How to Approach Business Ethics as Global Consensus Breaks Down

During the last decade, we’ve seen increased global pressures on companies and their leaders to conduct business with integrity, through both regulations and stakeholder initiatives. While not all regulatory expectations and requirements are the same, as with trade and export laws, the current politicization of ethical business conduct is putting companies and their leaders in the midst of ethical minefields.

For example, the U.S. administration recently issued a “pause” on anti-bribery enforcement, whereas the European Union is preparing to issue a directive on anti-corruption to have more rigorous standards. We’re seeing the same divergence on human rights–related topics, where the EU recently introduced a directive for ensuring gender balance in the boardroom while the U.S. administration takes firm action against diversity-related programs within and outside of the government.

With consensus breaking down on ethical issues such as anti-bribery enforcement and corporate responsibility, compliance and legal leaders might message to stay the course, while business peers might signal to their teams that with lax enforcement and legislative uncertainty, they should relax their resistance to taking risks to ensure market competitiveness.

These cross-currents are a call for leaders to face these challenging realities or risk potential financial and reputational damage. We already know the stakes for companies are high—for example, recall Volkswagen’s 2015 emissions scandal, which damaged the company’s reputation and cost billions of dollars in settlements, or Ericsson’s 2019 bribery and fraud scandal, which impacted its share price and resulted in hefty criminal penalties.

Confronting these realities and potential perils will require intentional efforts and messaging. Here are three strategies for executives to navigate these ethical challenges—before it’s too late for their organizations.

1. Know your true values and pressure-test them.

In an environment where regulations and geopolitics are taking twists and turns, it’s more critical than ever to pressure-test organizational values. While most organizations have corporate values on their website and intranet, they risk becoming “wall-values” if they don’t guide daily decision-making at all levels of the organization.

During our interactions with executive management teams around the world, decision-makers frequently affirm that they base their conduct on sound corporate values. But research indicates that decision-makers overestimate their own ethicality and fail to recognize the true values and economic motivations that underpin their decisions. Worse, mid-level managers are less convinced that their leaders are driven by ethics and integrity.

To identify whether their stated values promote ethical decision-making that can withstand regulatory uncertainty, executives should take the opportunity to engage with their teams, such as through small group discussions, surveys, and region- or function-specific assessments. Ask questions that drive conversations about both what’s known and what’s unspoken—for example:

• Do our values align with what we do and ethically promote how we want to do it?

• Would our values guide us if there were no external regulations or internal policies covering a particular set of circumstances?

• Do we have ambiguous values that might be subject to misinterpretation in different countries and regions?

• Do our values have unintended side effects that might lead to adverse consequences by rewarding the opposite of what we want to achieve?

• Are there underlying beliefs and open secrets that are difficult to discuss but run counter to our values?

Soliciting feedback and engaging with employees in often far-away operations does not always come naturally to senior executives. But when they challenge the practical application of values by asking questions on topics that are often avoided, they can gain critical insights into what drives employees’ decision-making.

To counter that reluctance, one of Richard’s clients started a campaign inviting employees to ask questions about values through a series of global town halls. The gatherings provided a valuable opportunity to surface and address misunderstandings and “myths” about corporate values and to then recenter ethical decision-making in the company.

2. Embrace friction.

Organizational friction can slow down and hinder decision-making. In today’s volatile environment, though, a lack of friction and discomfort might indicate that uncertainty and anxiety around a course of action aren’t being challenged and countervailing opinions are being ignored. But when addressed proactively, these organizational differences can spark healthy dialogue and teamwork by normalizing the tension.

Michaela Ahlberg, a former chief ethics and compliance officer of a global telecommunications company and author who now advises companies on responsible leadership, told us, “Ethics is not an answer, but a series of challenging conversations. You have to shed light on controversies and bring up uncomfortable and seemingly conflicting opinions so leaders will be able to manage ethical friction and navigate the grey zone.”

As uncertainty thrives, leaders now have a unique opportunity to mitigate and address what could end up as toxic friction by encouraging healthy disagreement and dialogue. Here are three ways to achieve healthy friction that we’ve seen in our organizational work:

1. Understand that it’s not about you. Friction needs to be depersonalized. Leaders should articulate that disagreements are not about personal conflict but instead are opportunities to participate in constructive dialogue and problem-solving.

One strategy Anna has used in her work is to destigmatize friction by starting difficult meetings with a little levity: “Get ready; I’m going to be the difficult one here so you don’t have to!”

2. Make allies out of adversaries. Friction is easy when you’re sitting with a likeminded friend or colleague; it becomes more difficult when you’re at odds with someone who has a belief or objective that seems to counter yours. By reaching out and inviting those people and teams to discussions and forums, you become a connector in your organization.

This relationship-building work should be done on an ongoing basis, not just in times of crisis. As Scott Sullivan, a senior compliance officer with decades of global experience, advises, “Get to know people, find common ground, and find a shared experience when there’s no crisis…If you’re talking to someone at a crisis moment, it might be too late to turn that adversary into an ally.”

3. Stay away from one-and-done initiatives. Consistent messaging and signaling the importance of ethics during times of uncertainty is not a single-meeting enterprise. It necessitates continuous dialogue and follow up to ensure that transparent discussions and friction are normalized as part of the company culture.

To stay vigilant, one of Anna’s “gut checks” is that when discussions become too easy and convenient, she looks out for warning signs of being ethically complacent and considers whether differing perspectives are being ignored or suppressed. For example:

• Instead of confronting the internal friction, you outsource the decision-making. The ultimate warning sign is when you find yourself reaching out for another opinion instead of advocating for your own.

• You go into a meeting with a pre-defined opinion and only participate in the discussion to re-validate your own perspective. A practical strategy is to do a self-check and start noticing how often (or seldom) you change your opinion instead of marginalizing other valid perspectives.

3. “Health check” expectations to drive ethical outcomes.

In our current environment of regulatory uncertainty and political and economic volatility, organizations and their employees are facing uncertain futures. For example, the reallocation of public funds and cancelled contracts, along with significant supply-chain disruptions, are putting tremendous strain on organizations to sustain their revenue models and profitability. What might have been a reasonable and achievable forecast a few months ago may no longer look even remotely possible in our current environment. And when goals separate from reality, people might take risks that they never even considered in order to succeed and demonstrate their continued contribution to the organization.

With all this turbulence, it’s time for leaders to demonstrate care and concern by soliciting feedback from the field and assessing if yesterday’s goals and expectations have separated from market conditions. Take one of Richard’s clients as an example. The client’s CEO called a sales meeting in response to a significant market disruption, saying, “The only problem I can’t help you with is the one you’re keeping to yourself. I know we’re facing a significant market cliff, so I want to hear what’s getting between you and success, and how I can help you, not how you can help me.” And Anna recalls a time of severe market disruption in her career when senior leaders recalibrated their goals, shifting from rewarding individual performance toward rewarding company performance—a move that promoted purposeful goals in a situation of market distress.

When employees don’t feel safe voicing their concerns, they might, even with the best intentions, take shortcuts and circumvent rules to achieve their targets. According to Ty Francis MBE, a senior executive who advises corporations on business integrity, modeling the behavior you want to see is critical. He told us:

Creating open feedback loops requires more than just good intentions. It requires a deliberate approach that fosters psychological safety and trust over time. As a leader, you need to consider how you model your own ethical behavior. Employees are more likely to speak up when they see their leaders demonstrating the same honesty and transparency they expect from their teams.

. . .

“In our ever-changing world of risk and enforcement, it has never been more important to develop solutions that protect people and their organizations during these times of significant commercial pressures,” Amanda Raad, an attorney who advises companies on international risk and crisis management, told us.

By following these strategies, leaders can create constructive and healthy work environments that support ethical decision-making, even amid geopolitical risk and market volatility. In doing so, they can thrive among the chaos and drive long-term success while protecting their organization’s reputation and remaining competitive.

Copyright 2025 Harvard Business School Publishing Corporation. Distributed by The New York Times Syndicate.

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