Lora Bentley spoke with Jim Huling, CEO and president, MATRIX Resources, Inc.
Bentley: With the advent of Sarbanes-Oxley and other governance measures, "corporate ethics" has become quite the buzzword. How do you advise public companies to move beyond the phrase as a marketing tool and to begin implementing ethics policies in earnest?
Huling: We should start by dismissing the entire notion of "corporate" ethics. It's an illusion. Ethics are actions that result from character, and character begins and ends with each of us as individuals. Companies don't have character. People have character, and when enough of them are joined in a common purpose, they can forge an identity as a group. But the issue of character will always be personal. A phrase from my high-school Latin class should be the mission statement for ethics in every company: "Esse quam videre." Meaning to be, rather than to appear. But changing behavior is very different from changing appearance. It's much harder work and less glamorous. That's why so few companies do it.
So how can organizations, or even teams, build character? First, define what you stand for and involve your people in that process. "No involvement, no commitment" is still one of the greatest truths of human behavior, and when the executives develop the company's principles in isolation, they are seldom adopted by the people. Second, have the courage to measure your organization's character. Establish a regular survey process - anonymous and confidential - and simply ask how well your organization lives out the values you say you believe in. Third, be willing to be publicly accountable. Post the results of your survey in the lobby of your office where everyone can see it. This one act will make a powerful statement, both internally and externally, that character is the foundation of your company.
Bentley: Would your advice to smaller private companies or nonprofit organizations that aren't subject to Sarbanes-Oxley be any different? Why?
Huling: Absolutely not. Ultimately, the success and sustainability of every organization comes down to the character of its people and their ability to align their actions with a set of principles. This core of character will enable an organization of any size or with any mission to withstand changes in market conditions, economies, or other external influences, and will allow that organization to endure. With this foundation, people become engaged and bring the best of their talents and their passion to their work because they work for a company that they can really believe in. This combination of high performance in an environment of trust and integrity is the formula for sustained superior performance in any organization, regardless of size.
Bentley: Do ethics policies make complying with regulations like Sarbanes-Oxley easier or more of a burden?
Huling: When a company establishes a foundation of shared values, and then aligns its actions to be consistent with those values, regulations such as Sarbanes-Oxley become easier because they represent only a minimum standard. In essence, Sarbanes-Oxley is simply an attempt to legislate integrity. However, it is possible for a company to meet the requirements of this type of legislation and still not operate with true integrity.
That's why self-auditing and public accountability are so much more powerful. Companies of real character will find that truly operating according to higher values will not only transcend the requirements of Sarbanes-Oxley, but will drive them to a far higher standard; a standard that leads to sustained organizational success.