Phil Castle, The Business Times
Rules, policies and training all promote ethical business practices. Then there’s what John Elmore describes as the grandmother test.
Would employees be comfortable treating their grandmothers the same way they treat customers in selling them products and services? If the answer’s yes, chances are good employees are acting in an ethical manner. If the answer’s no, though, changes could be in order, he said.
While ethical practices offer their own rewards, doing the right thing also can be the profitable thing in improving financial performance, attracting customers and recruiting employees, Elmore said.
Elmore, vice chairman of community banking and branch delivery at U.S. Bancorp, discussed ethical leadership during a presentation at Colorado Mesa University in Grand Junction. He delivered the keynote speech as part of events hosted by the CMU Daniels Fund Ethics Initiative, CMU Students Ethical Leadership Club and Student Center for the Public Trust.
Elmore based his presentation in good part on his experiences with U.S. Bancorp, the parent company of U.S. Bank.
While the reputation of the industry has suffered in the aftermath of the financial crisis and recession, most banks serve their customers and communities well, he said. “There are an awful lot of very good banks axross this country.”
Among other recognition Elmore said the company has received in operating one of the highest-rated banks in the world, U.S. Bank has earned awards from United Way for its support of the organization and community engagement and the Department of Defense for support of military service members and their families. Moreover, the Ethisphere Institute has named U.S. Bank one of the World’s Most Ethical Companies for three straight years.
By definition, ethics involves the discipline of dealing with good and bad, Elmore said. But other factors are involved, he said, including risks related to laws, regulatory compliance and reputation.
Ethics matter, Elmore said, because ethical businesses perform better financially and attract more customers and employees.
According to a study conducted by the Ethisphere Institute, publicly traded companies named to its most ethical list outperform the Standard & Poor’s broad stock market index of 500 companies.
Elmore said other research found that 92 percent of those in the millennial generation prefer to do business with companies they consider ethical and 94 percent of college graduates with master’s of business administration degrees would be willing to accept lower salaries to work for companies they deem ethical.
The combination of rules and values promote ethical practices, Elmore said. So does employee training that aligns personal and company values. It’s important, he said, to foster a corporate environment that recognizes that people make mistakes and leaves employees comfortable to report problems whether they’re their own or others.
It’s important, too, that employees get to know their customers to better understand what they actually need in products and services rather than try to sell them things they don’t need, Elmore said. “That’s being in the relationship business.”
In Colorado and other states that have legalized recreational marijuana, the banking industry faces challenges because federal law makes it illegal for them to accept deposits from the sales of marijuana, Elmore said.
Should bankers refuse to issue a home loans to a customer who’s income is derived from a marijuana business or accept a payoff for a commercial loan because a storage building has been sold to marijuana business — or end a long-term relationship with a good customer because that customer is going into the marijuana business?
Situations that might not involve a legal issue still could present other challenges if they engender strong feelings either in support or opposition, Elmore said. Should a bank offer services to a customer that’s been awarded a government contract to erect a border wall?
Companies also have to guard against the unintended consequences of their policies, he said.
Establishing core values for a company helps in promoting ethical practices, Elmore said. For U.S. Bank, those core values include doing the right thing; helping people achieve goals; staying ahead of a quickly changing world; drawing strength from diversity; and, for Elmore the most important, putting people first.
Elmore said one reason he’s enjoyed working for U.S. Bank is that he’s never experienced a conflict between personal and company beliefs. That also means he’s never worried about failing the grandmother test.