by Deann M. Baker, CHC, CCEP, CHRC
An ethical culture is an element of an effective ethics and compliance program. The Federal Sentencing Guidelines for “Effective Compliance and Ethics Programs” states: “organizations are to be diligent in the promotion of an organizational culture that encourages ethical (right) conduct and a commitment to compliance with the law.”
Culture means attitudes and behavior that characterize the functioning of a group or organization and ethical means principles of morality pertaining to concepts of right and wrong conduct. Success, for purposes of this article, means to achieve defined performance goals and the mission in a right way.
Being fair and demonstrating one is trustworthy are essential components of creating an ethical culture. Trust is developed when people experience honest and equitable treatment and when leadership is transparent in their communications, demonstrate consistent disciplinary actions (remain objective) and are open to hearing and discussing concerns. Leadership must demonstrate they are trustworthy in order to successfully influence an ethical and legal culture. Colin Powell, retired four-star general in the U.S. Army, says it this way: “Leadership is solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or concluded you do not care. Either case is a failure of leadership.”
There are benefits to organizations and the workforce when an ethical culture is promoted. Studies show that organizations that promote an ethical culture have greater success in meeting their goals and are able to achieve greater customer and employee satisfaction. Workforce members are more productive and even inspired to be more creative. We are certainly happier and therefore healthier when we work for organizations that promote a right culture because it gives us confidence in the organization and ourselves.
The greatest deterrent in creating an ethical culture is when people are not comfortable reporting concerns for fear of retaliation. According to the 2013 National Business Ethics Survey (NBES), there are dividends within the business that fosters high standards of conduct and honors the rules. However the NBES also reports that more than one out of every three people who observe misconduct choose not to report it and that the rate of retaliation remains alarmingly high at 21%. This certainly would not meet the definition of creating an “ethical culture nor a commitment to compliance with the law” as defined by the Federal Sentencing Guidelines. This compliance element impacts the compliance program performance (“effectiveness”) within an organization, so it is a concerning statistic.
How we think about matters influences the choices we make. Our thinking shapes our character, attitudes, our conduct, and conversations. Thus it’s important we think upon and understand the ethical and legal conduct expected of us as defined by our organization’s Codes for Conduct. We need to be familiar with these standards for business conduct, because they advise us where and how to raise concerns, define the risks to the organization, and explain how we are accountable to comply with the laws and the organization’s policies. We can be held accountable for wrongdoing when we know about it and don’t do anything about it. Regardless of our role, we are all able to influence ethical culture by first choosing right conduct for ourselves.