The value of managing ethics of an organisation

Many organisations and ethics practitioners invest time and money towards ethics programmes with an aim of building an ethical culture. The regulatory environment has made ethics management a requirement for both the private sector [Section 72(4) of the Companies Act] and public sector (Public Sector Integrity Management Framework).

 

With so much literature and guidelines on ethics management, organisations should be enjoying the benefits of an ethical organisational culture. But they often do not. Why?

 

Many organisations and ethics practitioners invest time and money in ethics programmes with the aim of building an ethical culture. The regulatory environment has made ethics management a requirement for both the private sector [Section 72(4) of the Companies Act] and the public sector (Public Sector Integrity Management Framework). According to a survey that was conducted by Ethical Corporation (2013), companies’ expenditure on ethics management programmes has significantly increased over the past three years.  The majority of the budget is channelled towards code of ethics development and the communication of ethical principles within organisations. Similarly in South Africa, many organisations focus on developing a code of ethics and providing ethics training. As of October 2014, a total of 905 Ethics Officers has been trained by EthicsSA and 394 were certified as ethics officers.  There is a growing demand for ethics interventions in the private and public sector. Despite the increased investment in ethics management, there are not many organisations that have succeeded in cultivating a totally aligned organisational culture where ethics is deeply embedded in the organisation.

Through my engagement with both the private and public sector (in my capacity as an Ethics specialist), I have observed factors that contribute to the disjuncture between investment in ethics management versus achieving a totally aligned ethical organisation:

  • Organisations view ethics management as a compliance exercise (tick box exercise) rather than as the art of shaping organisational culture. Ethics management is approached from a compliance perspective rather than a culture building perspective that requires leadership commitment in order for it to be effective. Ethics is no longer a soft issue but rather a hard issue.  In the book of Sun Tsu, The Art of War, one can draw important principles, plans, tactics that can shape the ethics management approach in order to positively impact on culture. Ethics management requires leadership and tactics that are systematically executed with precision in order to manage unethical behaviour. Policies and processes should be implemented as required by legislation; however the application of policies is never measured in order to determine if the application is appropriate for the organisations and whether it has an impact on culture.
  • Organisations manage ethics by focusing on the conduct of individual employees and blindly overlook the behaviour of the organisation, which is expressed through the types of decisions that the organisation makes and how it responds to matters that impact on relations between employees and other stakeholders. An organisation’s behaviour is a critical element that should be managed, as it displays what is valued by an organisation and largely determines how employees tend to respond to work related matters. If the organisational behaviour is not managed then one should not expect that the organisation’s culture will develop. Organisations attach value to what is measured; therefore organisation’s ethical behaviour should be managed and measured in order to ensure that investment is directed towards the development of an ethical organisational culture.
  • Organisations have poor or a lack of continuous monitoring and evaluation of the organisational culture. There are inadequate mechanisms or indicators that determine the integrity health status of organisations and it is the responsibility of ethics practitioners to develop the appropriate measures for their organisation. These could range from indicators relating to the adequacy of ethics infrastructure, ethics programme effectiveness and organisational culture assessment. Effective monitoring and evaluation systems are critical in determining adequate inputs, outputs and outcomes that are required to achieve a totally aligned ethical organisational culture.

The leadership have the responsibility of ensuring that there is value for money for the investment in ethics management programmes. The impact of ethics interventions in organisations should be quantified and there should be a reasonable expectation of a return on investment. Ethics management should be managed like any other  division of an organisation and it should contribute to organisational performance. A strict compliance approach that cuts the link between individual behaviour and organisational behaviour, coupled with inadequate monitoring mechanisms might lead to clean audits, but robs organisations from creating, maintaining and benefiting from a totally aligned organisational culture.

 

Written by: Phindi Twala
October 2014