I recently read a blog called The FCPA Blog that contends ‘ethical culture’ can be measured. This motivated me to find out how and whether I agree with the premise.
According to the FCPA Blog, “ethical culture is clearly one of the most challenging components of a compliance and ethics program in terms of reliable measurement.” It’s noteworthy that the author adopts the definition proposed by Linda Trevino and Katherine Nelson, “culture expresses shared assumptions, values, and beliefs and is manifested in many ways, including formal rules and myths, norms of daily behavior, physical settings, modes of dress, special language, myths, heroes, and stories.”
This definition covers a lot of ground. The blog does an excellent job identifying the factors to be included in measurement. Here is a brief summary.
Achievability of targets, goals, and tasks. Goals and incentives for behavior are good indicators that compliance is taken seriously.
Communication. Encouraging employees to speak out to resolve moral dilemmas enhances communication and retaliation for doing should not be permitted.
Leadership. Ethical role-modeling sends a signal the organization takes creating an ethical culture seriously.
Organizational justice. A commitment to do the right thing combined with fair treatment of employees creates a just system that can enhance culture.
Accountability. Clarifying what constitutes desirable and undesirable behavior together with a willingness to accept responsibility, especially when things go wrong, sends the message an ethical culture is respected and expected.
Organizational culture should be embedded in the policies espoused by top management, the organization’s code of ethics, and the ethics and compliance function. According to Ethical Systems.ORG, research shows that an ethical corporate culture contributes to reduced business misconduct and diminished risk profiles. Companies and regulators are trying to shape ethical corporate cultures that reduce ethical failures and increase team performance.
Measuring culture is difficult regardless of the criteria established because there needs to be some kind of valuation to make a determination about whether the ethical culture achieved its goals or fell short. Moreover, determining whether individuals promoted such an outcome is easier said than done. What’s needed is to experiment with different measurement systems to find a reliable tool.
We should avoid the practice of making the measurement a check-the-box exercise. Meaningful compliance requires more and subjective evaluations using clearly defined criteria is a useful way to get started.
Another important measurement tool is to interview stakeholders about how well their needs are being met and whether any conflicts have occurred. Interviews should include managers, employees, customers, clients, contractors, suppliers and others who rely on the ethics and accountability of key individuals and the organization’s systems to ensure their needs are met. This can be cross-checked to the code of ethics to ensure the ethical culture is working as intended and, if not, corrective action should be taken.
An organization is only as good – ethically – as its culture supports. It is time to get serious about measuring the key factors and including it in the ethics and compliance function.
Blog posted by Steven Mintz, aka Ethics Sage, on August 1, 2019. Steve recently published a book titled Beyond Happiness and Meaning that explains the ethics of personal relationships, workplace interactions and on social media activities. Visit Steve’s website, sign up for his newsletter, and buy his book on Amazon. Follow him on Facebook and “Like” his page.