What an ethical culture is and isn’t

There was an interesting exchange at ECOA Connects blog last week, about what are the key components of an ethical culture. (ECOA is the Ethics and Compliance Officer Association.) The authors were two men with a great deal of experience working with companies on their ethics policies and problems.

Steve Priest offered this simple common-sense list of five attributes:

  1. A commitment to doing the right thing. 
  2. Clear standards. 
  3. Organizational values put into action (by leaders and employees). 
  4. Accountability. 
  5. Open communications up, across and down the organization.

Jeff Kaplan agreed with the list, and then added his list of the negatives — the features an ethical culture lacks:

  1. short-term thinking
  2. weak employee identification with the company, its customers or its products/services;
  3. Indices of “moral hazard” (misalignment of incentives and risks), with bad behavior being rewarded where it produces short-term business gains;
  4. difficulty in asking questions/raising concerns (not just C&E ones);
  5. marginalization of C&E issues or personnel (and others in control functions);
  6. a lack of “organizational justice” – meaning a lack of fairness;
  7. questionable managerial tone – not only at the top, but also in the “middle” and at the “edges”;
  8. an unreasonable pressure to perform.

When you put both lists together, you get a good sense of what a company looks like that is well-designed, ethically, versus a company in which the pursuit of short term profit has created a culture that is at high risk of scandal and indictment. For more on ethical cultures and how to create them, see our Corporate Culture page. [coming soon]