The Red Flag Group®
culture of ethics

How to nurture a culture of ethics

How to nurture a culture of ethics

Why is a culture of ethics important?

A culture of ethics shows how people are really doing business for a company. The costs of not having a culture of ethics are real: high employee turnover, employee misconduct, fines, costly investigations (internally and by authorities), distracted employees, loss of innovation and lost time. Without a culture of ethics employees are afraid to speak up and are pressured to cut corners to ‘just get the job done’. Programmes that look good on paper may fall short if not put into action properly. A culture of ethics makes employees feel that acting ethically is the right thing to do.

How does a company create a culture of ethics?

Discussing and defining what an ethical culture should be is the first step. To achieve the goal of changing the culture for the better, a company first needs to measure it. Often the actual company culture is worse than what it appears to be. Even if compliance professionals suspect the worst when auditing and measuring the culture, there needs to be a systematic and reliable examination. By gathering real data from a significant sample of employee opinions you will get an accurate awareness of the culture.

Conducting a culture assessment

Step 1. Use a questionnaire to gather data

One of the quickest and most effective ways to conduct a culture assessment is with a questionnaire. The best type of questionnaire is one that is anonymous and is administered by a third party, as this increases the likelihood that the respondents will provide truthful answers (if the company administers the questionnaire itself, the employees may not provide honest answers for fear of repercussions). Online questionnaires are the most cost effective.

Using an exact set of questions year after year ensures that the questionnaire is consistent, and the results can be used for an ‘apples-to-apples’ comparison against the previous years’ results. Companies should also administer the questionnaire at the same time each year; people may be under more stress at certain times of the year, which can skew the results.

Step 2. Examine the data to identify areas for improvement

Once a company has the results of the questionnaire, it is important that they plan improvements on a holistic level. Improvements should not be aimed at attaining more positive survey responses but at addressing the issues that are causing operational, cultural and ethical problems.

It is important to systematically measure the culture of the company on an annual basis. Using a proven and tested methodology provides more useful actionable items than simply relying on anecdotal or ‘water-cooler’ evidence.

There could be a small but vocal employee population that gives the appearance of a false culture. With a detailed and thorough examination of the culture, an organisation can identify strengths and areas for improvement. 

Key areas for companies to look for while examining the culture

There are myriad areas of a company’s culture that can be explored and inspected during a culture assessment. Narrowing down the topics to examine can be difficult, but there are some essential elements to study.

Programme awareness: One of the most rudimentary topics is awareness of the programmes. Do employees know about the code of conduct that was updated last year? Are they aware of the reporting avenues available to them? Where do they go if they want to read the gifts and entertainment policy? If the employees are unsure or provide negative answers to any of these questions it is a good indication that your company does not have a culture of ethics.

Commitment: More key aspects to examine are the pressures to commit misconduct and actual occurrences of misconduct. It can take a good deal of bravery and effort for employees to actually pick up the phone and make a report; however, they are directly asked about witnessing any misconduct in the questionnaire, and this can uncover more data on the subject. Has an employee seen misconduct? What type of misconduct was it? Did they report it? Were they pressured to not report it? These questions can give insight into the realities that employees must deal with when speaking up, as well as the types and frequency of misconduct.

Fairness: Fairness is something that employees respect and it carries a lot of weight when it comes to their job. Employees can become alienated from the company if they feel that they are not being heard or, worse if they are being held to different standards than others in the company are. Questions should be asked about uniformity of discipline, promotions, standards and rewards across all levels of the company. If employees feel as though managers and executives are held to lower standards, then those senior staff might not be setting the best example.

Demographic data: To make questionnaire data more meaningful, companies should include demographic questions such as those that concern the employee’s location, gender, tenure, department, role and business segment. With this information, it is possible to segment the data into specific groups to determine if there is a more positive culture in one location than in another. It could be that one supervisor or vice president is implementing great ideas in a location, and these ideas could be used across the entire organisation.

Step 3. Communications

After a company has collected and analysed the results of the questionnaire, some areas for improvement will be evident. How does a company make those improvements?

Enforce communication plans: Alterations to the communication plan are a good first step towards creating a culture of ethics. Many companies will discover that, while they have good documentation in place, nobody at the company is actually aware of it. A focused and deliberate marketing programme should be implemented to deal with programme deficiencies. For example, if the culture assessment determines that employees don’t know about new policies, a communication plan should be enacted around those new policies. Communication can be sent electronically, included in regular newsletters, or delivered in team meetings, town hall meetings or training sessions. Separate from communications related to compliance and ethics programmes, employees will appreciate more transparent news from the company about any recent changes and how they will be affected by them. Even if the news is not necessarily good news, most employees will appreciate the candid communication.

Control on the tone from the middle: Another element of change which is often brought forth as a result of a culture assessment is a modification of the tone from the top and the middle. The tone from the middle (set by employees’ direct managers and supervisors) can be one of the most important factors to affect a change of culture, if not the most important factor. Employees look to their direct managers as an example of how to act; in turn, managers should receive targeted communication and training efforts as a vehicle for change. While general audience communication programmes can be effective on some level, seeing a strong example set by middle management can be the most reputable and effective catalyst for culture change. Likewise, the tone from the top is very important. Executive and senior members of the company need to lead by example and regularly communicate with staff about the importance of creating an ethical culture and how a culture of ethics actually looks. Simply expounding on corporate values, while it has its place, can be overdone; employees want more practical guidance.

Rebranding: Finally, a rebranding effort can take place to liven up some of the written documents and online experiences, such as training and the compliance intranet portal. While some of the information that employees need to know might not be the most exciting, it doesn’t need to be presented to them in a legalistic and boring way. Making content more user-friendly is a way to draw employees in and help them remember the information more easily. Simplifying the tone by removing phrases such as ‘notwithstanding the foregoing …’ and ‘hereunto known as …’ and adding in some photographs goes a long way.

It is important to remember that the existing culture took quite a while to establish and, in turn, it will take a while to change. Like evolution, changes happen incrementally, and big changes can take many years, but steady and consistent progress can be made. As many companies consider undertaking a culture assessment for the first time, it is important to remember to conduct them in a way that produces valuable and actionable information. The result of the culture assessment should not be charts and graphs but rather updates and improvements to the compliance and ethics programme. Conducting a culture assessment is an effective way to gauge employees’ perceptions of the company, sources of pressure, and how employees are really getting the job done.