Corporate culture has been defined as the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. An organization’s corporate culture is a major driver of performance as it defines the way things are done within the enterprise. Maintaining cultural coherence across the organization ties into the success or otherwise of corporate strategy. Corporate culture is either developed consciously and strategically or develops by default. Regardless of how the culture emerges, it determines the behaviour of employees, guides interactions internally and defines external relations.
In developing corporate culture, it is imperative to incorporate ethics which underpin good corporate governance. The Board is responsible for defining what kind of culture it wants to enthrone in the organization. In recent years, organizational crisis, corporate misconduct, and accounting scandals have captured the headlines, emphasizing the need for organizations to establish corporate ethical culture. In “Tyco International: Corporate Culture and Corporate Governance,” following the very public executive misconduct scandal, the newly appointed Chairman and Chief Executive Officer, Edward Breen led an effort to develop an architecture and culture of world class corporate governance best practices by speaking about these regularly throughout the company and ensuring that the appropriate tone was set at the executive and board level. These efforts led to improved corporate governance ratings for Tyco International.
Research indicates that the absence of ethics in business could affect a company’s credibility, impact employee performance, threaten the sustainability of the business, and could result in embarrassing legal issues.
The absence of ethics in business could affect a company’s credibility, impact employee performance, threaten the sustainability of the business, and could result in embarrassing legal issues
In developing a culture of ethics, identifying and using Ethics Champions to create, promote and enforce a corporate ethical culture is recommended. Ethics champions are those individuals who support the development of an ethical culture in the organization. Ethics Champions influence team decisions to be more ethical by promoting team ethical awareness and communicating both quantitative and qualitative benefits to be so derived.
Typically, business decisions are made within a “business” context which is preoccupied with profit-making and many other self-interest considerations. Introducing Ethics Champions into the business mix would decisions pass through an “ethics filter”, weighed against ethical ideals and standards that go beyond the self-interest of the enterprise and individuals. An Ethics Champion may encourage teams to take into account information relating to the ethical implications of a situation rather than relying exclusively on information related to the bottom-line and other pecuniary benefits.
Beyond driving the decision-making process to include ethical considerations, an Ethics Champion investigates the underlying causes of ethical lapses and partners with the management team to resolve them with the aid of corporate ethics and compliance resources for education and communication. Various factors have been identified as contributors to unethical behaviour in the workplace including warped moral compass of individuals, mirroring the behaviour of colleagues, unrealistic targets, and pressure to perform amongst others. An Ethics Champion would engage Management with a view to identify, correct and eliminate or significantly reduce these factors.
While an individual may be formally appointed to the role of an Ethics Champion, individuals could emerge naturally because of their inclination to act ethically and encourage others to do so. However, to be effective, a formal appointment is recommended. The Ethical Champion should also be a high-ranking officer of the company who can command influence and effect required changes.
A Code of Ethics is critical to support and facilitate the role of Ethics Champions as this will provide clear guidance to employees. The Code of Ethics should be enforced, and violation handled appropriately. Where ethical breaches are overlooked, there is a likelihood that such behaviour will reoccur.
In establishing a strong ethical culture, organizations may run up against a number of obstacles. Where Management seeks to implement a culture that is alien to staff, there would most likely be a lot of inertia as the change may not be a welcome development. Bureaucracy is another challenge to establishing an ethical culture, as the established operational structure may not be easily changed.
A periodic assessment of the state of the organization’s prevalent corporate ethical culture is useful and helps to determine if this is at the desirable levels and in line with the espoused values, and ascertain the necessary actions to be taken to ensure that a strong ethical culture is established or reinforced, as the case may be. There should be a focus on education and orientation of employees across the organization as opposed to policing and nitpicking.
Corporate ethical culture offers several benefits to the enterprise. It can lead to increased employee job satisfaction, reduced employee burnout, decrease in illegal and criminal activities, improved organizational performance and promote a positive reputation, as well as increase trust by customer and stakeholders.
Creating an ethical culture is not a tick-the-box exercise, but a conscious effort to develop a set of acceptable behaviour within the organization such as integrity, professionalism, fairness, respect, and concern for environmental and social impact amongst others.
