Beyond the Code of Ethics- Measuring Corporate Culture
7th edition (2019/2018)
Compliance / Culture / Scandals
Read the beginning of the text
An ethical corporate culture is not created by a code of ethics any more than telling a child not to eat sweets gives them healthy teeth. Culture is more than documents and processes; it is made of perceptions, of feelings and the sense of “how things are done around here”. Take any recent scandal: they were not created by individual employees, but by a corporate culture which allowed and even encouraged people to behave unethically.
There was the rationalisation of the fraud; in other words, the attitude that “everyone else is doing it, so it must be ok”, the winning at all costs mentality, and the side-lining of those who tried to blow the whistle. So how can that culture have been fostered, and conversely, how can the leaders of tomorrow get assurance that the culture they want and think they have created is actually in place? How can something as intangible as corporate culture be measured?
In the first part of this essay, we will consider three case studies of recent scandals to identify some of the tell-tale signs of a poor corporate culture. It is important to note that all three examples had a mature compliance system with an external whistle-blower hotline, a code of conduct and an internal audit department. So what went wrong?