ETHICS – Culture of Ethics

The Power of Company Culture

Research shows that our actions are in large part determined and influenced by the circumstances of our environment and the standards that our leaders and peers set for us—even if it means compromising our own personal moral ideals. So you can imagine how important and powerful a company’s culture truly is.

Frances Frei and Anne Morriss at Harvard Business Review even suggest that company culture is the backbone of an organization’s ethical foundation—picking up where the handbook leaves off.

“Employees make hundreds of decisions on their own every day, and [company] culture is our guide. Culture tells us what to do when the CEO isn’t in the room, which is of course most of the time.”

Strong vs. Weak Ethical Culture

According to Ethics Resource Center (ERC), the strength of a company’s ethical culture is the extent to which doing the right thing is made a priority.

There is a great difference between a strong and weak ethical culture, which they define as:

Strong Ethical Culture — Ethical values matter, and that is apparent in the actions of employees, especially management; company policy and procedures; and decisions about who gets rewarded and who gets punished and how to weather tough times.

Weak Ethical Culture — Ethical values aren’t promoted, and getting the job done is far more important than getting the job done in the ethically correct way.

Promoting an ethical culture is not only the right thing to do from a moral standpoint, but it’s also the right thing to do for the overall success of the business. A company with a strong ethical culture reaps many benefits:

• Less pressure on employees to compromise company standards
• Fewer incidences of misconduct
• Greater likelihood to report an observed misconduct
• Less likelihood of retaliation against those who report misconduct

Measuring a Culture of Ethics

The Ethisphere Institute, who honors the World’s Most Ethical Companies, finds company culture so intertwined with company ethics that it includes ‘Culture of Ethics’ as one of the five main criteria used to measure a company’s ethics.

A company’s Culture of Ethics score is based on:

• widely accepted or unaccepted norms relating to ethical conduct
• efforts and success at establishing an ethical tone
• steps taken to communicate and reinforce an ethical tone throughout every level of the organization

According to Ethisphere, an ethical culture begins with adopting, instilling, and teaching ethical-values that the workforce fully supports and exemplifies. Alex Brigham, executive director of the Ethisphere Institute, says that organizations on the World’s Most Ethical Companies lists understand that a strong culture of ethics is key to driving financial performance and sustainable excellence.

Creating a Strong Ethical Culture

An ethical culture is built upon ethical leadership, supervisor reinforcement, and peer commitment. Based on the National Business Ethics Survey (NBES), there are many ways to improve a company’s culture of ethics:

1. Make developing an ethical culture a business priority
2. Lead by example—especially senior leaders
3. Develop and promote programs that encourage ethics as priority at all organization levels
4. Be aware of what challenges are innate within the organization
5. Find ways to help employees feel invested in the company
6. Invest time and effort in regular assessment and careful analysis

Delivering Our Promise

Read more from The Chronicle about The World’s Most Ethical Companies, and stay tuned for more posts about how a company and its ethics are measured.