March/April 2017

On Ethics
There’s More to Ethical Culture Than Checking a Box

It’s important that engineering firms have effective ethics and compliance programs with the proper codes of conduct, training, and reporting systems. However, new research recommends that firms look for the presence or absence of ethical behaviors to measure the success of their programs instead of tallying up how many program elements are in place.

The study by LRN Corp., which offers ethics and compliance advice, found that many firms take a check-the-box approach, looking at only the number of policies, hotlines, training sessions, and audits to gauge program success. But values-based workplace cultures are better at influencing employee behavior rather than rules.

Organizations with high-performing programs believe their strong values orientation boosts their brand appeal. About 80% of compliance officers surveyed agree that expressing core values in behavioral terms is an important part of the ethics and compliance process. Among the firms with high-performing programs, almost 90% of ethics and compliance officers have integrated their companies’ core values by expressing them as specific behaviors in their codes of conduct.

More than 70% of ethics officers surveyed reported that their top executive leaders hold employees accountable for ethical behavior. These leaders actively engage in the organization’s values through management style, clear communications, decision-making, and incentives.

At companies with the most ethical cultures, 90% of officers say that their middle-level managers are also empowered to help communicate the firm’s code of conduct and ethics throughout the organization.

LRN has found that three systems influence individual and organizational behavior: governance (formal structure, rules, and polices), culture (norms and mindset), and leadership (how managers behave).

Types of Organizations

Blind Obedience—Power-based, task-driven organizations operate through command-and-control-based principles and policing. This approach places little emphasis on building enduring relationships among colleagues, with customers, or within society. Employees are coerced to do as they are told under threat of punishment or adverse consequences. These types of organizations focus on short-term goals.

Informed Acquiescence—Rules-based, process-driven organizations operate through hierarchy, policy, and 20th century “good management” practices. Employees are motivated by performance-based rewards and expected to fulfill the expectations of their roles. Long-term goals are identified, but are often set aside in favor of short-term success.

Self-Governance—Purpose-inspired, values-based organizations are led with moral authority and operate with a set of core principles and social imperatives. Employees are inspired by a desire for significance and encouraged to act as leaders regardless of role. Such organizations are focused on long-term legacy and sustainable performance.