We're Always on Parade

Every year, research and polling firm Gallup tracks the public’s confidence in various American institutions. Big business, I’m sorry to say, remains near the bottom of the list – ahead only of Internet and television news and the Congress. The institution trusted most? The military.

As business leaders, how do we bridge this trust gap? It’s a matter of ethics. I tell our employees at USAA: You’re always on parade. People are watching to see if what you do lines up with what you say. Ultimately, customers won’t do business with companies they don’t trust.

The military has had its own share of failures, but my own 28 years in the Army and 20-plus in business tells me that business can learn a few things from the armed forces when it comes to building and enforcing high ethical standards.

One observation we can draw from the military: Culture is an incubator for ethical behavior.

It’s tempting to conclude that the military’s orders, rules and regulations are responsible for keeping behavior on the straight and narrow. But whether you’re a military commander or a business leader, you simply cannot legislate or codify every single desired ethical behavior. Instead, you have to nurture a culture that not only reinforces the right behaviors but leads adherents to aspire to live out the right values.

In the Army, we devoted a lot of effort to sustaining a culture characterized by a few core values. Loyalty, duty, respect and selfless service: We reinforced these values at every turn. When individual behavior fell short, we pointed it out, imposed consequences and let the soldier know what he or she needed to do to improve.

Can a similar approach work in the private sector? At USAA, we use a code of conduct and associated core values as a set of guiding criteria designed to apply to every employee, regardless of rank. These criteria are meant to be observable and to flow from the “do the right thing” culture that we’ve encouraged over the decades. Managers and employees hold one another to this code – and is part of how we conduct all of our work.

A second lesson we can glean from the military: Ethics starts at the top.

One of my old bosses, General Norman Schwarzkopf, once said that of all the leadership failures of the past century, 99 percent were failures of character. He also said: “Leadership is a combination of strategy and character. But if you must be without one, be without the strategy.” General Schwarzkopf practiced what he preached. As a result, the soldiers followed him into battle at the risk of their very lives.

Likewise, in business, an ethical culture starts at the top, with management modeling ethical behavior. Executives have to be held to exactly the same high standards that other employees are.

Talk is cheap, of course. In Enron’s 1998 annual report, the company described its core values of respect, integrity, communication and excellence. A few years later, the company’s leadership failures left the trust of employees and investors in ruins. Within a decade, the credit crisis would further undermine the public’s trust in big business.

If business wants the complete confidence and trust of Americans, we will have to earn it. We could do worse than taking a page from the military in building and sustaining ethical corporate cultures.