Are workplace behaviors and culture useful metrics for organizational ethics and compliance efforts (are they measurable)? A recent report implies they should be.
Most organizations track and measure standard program elements—the number of hotline calls and training courses, the presence of policies and procedures, audit and survey results, etc. Those are important elements, but they should not be the only metrics of success. As pointed out in a recent Ethical Advocate blog post, regulators are looking for evidence of culture change, which can include organizational and employee behavior.
Consulting firm LRN’s most recent program effectiveness index report on ethics and compliance, which summarizes the results of a survey of more than 550 ethics, compliance, and legal experts from around the world (DiPietro, 2017), asserts that firms need to “design and implement programs that operationalize values and elevate employee behavior, the optimal goal for all E&C programs” (LRC, 2017).
The reported survey results show that “E&C programs that define their approach as values-based [which are significantly more effective at influencing employee behavior than those solely oriented toward rules or procedures] scored highest on LRN’s new Program Effectiveness Index (PEI) and on all key outputs including level of C-suite support, cross-functional integration, middle management engagement, and code of conduct and policy accessibility.”
LRN identifies three systems that influence individual and organizational behavior: governance (formal structure, rules, and policies); culture (norms, traditions, habits, and mindsets); and leadership (how managers behave, the source of authority, and how that authority is exercised).
Governance systems could be construed as the essential basics: ethics and compliance-related policies, procedures, and codes of ethics disseminated to employees and reflected in employee handbooks; ongoing training; regular communication; and effective ethics hotlines. However, even these longstanding tools can be linked to behaviors. Per the Wall Street Journal summary of the report (DiPietro, 2017), companies with the most effective programs link the business’ core values with specific behaviors that are spelled out in the code of conduct.
How well those efforts are acted on depends on the culture and leadership systems. It is those systems that influence behavior throughout the organization. How leaders and other managers behave is especially important. Here are two examples from the report.
- Top leadership (the C-Suite) holds leaders accountable for ethical behavior; promotes ethics without prompting; models values-based behavior; engages the chief ethics and compliance (E&C) officer while making strategic decisions; considers managers’ ethical behavior for performance reviews and as a prerequisite for promotion; and holds leaders accountable for owning E&C in their business areas.
- Middle managers clearly know they are accountable for (and are held accountable for) assessing E&C risk for their business and teams; actively supporting the E&C program; modeling values-based behavior; and dealing effectively with E&C concerns raised by their teams.
By focusing on (and measuring) behaviors that promote and reward ethical cultures, E&C officers and organizational leaders can help their firms achieve the benefits that come with an ethical culture.
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DiPietro, Ben. “The Morning Risk Report: Top Ethics and Compliance Programs Emphasize Behavior.” Wall Street Journal Risk & Compliance Journal (blog), February 7, 2017. http://blogs.wsj.com/riskandcompliance/2017/02/07/the-morning-risk-report-top-ethics-and-compliance-programs-emphasize-behavior/