The best way to teach character is by example.

Burke Allen, the CEO of Novologic (where I now work) sent me an email this morning, and I too - thought it was important enough to pass along...
I've spent lots of time with some of the world's most successful coaches. I discovered that many of them think about character a lot, especially traits that are important to winning—like self-discipline, perseverance, resiliency and courage. They pay less attention to virtues like honesty, integrity, responsibility, compassion, respect and fairness—aspects of character that make a good person, citizen, spouse or parent.
The problem is that even at the amateur level, many coaches are hired and paid to win, not to build character. Unless it interferes with performance, to worry about the kind of person an athlete is off the field is a waste of time.
Coaches who seek to hone the mental and physical skills of winning while ignoring moral virtues of honor and decency too often produce magnificent competitors who are menaces to society.
Perhaps coaches of elite athletes not connected with educational or youth-serving institutions can operate in this moral vacuum, but all others have a responsibility to teach, enforce, advocate and model all aspects of good character including trustworthiness, respect, responsibility, fairness, caring and citizenship.
Whether it's sports, business or politics, whenever we divorce issues of competence from issues of character, we create a class of amoral professionals who think they're exempt from common standards of honor and decency. This discredits and demeans the moral standing of everyone involved. … Michael Josephson
Dr. Wayne W. Dyer said, "Your reputation is in the hands of others. That's what a reputation is. You can't control that. The only thing you can control is your character." Helen Gahagan Douglas said, "Character isn't inherited. One builds it daily by the way one thinks and acts, thought by thought, action by action." I really think this quote is right on the money - Baron Thomas Babington Macauley (1800-1859) said, “The measure of a man's character is what he would do if he knew he never would be found out.” And no one said it better than Johann Wolfgang von Goethe – von Goethe said, "You can easily judge the character of a man by how he treats those who can do nothing for him.”
The best way to teach character is by example, I’ve always maintained. Remember, our character is our fate - we can build it over our entire lifetime and lose it in a split second. Our character isn’t what others may say or think it is – our character isn’t what we may say or think it is – our character is what it is.