Ethisphere Institute, a New York City think tank, has unveiled its sixth annual list of the World’s Most Ethical Companies (WME).
The list identifies organizations with fair business practices and standards compared with their industry peers. Achieving this level of recognition can be a challenge for many companies because finding the right leadership to guide an organization through difficult economic times, while also meeting expectations for ethical conduct, is not always easy. This year, nearly 5,000 companies were nominated but only 145 made it onto the list. According to Ethisphere, the 2012 list includes representatives of more than three dozen industries, from aerospace to wind power, with 43 of the winners headquartered outside the US.
Ethisphere methodology includes measuring the nominated company’s governance structure against checklists from organizations like GovernanceMetrics International. If a company fails to have a ‘good’ rating due to bribery allegations, corporate citizenship, regulatory and ethical issues, it is automatically tossed out of the list.
This year’s first-time recipients included Hasbro, Realogy, Petco, Britain’s Ethical Fruit Co, Thrivent Financial for Lutherans and Henry Schein, along with 31 others. Some 18 companies were removed from last year’s list this time due to ethical violations or lack of social responsibility initiatives.
The economic climate over the past several years has made it particularly difficult for top leaders and executives to land a place on the Ethisphere list. When the bottom line is under stress, other objectives can become secondary, or be completely ignored. Just look at the number of now-defunct firms and fraudulent activities the SEC and Department of Justice have cracked down on in the past year. For a firm to make it onto the WME list is, therefore, undoubtedly both an honor and an achievement.
Marriott International is one of the few companies to secure a hard-earned spot on the ethical companies list not once but five times in the past six years. So how does Marriott maintain its sharp focus on ethical practices in a highly competitive world?
Well, ethics is correlated with leadership and it all starts with the tone at the top. The company’s executive leadership in its Bethesda headquarters and in regional offices around the globe has set an example admired throughout the industry. In Marriott’s law department, general counsel and executive vice president Ed Ryan and his team have taken to heart the principle established by the hotel operator’s CEO and chairman John Willard Marriott (JW) and COO Arne Sorenson, as they have helped guide the company through some of its toughest times.
‘We frequently encounter ethical and compliance questions and issues, many of which are similar to issues encountered by all large companies operating in a multi-national business environment,’ says Ryan. ‘But the tone has been set. There is an expectation that every individual in the company, including those in leadership positions, will act appropriately.’
Marriott has had its fair share of trials and tribulations. In 2001 the Marriott World Trade Center was destroyed in the 9/11 attacks and 2003 saw the Marriott Hotel bombing in Indonesia. Then, as the company sought to regain its stability in 2011 – just days after the brand new JW Marriott Hotel in Tripoli, Libya opened – the social media political protests began, obliging the company’s crisis team to step in and evacuate guests and employees.
With locations in 73 countries and thousands of properties scattered throughout the US, every day brings surprises and hurdles to test the abilities of Ryan and his legal team. ‘Each day, there’s a new experience,’ says Ryan (pictured left), who has been with Marriott since 1996. ‘I speak to many of our worldwide offices on a daily basis, sometimes on a business issue or to simply touch base.’ Ryan oversees approximately 65 lawyers and believes being available to listen and provide counsel to others is the true fabric of an ethical leader and company. For this general counsel, there are five characteristics of ethical leaders:
• Knowledgeable: Establish yourself as someone who is up to date with the organization’s ethical and legal issues
• Open-minded: Always approach a situation judiciously with a balance of ideas so that all parties will contribute to and gain understanding from the final decision
• Deliberate: Question the assumptions. Why is there an issue? When confronted with a situation, don’t make a hasty decision. What are the facts? What are the legal and ethical standards? How can they be resolved?
• Instructive: It is important to provide guidance and make yourself accessible to employees and other members of your department. A major part of the general counsel’s role is to provide guidance on any type of issue, including the most complex ones
• Forward thinking: Think ahead to anticipate issues and avoid being surprised by the ones that arise today; explore what the issues might be tomorrow and thereafter.
Taking into consideration Marriott’s triumphs and experiences, the challenges are clear. Making it onto the list of the World’s Most Ethical Companies, with the global recognition that implies, does not come easily. Staying on the list year after year is all the more impressive. It certainly does pay to be ethical.
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