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Measuring ethical culture

This presents a discussion on how to measure ethical culture.

ethical cultureI just read an interesting article by Scott Moritz of Protiviti. Measuring Ethical Culture – Tapping into Open Secrets is an easy read and covers the main points.

He suggests that employees are more likely than in previous years to answer a survey honestly, assuming that it can be answered anonymously.

I tend to agree, but caution that the willingness of employees to answer such a survey can be influenced by, among other things:

  • The culture of the various locations in which the company operates. In some locations, people are reluctant to respond at all, let alone honestly
  • Whether they trust the organization to treat their responses anonymously and not to retaliate
  • Whether they believe the responses will be assessed honestly
  • Whether they believe actions will be taken
  • Their prior experience
  • …and so on

I think there are other points that should be made:

  • Both the CAE and the CRO, if not the executive management team, should already have an idea of the ethical culture
  • The preparation and dissemination of the survey are critical. It should be tailored to the organization and shared in a way employees will trust
  • You need to make sure you are prepared for the survey results.
    • Who is going to receive them?
    • Who will ever see the individual responses?
    • Who will summarize them?
    • Who will evaluate the results and determine what actions will be taken?
    • How will this be discussed at the executive committee level?
    • How will this be discussed with the board?
    • How and when will you communicate to the employees? How much will you tell them – of the results and the actions in response?
    • Are sufficient and appropriate resources available to handle everything promptly?
    • Who will follow up to ensure the appropriate actions are taken?
    • How often will you do this? If the results indicate a problem, when will you repeat the survey?
  • What are you going to survey? How broad will the survey be? Ethics is a big topic, and will you cover all compliance needs as well – including the latest hot topic, sexual harassment?

As CAE, I worked with the HR department at a couple of my companies to include ethics-related questions in the bi-annual employee survey. It was useful and I recommend that practice.

I watched at SAP when the company sent out a survey to all employees in 2008/9. The results were highly critical of top management (and other layers) and the board was courageous in its response. Changes were made at the top.

I believe this is a serious and important topic to discuss. I would involve the general counsel, head of HR, and even the CEO in the discussion before presenting it to the executive committee and then to the board for their review and approval.

What do you think?

How have you addressed this issue?

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Norman D. Marks, CPA, CRMA

Norman D. Marks is an Author, Evangelist and Mentor for Better Run Business, as well as an OCEG Fellow and Honorary Fellow of the Institute of Risk Management. Mr. Marks has been a practitioner and thought leader in internal audit, risk management, and governance for a long time. He has led large and small internal audit departments, been a Chief Risk Officer and Chief Compliance Officer, and managed IT Security and governance functions. Read more
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