How to create a corporate culture that works: employees, ethics, and your company’s success

Close-up of business people's hand giving high-fiveMaintaining a high degree of integrity is an essential feature of any organization interested in long-term survival and success. The key to cultivating ethical standards in your business is intrinsically and fundamentally linked to the culture that is nurtured and promoted within your organization.

While the correlation between ethics and culture is well established, it’s the challenge of creating a corporate culture that both promotes and values ethical behavior where things can get tricky. Setting behavioral standards can be achieved by distributing a well-written code of conduct and engaging in ongoing internal communications. However, to have employees engage in ethical behavior, organizations must go beyond talking about the rules, and address the motives that drive good people to do bad things.

Ethics vs. Compliance

Knowing the rules does not mean people will follow them. Do you always adhere to the speed limit when you drive? If you are inclined to speed, will seeing more “Speed Limit” signs make you slow down? Of course, stricter enforcement will more likely deter unethical or illegal behavior, but what kind of business has ethics police parked at the end of every cubicle?

The key to running a corruption-proof company is to look less at the rules and more at what keeps people from following them. To do that, it is necessary to understand a few essential aspects of human nature:

  1. People are basically good but they are all vulnerable to pressure and are prone to rationalize actions when given the chance.
  2. People are generally conflicted between a desire to succeed and a desire to do the right thing.

The focus, then, should be on training managers to create the right corporate environment that encourages employees to do what they would like to do—but often feel pressured not to. Creating this culture involves the following key steps:

Move the cookie jar: Humans have been vulnerable to temptation since Adam and Eve, and that aspect of human nature will not change. By enacting reasonable controls that deter fraud, and by maintaining clear standards, your employees will more likely resist the temptation to cheat. However, most people struggle between the need to succeed and a desire to do good. And this conflict cannot be resolved merely by being told to do the right thing. Our power of rationalization is so powerful that we can convince ourselves that, for instance, taking just one more cookie won’t hurt anyone. Organizations must address this dilemma at the behavior level as well as at the prescriptive regulatory level. Organizations can help break down rationalization by acknowledging the specific issues that tend to get people into trouble. For example, discuss the specific reasons why individuals end up cutting corners or fudging reports. Public discussion often can be enough to deter many managers from engaging in that behavior.

Be fair: Perceptions of unfairness is one of the major reasons why people rationalize unethical or illegal conduct. When someone feels they are being treated unfairly, they become self-protecting. Actions that would have been unthinkable before become acceptable because a “I deserve it” logic seeps in. Leaders need to be mindful of where inconsistent application of rules and policies exist in the organization. No one expects equal treatment. But people have a sophisticated ability to discern fairness. And they will react—often emotionally—when those unwritten yet definitive lines are crossed.

Be open: Most employees want to be committed to their work and to their companies. They want to feel valued and important. Most employees are therefore quite sensitive to being left out of the loop—most specifically in terms of information. Lack of engagement often is sourced back to perceptions of being excluded from key information. “I don’t matter so why should I care?” frequently is a precursor to a less productive, less dedicated employee. Managers must be taught to see open communication as a strategically critical value and a behavior essential to keeping employees engaged and committed.

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