties and deadlines. Where already in place, the tool demands records of evidence, which are uploaded and made available for compliance or audit checks.
Just as there’s no ethically perfect human being, there’s no ethically perfect company either. Shortcomings will happen. We’re all fallible. That’s no reason, however, to stop short of making every effort to minimise the magnitude or frequency of failings in customer ethics. If you’d like to explore some ways to do so, let’s connect and together we contribute towards making our companies, our world, a better place – Samantha@BrillianceCX.com