Organisational culture the key to improving workplace ethics

Oct 24 2005 by Print This Article

Measures being taken by U.S. employers to improve ethical standards in the workplace are not proving as effective as expected, and must be combined with building the right organizational culture if they are to deliver results, new research has suggested.

The National Business Ethics Survey, conducted by the Ethics Resource Center, found that despite rising employee awareness of formal ethics and compliance programs, standards of ethical conduct remained unchanged - or even worsened.

More than half American workers (52 per cent) observed at least one type of type of misconduct in the past year, with 36 per cent of these seeing two or more violations, an increase on the previous survey, conducted in 2003, it found.

The two most common types of misconduct observed were abusive or intimidating behaviour towards employees (seen by 21 per cent) and lying to employees, customers, suppliers, and the public (seen by 19 per cent).

The survey also revealed a drop of 10 percentage points (to 55 per cent) in the number of employees who reported misconduct to management.

Patricia Harned, president of the Ethics Resource Center, said: "Regulation resulting from Enron and other corporate scandals spurred a renewed emphasis on corporate ethics and new laws and regulations related to compliance.

"Since that time organizations, especially for-profit companies, have invested significant resources in ethics and compliance programs, but we are not seeing much change in the direct impact that these programs are having."

However, despite the absence of positive results, the Ethics Resource Center concluded that formal ethics and compliance programs, such as ethics training do make a difference.

Crucially though, it found that their effectiveness depends on the culture of the organization. "Ethics and compliance programs can and do make a difference. However, their impact is related to the culture in which they are situated," it said

Formal programs have only limited impact where a strong ethical culture already exists, for example, where employees are perceived to be held accountable for their actions, it found.

Where ethical culture is weak, the survey showed, that although programs do have some effect, standards of ethical behaviour are significantly worse.

For example, 79 per cent of employees in organizations with strong ethical cultures reported misconduct to management compared to 48 per cent of employees in weak cultures, it revealed.

"We know formal programs are critical and work well initially, but we must now focus greater attention on building the right culture in which programs operate," said Harned.

"This data shows, for example, that management needs to lead by example to set the tone throughout the whole organization.

"Organizations need to evaluate what will work most effectively, including a closer look at the role workplace culture plays," she added.

However, the Ethics Resource Center concluded that the relationship between formal programs and workplace culture is not straightforward. Strong ethical cultures are in part themselves a product of formal programs, it said.