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Making an Ethical Culture Work (Part III of IV)

ethics cultureWho is responsible for developing a company’s culture?  The CEO or the CCO?

That is the question, right?  As Warner Wolf, the famous sports broadcaster used to say, “Wrong!!”

In fact, the answer breaks down to two-parts: (a) defining the company’s culture; and (2) communicating and embedding the company’s culture.

The CEO defines the company’s culture.  In most cases, the CEO’s definition of culture reflects the CEO’s own experiences.  All you have to do is review the CEO’s past performance and experience and you will get a good indication of how the CEO approaches the issue and how they will define the issue in the company.

In a few cases, CEOs may grow as they move in the business world, and they may embrace new approaches and thinking but whatever the source for the CEO, it comes down to a very personal definition.

Corporate boards have to focus on this issue when recruiting a new CEO.  It is beyond important – it is critical – for the CEO’s culture and the board’s definition of culture to align.  If not, corporate performance will be at significant risk.ethics culture5

Many CEOs are naïve.  They think the corporate culture is what they want it to be.  That is misguided thinking.  In reality, the corporate culture is defined by the CEO’s actions and surrounding statements.  Senior executives, managers and employees look to those indicators of corporate culture.  They want to see it in action.  That is the best way to define a corporate culture.

The company’s culture is reflected in those managers and employees who succeed while adhering to a culture of ethics, and those that are disciplined for violating the company’s culture.  It is a very basic notion of an ethical culture but the CEO dictates the culture and the actions of everyone in implementing that culture has to be proven.

That is where the CCO comes into play.  The CCO is the critical actor in making sure that internal processes reflect the CEO’s culture.

CCOs manage internal communications designed to promote an ethical culture.   CCOs set the tone in the trenches.  CCOs build on the CEO’s tone by repeating the CEO’s message, boiling down the tone to simple phrases, and implementing tone through communications, training, incentives, discipline, and other more specific business policies and procedures designed to ensure compliance.

CCOs know the importance of a company’s culture and they attend to that culture by surveys, focus groups and informal communications designed to measure and influence company culture in the mid-level and lower-level of the company.

There are six key ingredients to making an ethical culture work, each of which is implemented by the CCO.

  1. Written standards
  2. Training
  3. Access to ethics and compliance advice
  4. Anonymous reporting
  5. Clear and consistent discipline
  6. Specific element of employee performance appraisal focused on ethics and compliance

ethics culture4Ethical behavior does not mean compliance with the law.  Ethical behavior means values-based behavior.  The CEO and CCO combine their efforts to define an organization’s core beliefs and values, encourage those values to become embedded in the organization’s culture and empower employees to act in accordance with those values.

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