The Role Of Tone From The Top

The Role Of Tone From The Topdecember 28 2009bob Lane Chairman Of Jo

The Role of Tone From the Top December 28, 2009 Bob Lane, Chairman of John Deere Tone at the top, a much discussed term, is vital and necessary, but it is not sufficient for an ethical culture. For that, a strong tone needs to be reinforced, up and down the corporation, with defined processes, procedures and examples. The ethical fiber of a company does not rest solely in words or codes of conduct, but in the actual behavior observed by suppliers, dealers, customers, and employees. At John Deere this is summed up in a highly visible, frequently referenced shorthand known as “the how.” Observers need jolting evidence of the tone at the top, often a resolute willingness on management’s part to miss revenue or earnings targets — or even lose key talent — in order to do things the right way.

Typically, in a high performance culture like John Deere, under these conditions no stone is left unturned in finding alternative ways to get the job done properly. Thus, in the end, rigorous performance targets are met squarely in the right way. Ironically, the unmistakable linking of words and deeds in all aspects of the business is one of the best ways to assure that ethical tone is matched with actions. At John Deere, for example, people came to realize that management was talking seriously about dramatically improving asset turnover, not an ethical issue per se. Skeptics reasonably thought that when a sale was potentially at risk, Deere would abandon its tough talk and revert to the standard industry practice of shipping an overabundance of product, even without firm evidence of retail activity.

In the end, Deere’s actions did match its words, and the business improved dramatically. In the same way, ethical talk requires the muscle of deeds, such as changing a supplier or avoiding business opportunities in certain countries when business cannot be conducted in the right way. In these cases, words are backed up with documented practices, processes, and procedures, all understood around the globe. In a widely published internal interview on only his second day on the job Sam Allen, the new President and CEO of John Deere, was asked, “What are you going to change?” His response, very succinctly and wisely, was, “It’s too soon to tell what we’re going to change. But what we’re not going to change is ‘the how’ and the way we do business.” A strong tone also means that company leadership is regularly engaged with the compliance function.

At John Deere, Sam Allen, as CEO, meets one-on-one, every quarter, with the chief compliance officer and the chief internal control officer. They also meet separately with members of the Deere board. As a director, I am also privileged to observe similar strong practices at General Electric and Verizon Communications. At John Deere and other premier companies, high performing ethical leaders – increasingly from all parts of the world – continue to emerge, trained in proper global processes and practices. As they blossom, we can be optimistic that their words of integrity will be unequivocally backed by their actions.

Paper For Above instruction

The concept of "tone from the top" holds a central role in shaping corporate ethical culture and internal controls. It emphasizes that leadership's actions, behaviors, and commitments are crucial in establishing and maintaining an ethical environment within an organization. This paper explores the importance of leadership tone, how it is communicated and reinforced throughout an organization, and the tangible impacts it has on company culture, compliance, and overall performance.

Firstly, "tone from the top" establishes ethical standards that permeate all levels of a corporation. Leadership influences organizational values through both words and deeds. Leaders set the expectations for ethical behavior by consistently demonstrating integrity, transparency, and accountability. For example, as outlined in Bob Lane's discussion of John Deere, leadership’s willingness to prioritize doing the right thing—even if it means missing financial targets or losing key talent—serves as a powerful signal to employees and stakeholders that ethical conduct is paramount. Such actions reinforce the message that compliance and integrity are non-negotiable priorities, which can deter misconduct and promote a culture of trust.

Secondly, the communication of ethical tone is often complemented by documented processes, procedures, and policies that guide employee behavior across various scenarios. For instance, John Deere integrates its core values into operational practices, ensuring that words of integrity are backed by concrete actions such as changing suppliers or avoiding business opportunities in questionable regions. These practices demonstrate that the organization embodies its stated values through consistent application of policies and clear expectations, which further strengthen the culture of compliance and integrity.

Thirdly, the reinforcement of ethical tone must be active and ongoing. Leadership engagement with compliance functions exemplifies this commitment. Regular meetings between top executives and compliance officers, as practiced by John Deere’s CEO, are instrumental in maintaining focus on ethical standards, addressing emerging risks, and fostering accountability. These interactions promote an environment where ethical considerations are integral to decision-making processes, and leadership remains vigilant against potential misconduct.

Furthermore, a strong tone from the top influences organizational behavior during challenging times. Leaders who publicly reaffirm their commitment to integrity and demonstrate a willingness to make difficult decisions exemplify the kind of behavior expected at all levels of the organization. Such leadership can inspire employees to emulate these values, thereby internalizing a culture where doing the right thing becomes second nature.

Moreover, the effect of the tone from the top extends beyond internal corporate culture to influence external relationships with suppliers, regulators, and customers. When leadership visibly upholds ethical standards, it enhances reputation and stakeholder trust, which are essential for long-term success. Conversely, lapses by senior management can undermine efforts and erode credibility.

It is critical, however, to recognize that tone from the top must be supported by tangible actions to be effective. Words alone are insufficient if not reinforced by behaviors such as prudent risk management, respecting legal standards, and fostering an environment where employees feel empowered to speak up against unethical practices without fear of retaliation. This interplay between leadership commitments, policies, and culturally embedded behaviors forms the foundation of a truly ethical organization.

In conclusion, "tone from the top" is a foundational element in cultivating an ethical corporate culture. Leadership must embody and consistently exemplify integrity, communicate expectations clearly, and uphold high standards through their actions and decisions. When these elements are aligned and actively reinforced, they create a robust environment where ethical conduct is the norm, and organizational success is sustained through trust and accountability.

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