Following is an excerpt from our new book, Minds at Work: Managing for Success in the Knowledge Economy (Chapter Six).

In today’s world, where you, your employees, and your company are completely transparent, your reputation is your most valuable asset. Everything you do is visible, and being invisible is no longer an Minds-at-work-150 option. Now it’s all about how you operate. The things that you produce can be made by almost anyone. Who you are is unique. According to Dov Seidman, founder of LRN, an ethics and compliance management firm, “We’re no longer asking everybody to do the next thing right; but to do the next right thing.”

Companies that are learning to manage minds are focused on being open, transparent organizations in which collaboration and communica­tion are basic operating principles. They believe that sharing knowledge is power, and continuous learning is the key to successfully meeting the challenges of the knowledge economy. Failures are to be learned from and not hidden. Opposing viewpoints and ideas are valued and listened to by everyone in the company. Conversations are open and honest. The hierarchy of roles, and the secrecy and compartmentalization that go with it, has been replaced by the hierarchy of ideas, in which openness is a prerequisite.

By comparison, companies that are managing hands are cultures in which playing follow the leader is serious business and means not asking for justification of decisions. These companies support behaviors rang­ing from not daring to ask questions or disagreeing with management to not thinking for yourself. Blindly obeying the rules, being nice and agreeable, and showing that you are successful at any cost are considered the norm.

A company driven by collaboration, cooperation, and communica­tion instead of command and control means people must be open and honest with one another. They must be able to trust that their co-work­ers and managers are telling the truth. Worldblu, an organization that has spent more than a decade of research on organizational democracy, has identified integrity as one of its 10 key principles of success. For them, a successful organization in today’s economy depends on “doing what is morally and ethically right.”

Trust is the cornerstone of learning. If I do not trust you, I won’t learn from you. If I don’t trust my company, I will not be engaged enough to learn and develop my abilities on behalf of that organization. An organization without ethics is an organization in which no one can be trusted. And an organization devoid of trust is an organization that cannot learn and grow and change. When you manage hands, trust is not important. People are considered cogs on the wheel and can easily be replaced. When you manage minds, people are your greatest asset. Their ability to grow and learn is the key to your success.

Managing minds companies know it’s smart business to make ethics a priority. It’s that simple. And companies that are managing minds are invested in enabling smart people to make the right decisions. The most visible way in which that support can be demonstrated is to have managers set the example. When managers condone behavior that crosses the line, employees will interpret that as permission to behave unethically. If managers are not honest in reporting the performance of their teams, team members will not see the point of turning in their best performance.

Managers need to support people who are doing the right thing. We’re not talking about giving lip service to ethics by listing this value on a lunchroom poster or HR memo. We’re talking about working ethi­cally every minute of every day. We need principled leadership from managers focused on doing the right thing. We need managers who convey this value to the people with whom they work, and have it be the standard in everything they do.

According to John Baldoni, in his book The Leader’s Pocket Guide: 101 Indispensable Tools, Tips, and Techniques for Any Situation, to head off unethical behavior, leaders should “be seen, be heard, and be there.” This means adhering to a very specific set of actions, many of which would be familiar to a manager in a company managing minds:

Be seen:

  • Visit people where they work.
  • Use teleconferences to stay in touch visually with your teams.
  • Institute an open-door policy so people can visit you if they need to.
  • Hold meetings where the work is done: in the cube, on the shop floor, and so on.

Be heard:

  • Deliver consistent messages. Make your messages clear, coherent, and concise.
  • Listen more than you speak.
  • Check for understanding.
  • Invite feedback from your direct reports and colleagues.

Be there:

  • Always be accessible and available to help.
  • Lead by example.
  • Act for the good of the team.
  • If sacrifice is required, be the first to volunteer.

Baldoni writes that when a crisis does arise due to the company or individuals breaking the rules, managers need to step up and quick­ly address the wrongs by confronting the problem and coming clean, fixing the problem with the interests of the person or people who were wronged in mind, listening to their complaints, apologizing and making restitution, and staying engaged until the problem is resolved. This course of action is not easy, especially when people have been harmed by something the company did, but it is the right thing to do, and the only way to head off disaster for your organization.

It’s impossible to anticipate and simulate every ethical dilemma that people might face in the course of their workday. The ambiguity of each situation is not something you can prepare for in a course or program. Managers must help people learn to make the right choices for the business. This means learning how to be clear about a situation, understanding the ethical dilemma, identifying the consequences of the wrong choice, and choosing to make the right decision. It goes beyond showing people what to do. Being clear about the situation, understand­ing the consequences, and making the right choices can only be learned on the job. It is a continuous learning process in which what you have learned to do is continually being adopted and adapted in a constantly changing set of circumstances and new environments.

A managing minds company cares about people and about learning, open and honest communication and collaboration, trust and honesty, and doing the “next right thing” instead of only doing the next thing more quickly, cheaply, or profitably. You do not need to be managing minds to be an ethical company, but it helps.