Building and Sustaining Strong Ethical Cultures

Building and Sustaining Strong Ethical Cultures

American Society for Quality

April 9, 2014Jim Nortz

[email protected]

585-260-8960

1

mailto:[email protected]

Helping organizations thrive by building sound internal controls and strong ethical cultures.

Built on Ethics Advisory Services

1. What is a strong ethical culture?2. Why should I want a strong ethical

culture?3. How can I build and sustain a strong

ethical culture?

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Today’s Agenda

1. I am an ethical person.

A. Agree

B. Disagree

4Agree

Disagree

2%

98%

2. It is very important to me that the organization I work for is ethical.

A. Agree

B. Disagree

5Agree

Disagree

2%

98%

3. There have been times in my career when I felt pressure to compromise my ethical standards.

A. True

B. False

6True

False

31%

69%

4. There have been times at work when I saw things going wrong and even though I spoke up, I was unable to get the organization to change course.

A. True

B. False

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14%

86%

5. Our organization has an accurate gauge to measure the strength of our ethical culture.

A. True

B. False

8True

False

88%

12%

What is a strong ethical culture?

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A strong ethical culture is one in which the dominant social dynamics consistently encourage/reward ethical behavior.

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Strong Ethical Culture

A strong ethical culture is one in which the dominant social dynamics consistently encourage/reward ethical behavior.

A culture in which it’s “cool” to be good – where the odd person out is the one who breaks the rules.

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Strong Ethical Culture

Why should I want a strong ethical culture?

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2006 LRN National Survey

“A majority of workers – 94 percent – say it is “critical” or “important” that the company they work for is ethical.”

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Reduced Misconduct Rates

0%

20%

40%

60%

80%

100%

Weak Ethical Culture Strong Ethical Culture

88%

20%

Percentage of Employees Who Observed Misconduct

2013 National Business Ethics Survey

A Strong Ethical Culture it Good for Business

Organizations with strong ethical cultures:

1. Minimize risks.

2. Maximize teamwork.

3. Recruit, retain and motivate the best in the industry.

4. Earn and sustain the trust of key stakeholders (customers, shareholders, suppliers and communities)

5. Maximize opportunities for superior financial performance.

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Benefits of a Strong Ethical Culture

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2013 National Business Ethics Survey

How can I build and sustain a strong ethical culture?

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The Big Question

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Organizational Behavior Distribution Curve

Acceptable Behavior Zone Unacceptable Behavior Zone

OrganizationalBehavioralBoundary

CatastrophicBehavioral Boundary

CatastrophicBehavior Zone

Industry Behavioral Boundary

Legal Behavioral Boundary

Ideal Behavior

Number of People

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Ideal Behavior

Pressure to Cheat

Number of People

Pressure to Cheat

External to Organization Shareholders Government Officials Customers

Inside the Organization Leaders Peers Job Demands

Inside Self Desire to win Desire to get job done Desire to save time Desire to look good

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22








Ideal Behavior

Pressure to Cheat

Number of People

23








Ideal Behavior

Pressure to Cheat

PurposeStructuresSystems

Number of People

A Live Demonstration

24

25








Ideal Behavior

Pressure to Cheat


Number of People

26








Ideal Behavior

Pressure to Cheat


Individual Attributes(Knowledge, Attitudes, Choices & Habits)

Number of People

27








Ideal Behavior

Pressure to Cheat



Social Dynamics(Obedience to AuthorityConformity to Social Norms)

Number of People

28

Obedience to Authority

29

Conformity to Social Norms

30








Ideal Behavior

Pressure to Cheat




Number of People

31








Ideal Behavior

Pressure to Cheat




Number of People

Leadership

A Failure of Leadership

A Tale of Two Leaders

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I wish my leaders were here to listen to this talk because they need to change for our organization to improve its culture.

A. Agree

B. Disagree

34Agree

Disagree

22%

78%

Avoid the

Blame and Change Game Trap

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1. Focus on yourself - Take personal responsibility for modeling and promoting ethical behavior.

2. Reflect on a significant failure of leadership and re-write the story.

3. Look for and emulate role models.

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A Path to Ethical Leadership

Two Leadership Challenges

1. Good intentions alone are insufficient to secure the “good” in organizations.

2. The primary behavioral drivers are invisible.

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1. Good intentions alone are insufficient to secure the “good” in organizations.

2. The primary behavioral drivers leaders seek to influence are invisible.

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Important Leadership Tools







Ideal Behavior

Pressure to Cheat




Number of People

Leadership

Leadership Tools

1. Purpose – Define the “why,” “what” and “how” of your organization in ethical terms and integrate it into all aspects of your operations.

2. Structure – Ensure spans of control and accountability are designed to promote ethical behavior.

3. Systems – Evaluate your key systems to ensure their reliability.

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1. Good intentions alone are insufficient to secure the “good” in large/complex organizations.

2. The primary behavioral drivers leaders seek to influence are invisible.

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The Key Behavioral Drivers Are Invisible







Ideal Behavior

Pressure to Cheat


Number of People

Leadership



The Primary Behavioral Drivers are Between Our Ears

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Perceived pressure to cheatPerceived leadership

KnowledgeAttitudesChoicesHabits

Perceived pressure to do wrong.Perceived encouragement to do

right

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Measuring the Invisible

Revealing the Invisible

Anonymous Polling

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1. Do employees know the rules associated with their jobs?

2. What are employees’ attitudes toward the rules?

3. Are employees pressured to violate the rules or encouraged to follow them?

4. How frequently do employees see misconduct in the workplace?

5. What kind of misconduct are they seeing?

6. When they see misconduct, do they report it? If so, to whom? If not, why not?

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Essential Information

Key Takeaways

1. Focus on yourself - Take personal responsibility for modeling and promoting ethical behavior.

2. Reflect on a significant failure of leadership and re-write the story.

3. Look for and emulate role models.

4. Optimize your chances of building and sustaining a strong ethical culture by:

a. Periodically evaluating and improving your organization’s purpose, structures and systems; and

b. Measuring the direction and magnitude of the invisible key behavioral drivers using anonymous polling.

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Thank You

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Building and Sustaining Strong Ethical Cultures

American Society for Quality

April 9, 2014Jim Nortz

[email protected]

585-260-8960

49

mailto:[email protected]

Documents

Building and Sustaining Strong Ethical Cultures