Building an Ethical Culture

Note: This essay on Building an Ethical Culture was submitted as a final essay for a college class on ethics.

When a company is first being formed, often one of the primary documents that is created is a mission statement. Soon after that come other statements including a code of ethics. These are all wonderful documents to have, and they help provide a clear foundation for how the company will operate. However, in the actual day to day running of that community, it is much more the overall culture of the company which determines the ways in which the employees will act and interact. It is not the static document, but rather the living, breathing decisions of each person throughout each day which shape the overall ethical direction of the company.

Many companies have created codes of ethics and then become engaged in quite unethical activities. These activities can reach through all levels of an organization. For example at WorldCom certainly the CFO and controller were culpable for taking action to participate in fraud - but then there are also low level employees like Betty Vinson whose crime was to follow orders without speaking up about what she had been told to do.

WorldCom did have both substantial internal documentation on proper accounting practices as well as "extensive internal controls (Richardson, 2009)." Clearly the mere presence of a piece of paper containing a policy or code is not the key to ensuring ethical behavior in employees.

What do employees often quote as the reason they felt it was reasonable to perform an unethical activity? According to a professional loss prevention specialist, the number one reason given to her for why an employee stole was that "everyone else did (Baluch, 2010)." The employees knew it was wrong to steal from the company. Corporate documentation clearly stated that thievery would be prosecuted. However, the overwhelmingly main factor in their decision was that the work culture supported it. They figured if everyone else was taking advantage of this benefit that they would be - in a way - at a relative loss if they were not doing it as well.

Researcher Frederick Taylor called this kind of activity "soldiering" - the idea that employees will tend to follow the standards of the group (Kreitner, 2009). If everyone else is only typing at 30 words per minute, the faster typist will tend to slow down - why bother to work harder if they will not be paid any better or treated any differently? They conform to group standards.

So in an ethical situation the primary motivating factor for an employee is unlikely to be a piece of paper they saw once during the hiring process and which has been locked up in a drawer in the Human Resources office ever since. What will tend to motivate them is the interactions - day in and day out - with their fellow co-workers and management.

If the official rules say that every person must be at their desk by 9am sharp every day, but the employee sees over the course of several months that her coworkers tend to roll in between 10am and 11am, she is far less likely to be worried if she has car troubles and gets in at 9:20am. Perhaps even more importantly, if she is called into the main office and scolded by her boss she is unlikely to feel ashamed that she broke the rules. She is much more likely to feel upset that she was disciplined for behavior which was endemic to the entire group.

So while one key to promoting an ethical culture is certainly to have the foundation documents, an equally - if not much more important - piece of this puzzle is to have a supportive environment in the workplace in which both management and employees embrace and believe in that ethical way of life. It is that cultural atmosphere which truly creates ethical behavior.

But how can this be achieved?

The key to a culture in an office workplace is that it cannot be manufactured. A culture is not mandated by a CEO and forced into place by each successive layer of management. Rather, a culture grows organically out of the daily actions and decisions of all employees. So a long term, attentive approach must be taken to bring this to fruition.

First, of course, the foundation must be in place. The documents must exist and all employees need to read and understand them. This can be done with meetings and training seminars where employees are encouraged to take notes, ask questions, and make suggestions.

The management team needs to be mindful of the company’s ethical guidelines in their daily work activities. They should ensure that they model the desired behavior themselves (Posner, 2008). Then they should look for instances of employees doing what they should be doing and rewarding it. So often the focus is on punishing the wrongdoers while those who routinely do things properly get little attention. However, if those doing-the-job-right people get positive praise, this encourages others around them to be more like them. It becomes a culturally beneficial thing for an employee to follow the rules. Combinations of rewards, praise, and tangible career benefits can help the progress build momentum.

Yes, there needs to be negative reinforcement when someone does not meet the guidelines - for example, showing up late. However, it needs to be applied gently and most importantly fairly (Sloan, 2006). If there is going to be a rule about showing up late, it should be explained why it is important in a realistic sense - not just because it is "a rule." It should be modeled by management. Then it also needs to be applied to all workers in an equivalent manner.

Employees will often do certain activities because they feel there are no negative consequences (Fournies, 1999). It’s easier to be late, and it doesn’t really matter anyway. By providing known, fair consequences to rule breaking, management helps employees to follow the guidelines.

On the other end of the spectrum, there are activities that employees should be encouraged to do spontaneously. Rather than breaking or not breaking a rule, this is where management would want an employee to speak up if they saw something unethical going on. Proactive suggestions are one example of an employee’s spontaneous activity to help assist the company.

Activities which require an employee to take initiative can be much more challenging than those actions where an employee simply has to follow the existing rules. This higher hurdle means that it’s even more important for management help ensure that every step along this process be as smooth and encouraging of success as possible.

First, again, all employees should know that offering suggestions and feedback is highly encouraged. There should be many ways set up to do this - easy to arrange personal meetings, quickly handled email messages, and even anonymous reporting websites and drop boxes. The more ways in which an employee can make contact, based on their personal preferences, the more likely an employee is to make that initial communication.

Perhaps just as important as the easy of connection is the reliability of the response. If employees actively use a drop box to submit ideas - only to discover the suggestions slips are all being thrown away each night - they will end up even more discouraged than when they began. It is the authentic response by management, and the sense that together the employees and management are making progress towards helping the company become even better than before, that encourages the process to move forward and flourish.

Results are key to this process being a success. Changes that are suggested and reasonable to implement should be implemented. Ethical issues which are brought up should be examined and considered seriously. Not every suggestion needs to be acted upon, of course, but it should be demonstrated that they were not dismissed out of hand. It is often the out-of-the-box idea which brings the most tangible benefits.

By bringing employees into the loop as shareholders in the company’s success, the workers feel more responsibility towards helping the company succeed. They feel more personal oversight over their own actions within the company and the actions of their co-workers. By fostering a cultural mentality of "we are all in this together," the employees become less likely to harm the company with their own actions and more likely to speak up when they see others taking actions that might cause harm. This helps, over time, to foster an ethical culture which allows both the employees as individuals and the company as a whole thrive and prosper.


Baluch, M. Personal Interview. 25 February 2011.

Fournies, Ferdinand. (1999). Coaching for Improved Work Performance. New York, NY: McGraw-Hill.

Kreitner, Robert and Kinicki, Angelo. (2009). Organizational Behavior. New York, NY: McGraw-Hill.

Posner, Barry and Kouzes, Jim. (2008). The Leadership Challenge. Hoboken, NJ: Jossey-Bass.

Richardson, John E. (2009). Business Ethics 10/11 Annual Editions. New York, NY: McGraw-Hill.

Sloan, Karlin. (2006). Smarter, Faster, Better: Strategies for Effective, Enduring, and Fulfilled Leadership. Hoboken, NJ: Jossey-Bass.

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