What are Corporate Ethics?

Merriam-Webster’s dictionary defines an “ethic” as a discipline dealing with what is good or bad or with a moral duty or obligation. A person might be tempted to ask, what do ethics have to do with business? There is the law, and the law should keep any potential abuses by a company or it’s employees in check, right? Why should a company develop its own set of ethics independent of the law? Unfortunately, history has shown us that mere implementation of legal requirements is not enough to keep many businesses on the right track.

Ethics often touch on things that go beyond simple, legal, or regulations. In the lead up to the 2008 financial crisis, for instance, many banks approved mortgages for borrowers who could not realistically afford them. For the loan officers writing these mortgages, their bonuses were more important than their customers long term stability or financial health. What these banks and employees were doing was legal, though unethical. Had these organizations developed and implemented ethical systems contrary to what these employees were doing, many people could have been spared poverty and heartache.

What is Ethics Data Analysis?

Unfortunately, developing ethical regulations is–alone–not enough. These regulations must actually be acted upon. For any implementation to be effective though, it must be tested. The best way to measure the effectiveness of a new ethical regime is to collect data on changes in employee behavior after the imposition of the new rules in question.

In this way, an ethical structure can be analyzed for effectiveness and then altered accordingly. In the case of the banks referenced above, a thorough guide on avoiding harassment in the workplace would have done nothing to stop unethical lending decisions. Ethics data analysis is a tool designed to identify those areas that are most in need of attention. If a corporate code of ethics are the nail that keeps a company joined to it’s moral obligations, ethics data analysis is the hammer that drives that nail.

What Are The Best Ways to Gather Ethics Data?

There are two primary types of ethics data companies should attempt to gather – activity data and performance data. Activity data measures how much your employees participate in your various ethics programs. Do employees show up for ethics trainings? How many ethics modules do they complete when given self-training tasks? Do employees actually use hotlines and other violation reporting methods? Activity data is important, because it can show a company whether or not its systems are functioning on the macro-level. A code of ethics is only as good as its subjects’ participation. Activity data is not, however, the most important kind of data a company can gather.

Performance data measures how conditions change over time. Important points of performance data might be things like the type of complaints phoned into a hotline versus the number of complaints. A hotline that receives few calls but successfully catches a wayward supervisor embezzling millions is probably a lot more valuable to an organization than a hotline that constantly tracks small violations but has no effect on major issues. Performance data might also be ascertained by quarterly survey. If employees report feeling less pressure to break rules over time, this might be a sign of the successful implementation of an ethics culture.