By establishing ethical frameworks, leaders can foster trust among employees which can drive up to a 400% increase in performance.

The emergence of a moral vacuum and the lack of commonly held ethical frameworks in business are significant concerns for business leaders. To address this, leaders must strengthen, and sometimes re-establish, the ethical foundation within their organisations. This effort builds trust within the workforce, resulting in increased motivation, customer satisfaction, and productivity.

Re-establishing moral pillars

The Silent and Traditionalist generations established a strong, widely accepted moral code that was initially upheld by the Baby Boomers. However, this ethical framework has eroded over time due to societal changes. Generation X began to blur the lines between previously clear distinctions of right and wrong, opening the door to broader questions about morals and ethics.

This dilution continued with Millennials and Gen Z, who are inherently inclined to challenge established norms and more likely to adopt a relativistic worldview. Notably, 24% of Gen Z strongly agree that moral standards change over time and vary based on societal context – twice the percentage seen in older generations.

The fragmentation and growing fluidity of commonly held beliefs has led to organisational division and disconnection, with employees often operating from divergent or even void moral compasses, leading to conflict and tension. To address this, leaders must establish and maintain a collective set of values and behaviours, underpinned by a strong moral code.

Whereas values were previously marketing-driven “nice-to-haves,” they are now essential in defining and governing an organisation’s and its employees’ integrity. This code is the foundational ingredient for long-term business success – trust.

Why ethical frameworks drive trust

Business leaders with strong moral codes foster trust by consistently making ethical decisions, being transparent, and treating employees and stakeholders with respect and fairness. Their integrity and ethical behaviour create a reliable and predictable environment, encouraging a culture of honesty and accountability. This builds a positive reputation and attracts top talent, ultimately reinforcing trust and loyalty within the organisation.

Leaders now have a prime opportunity to earn their employees’ trust. The Edelman Trust Barometer has shown a notable shift in trust towards “my employer” since 2019, with businesses becoming more trusted than NGOs, government, and the media, taking over the role once held by other institutions.

The attributes of an ethical framework

To foster trust within an organisation, a structured ethical framework is essential. This framework should be founded on accountability, integrity, transparency, genuine responsiveness to employee and customer concerns, and collaborative (not consensual or collusive) decision-making. Further, it needs to align with and reflect the organisation’s values, supporting and enhancing effective and sustainable business delivery.

Leaders must embrace this framework and consistently act according to its ethical principles to establish a foundation of trust. Trust is further reinforced by a leader’s ability to connect across the organisation, bridging generational differences to create a unified ethical stance.

Similarly, this trust is solidified through courageous leadership that acknowledges and addresses disruptive dynamics. Such leadership not only builds trust but also creates a self-regulating culture, significantly reducing the risk of future scandals.

Why individual and corporate values must align

Leaders can no longer assume alignment between individual and corporate values. They must first define the organisation’s purpose and values, then communicate and embody these, along with a framework of endorsed behaviours through the organisation. This alignment should be connected to meaningful work and value creation that extends beyond mere shareholder returns.

For leaders to embody these ethics, aligning their personal goals, motivations, and behaviours with the organisation’s values is crucial. This requires a review of both individual and corporate values to identify common and individual goals that executives can authentically invest in and lead.

Such alignment empowers leaders to confidently uphold and advocate for the organisation’s values, fostering an ethical framework that permeates the entire organisation. With this framework in place, trust begins to build.

A high-trust workforce is unbeatable

Leaders who build high-trust organisations based on an ethical framework enjoy numerous benefits to their bottom line. This includes productivity and engagement gains, more loyal customers and repeat business, and greater overall performance.

Deloitte research shows trusted companies outperform their peers by up to 400%, employees who trust their employers are 79% more motivated to work, and customers are 88% more likely to repurchase from companies they trust.

According to Harvard Business Review, employees in high-trust companies report 74% less stress and 106% more energy. They also experience 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, and 40% less burnout. What’s more, average voluntary turnover rate in high-trust workplaces is just 10%, significantly less than industry averages.

Establishing an ethical framework enables the establishment of higher trust, which ultimately leads to a sustainable and substantially better business.

Andrew Rodgers is a Principal in the Leadership Practice at Odgers Berndtson
Principal in the Leadership Practice at Odgers Berndtson | Website

Andrew is a Principal in the Leadership Practice at Odgers Berndtson. He has worked at a global executive committee level, with country leadership teams in the UK, Europe, Asia, and the Middle East. Some of his specialisms include the actuarial, legal, finance and education sectors, as well as sales and operations teams. He is a certified ICF coach on a mission to see leadership teams thrive.