Corporate culture is the basis of any company’s code of ethics and is described as being ‘the way we do things around here’ (The Corporate Ethics Monitor, Volume 1, Issue 1, page 14). The idea of an organization’s culture can be applied to any group or corporation, small, medium or large. Is the employee encouraged to behave responsibly? Does the employee know what is expected of him or her? Is there any value or norm that should not get eroded or sacrificed in pursuit of the bottom line? Is there a well-understood ethical decision-making framework – one that applies to the most senior as well as most junior employee? Are you supposed to raise a dilemma if you see on and, if so, with whom? Will the company ‘kill the messenger’ if you raise such a dilemma.
The idea of an organization’s culture can be applied to any group or corporation, small, medium or large. Corporate culture encompasses such practices as fair hiring procedures, how a deal is worked out, how vacation time is decided, how the company is structured (i.e. number of vice-presidents and managers), the goals of the company, and pension programs. Essentially, corporate culture is how a company runs on a day to day basis, following unwritten rules that are simply understood by all employees and employers. It is important to note that corporate culture may contradict a written code of ethics. “Strong corporate cultures tend to inhibit adaptability” (The Corporate Ethics Monitor, Volume 1, Issue 2, page 31). In other words, often older, or authoritarian, or more established companies and organizations find it difficult to align their corporate culture with the changing views of society. Therefore, for an integrity-aspiring corporation, it is important to understand that while the views and ethics of the board of directors may not change, the needs, views, makeup and ethical practices of the employee base may dramatically change overtime. This requires ethics testing, policy and training recalibration, social performance auditing, accountability and transparency analysis, and continuous improvement. In order to meet the needs of this new employee demographic as well as changing societal expectations, a corporation must be willing to examine its corporate culture, identify the outdated aspects, and change it for the better.
There are five important factors to keep in mind if you as a corporation want to examine and change your corporate culture.
“Recruit the best people you can,” those “who are prepared to make time for the effort because they care about being involved in an examination of the organization’s values, ethics and future” (The Corporate Ethics Monitor, Volume 1, Issue 3, page 45).
“Spend as much time as possible quietly building a strong internal constituency that can be counted upon when the project goes public” (The Corporate Ethics Monitor, Volume 1, Issue 3, page 45). This is an important step if the new policies are going to be successfully integrated into the company’s corporate culture because if the policies do not seem well thought out or well supported then they will not be popular and people will not be willing to adopt them.
Remember that “any effort to change an institution short of a revolution must be incremental” (The Corporate Ethics Monitor, Volume 1, Issue 3, page 45). If an organization is serious about changing its corporate culture, it cannot give up at the first sign of resistance from some employees but instead it must try to explain why the changes are taking place and how they will effect the average employee so that people will be better prepared for the eventual changes.
“Ignore traditional organizational roles,” which tend to pigeonhole people and ideas into roles that may not best serve the employee, the employer or the corporation. Changing a company or organization’s culture may mean that certain roles are redefined or replaced by new ones.
Use appropriate tools to identify and reduce the gap between espoused values and actual practices. This means social and ethics audits, independent performance appraisals, committing to international best practice standards, seeking unfettered and regular opinions or dialogue from diverse stakeholders, and independent verification.
Keeping these five factors in mind when beginning the process of changing a company’s culture will make the process much easier for the employees and the employers.
“Social or ethical auditing is a technique intended to complement traditional financial accounting” (The Corporate Ethics Monitor, Volume 10, Issue 1, page 12). Social and ethics audits are used by corporations as an “effective and verifiable framework within which to measure and test their non-financial performance” (The Corporate Ethics Monitor, Volume 10, Issue 1, page 12). EthicScan distinguishes between an ethics audit – which looks at best possible or ethically optimal international standards – and a social audit – which uses a company’s standards or best practice within an industry sector. Other organizations may use the concepts interchangeably. EthicScan has a list of fifty-five private and public organizations that have conducted such investigative reports.
In Canada, ethics audits tend to have six major components: “values-based standard setting, document review, benchmarking, an environmental scan, multi-stakeholder surveys, and action-enabling recommendations” (The Corporate Ethics Monitor, Volume 13, Issue 5, page 77). “Values-based standard setting” reviews whether the corporation is taking into account the values of all its stakeholders, including the corporation itself, employees, retirees, shareholders, host communities, international ethical trading and human rights organizations, and industry institutions. If one stakeholder sector is being ignored, then these values and needs should be addressed in corporate policy. A “Document review” refers to “an in-depth review of the manual of administration, the corporate code of ethics, board minutes and corporate policies, and other policies in terms of business practices, conflict of interest, harassment, privacy and the like” (The Corporate Ethics Monitor, Volume 13, Issue 5, page 77). Essentially, this review asks, “does the corporation’s reflect its public statements on corporate social responsibility and have its actions reflected those policies?” “Benchmarking” pertains to how the corporation’s behaviour compares to industry norms and industry best practices. An “Environmental scan” addresses “macro-changes in social climate, nationalism, technology, international trade policy, and other factors that could transform the very organization of the business or agency under study” (The Corporate Ethics Monitor, Volume 13, Issue 5, page 77). These scans should be regularly conducted so that a corporation can adjust its policies and practices accordingly. “Multi-stakeholder surveys” should be conducted to see how significant stakeholders view the policies and actions of the organization because public opinion is often most important in terms of perception of success. A combination of written questionnaires, exit interviews, personal interviews, and other techniques are common. Finally, “action-enabling recommendations” “must link the audit cycle into the planning mode of the organization” so that the findings of the audit are not lost in the corporate bureaucracy but instead are the basis for change and improvement in the company (The Corporate Ethics Monitor, Volume 13, Issue 5, page 77).
An ethics audit can be an important function in improving the company’s corporate social responsibility policies as well as its public ethical reputation. Even if a company starts out with a small scale ethics audit, this is often a step in the right direction and that company should be applauded and then encouraged to keep moving in the right direction to a full scale, independently-conducted, publicly disclosed, independently-verified ethics audit.
An organization that exhibits corporate social responsibility performs so that it is both “directly and indirectly sensitive to the reasonable needs of various sectors in society” (The Corporate Ethics Monitor, Volume 1, Issue 1, page 1). In other words, it is – and is seen to be – responsive to various stakeholders’ needs. Companies that are socially responsible consider the needs of employees, customers, suppliers, host communities, the environment, and society in general. As an example, socially responsible corporations are responsive to their employees’ rights in the workplace and vice versa. For instance, such corporations protect whistle blowers and address employee complaints privately through an ombudsman program and confidential counselling. As well, they protect the rights of their customers through codes of ethics, which cover various topics such as privacy of client information, fair business practices, and transparency of corporate policies and actions. However, many socially responsible corporations go beyond ensuring these negative rights to promote and protect the positive rights of all of their stakeholders. This means, for example, providing a variety of services for the corporation’s employees such as on-site daycare programs or daycare referral services, employee wellness or employee assistance programs, just to name a few.
Many people believe corporations are responsible only to their shareholders and not to other sectors of society. These people often posit that corporations that act socially responsible will never survive in a competitive market where profits are the “be all and end all.” However, “several researchers have studied whether straying from the short-term, profit-only objective has proven to be harmful to a corporation’s health” (The Corporate Ethics Monitor, Volume 1, Issue 2, page 1). The consensus results are that “companies that display good social performance appear to be more profitable than those that don’t” (The Corporate Ethics Monitor, Volume 1, Issue 2, page 1). These results may seem unlikely since it is generally believed that a company that spends more cannot make more in the end; however, the costs of these programs are greatly outweighed by the benefits they provide. First, any program a corporation implements that benefits employees should benefit the corporation in the long run since a happy, healthy employee will be more efficient, committed, and innovative. Second, programs that benefit the host community, such as environmental-friendly practices and donations to local charities, will lead to better relations between the corporation and the host community, which can only lead to future gains for the company in terms of credibility, reputation and public support as well as ease of dealing with issues like corporate expansion, community consultation, taxation, and environmental cleanups. Third, many business people now believe that it is economically beneficial to present an ethically-sound company to a more informed, ethically-conscious public. Many corporate executives also perceive that it is their responsibility to “take the lead in the coming reforms” of corporate social responsibility, “an indication of the widespread interest businesspeople, consumers, investors, potential partners, regulators, and others have for the emerging field of CSR” (The Corporate Ethics Monitor, Volume 1, Issue 5, page 75).
Corporate social responsibility is often difficult to measure due to the differences between industry sectors and between behaviour of corporations within a sector as well as the qualitative, less easily measured nature of corporate social responsibility. However, generally “analysts studying corporate social responsibility (CSR) look for:
a process for establishing ethical goals,
a statement of normative business conduct or code of ethics,
a mechanism for inculcating those goals,
a feedback process for policy re-evaluation and potential adjustment, and finally,
a reward system and reinforcement mechanisms for achieving ethical performance goals” (The Corporate Ethics Monitor, Volume 1, Issue 4, page 58).
These five characteristics can also be applied by anyone who is interested in determining the ethical performance level of a corporation and “whether a company’s activities are consistent with or in conflict with multi-stakeholder standards in such areas as environmental protection, pay equity, ethical sourcing and trading, and charitable funding of not-for-profit social and cultural agencies” (The Corporate Ethics Monitor, Volume 1, Issue 1, page 12).
Welcome to our new series of Blog Posts, on Frequently Asked Questions. These kinds of questions are definitions of terms, as the industry understands it, and how that relates to the Ethics Field. These will be posted on Mondays, along with our news postings. If you have a question about this field, contact us at [email protected] and we’ll schedule a post.
First Question: Does EthicScan Grade Companies?
EthicScan examines behaviour, not espoused values. It provides low cost, high quality, independent ratings on 1500 companies across ten different categories of social responsibility. The criteria used are determined by 60 Canadian experts from such fields as business, union rights, environmental considerations, women’s legal action advocates, journalists, and others.
EthicScan’s grading system can be seen in the section of this site dealing with the modified Delphi. EthicScan grades performance of organizations and companies within different performance categories, but not overall. It is misleading and potentially dangerous to trade off good performance in one category (such as diversity and equity) versus bad in another (such as sourcing and trading).
EthicScan’s Rating Reports provide grades in each performance category by company, sector and the entire DataBase.
Current factory inspections programs are flawed, with deliberate mis-labelling and corruption in factories in China, resulting in shoddy and unsafe products on shelves of retailers like WalMart, says a New York Times investigation story.
EthicScan, Canada’s oldest and largest corporate responsibility research and ethics consultancy, announces its extensive education program for next year. 14 faculty members, 15 courses, 10 webinars, and 4 learning circles on topics like complaint investigation, ethical partnering, end of life decision-making, managing sustainability, and corporate reporting. Most programs in Canada and the U.K.
A new next generation business model that aligns coaching and business with CSR is called Socially Responsible Consulting & Coaching (Philanthropreneuring). Billionaires pledge half their assets when they die. For the rest of us, why wait until you die: give experience, cash and support as well as levity to worthy enterprises while making a living.
CalPERS – the largest public pension fund in the US – and its academic partners have launched a searchable database of more than 700 academic studies on sustainability factors that examine the impact of these factors.
In the last decade, 2013 vs 2003, there have been sharp changes in public attitudes in the U.S. to extra-marital sex, same sex relationships, and babies outside marriage, all of which should caution us to distinguish ethics from culturally-changing morality. For Gallup survey data, see
Some observers concede that the Bangladesh government and local manufacturers have been lax on safety issues, but note the countervailing ethical conundrum: that boycotts or cutting of ties with the impoverished nation will only move the problem somewhere else and further drive Bangladesh into wrenching poverty.
Corporate culture is the basis of any company’s code of ethics and is described as being ‘the way we do things around here’ (The Corporate Ethics Monitor, Volume 1, Issue 1, page 14). The idea of an organization’s culture can be applied to any group or corporation, small, medium or large. Is the employee encouraged to behave responsibly? Does the employee know what is expected of him or her? Is there any value or norm that should not get eroded or sacrificed in pursuit of the bottom line? Is there a well-understood ethical decision-making framework – one that applies to the most senior as well as most junior employee? Are you supposed to raise a dilemma if you see on and, if so, with whom? Will the company ‘kill the messenger’ if you raise such a dilemma.
Welcome to our new series of Blog Posts, on Frequently Asked Questions. These kinds of questions are definitions of terms, as the industry understands it, and how that relates to the Ethics Field. These will be posted on Mondays, along with our news postings. If you have a question about this field, contact us at 
