Ethical Culture and Feeling Supported

Every organization wants its employees to feel like they’re part of an effective team, and compliance officers know that a strong ethical culture is crucial to that sense of “team.” A new study has arrived that tries to pinpoint the role that ethical culture plays in strong teams — and what else needs to be present to keep employees engaged.

The study was published just before Christmas in the journal Administrative Sciences by four management and medical professors based in Bosnia. They surveyed 430 healthcare workers across Bosnia and Herzegovina, asking them questions about the ethical climate at their employers and also about managerial competence, too. 

Why does that matter? Because ethical culture isn’t the only ingredient in a company’s larger organizational culture. Your company could have a great ethical culture, but if managers are incompetent at their jobs, that could still be a recipe for long-term failure. Compliance and HR leaders need to think about how their respective domains work together to support team performance and overall organizational success.

Anyway, back to the Bosnia study. The researchers found that a strong ethical climate correlates to lower employee turnover; while managerial competence correlates to higher job satisfaction. Or, as the study authors wrote: “Ethical climate appears more closely tied to whether people can imagine remaining in the organization, whereas managerial competence is more closely tied to how they evaluate their current work experience.”

I can’t vouch for the rigor of the study, which only polled 430 people in one field (healthcare) in one country (Bosnia Herzegovina) — but the findings feel right. They point in a direction that jibes with common sense. So even if we don’t take the precise findings as scientific fact, compliance officers can still use the fundamental conclusions as a framing mechanism for how to think about your program’s contributions to the organizational culture.

It’s About Support

The authors of the study used the word “support” 131 times when they wrote up their findings. That stuck with me. We’ve all heard endless webinars where compliance officers talk about how to build a successful program, and inevitably they say something like, “We’re here to support the business.” 

Compliance officers say that because it’s true; but this study reminds us that a strong ethical culture is only one element of “support” as seen from the perspective of employees. 

Consider Figure 1, below. If we assume that the study’s findings are true (higher ethical climate correlates to lower turnover; higher managerial competence correlates to greater job satisfaction), then your employees’ attitudes might fall along these lines.

I get that ethics and compliance officers are only responsible for the ethical climate on the left side of the chart. My point with Figure 1 is that it can help ethics and compliance officers understand how employee attitudes might change as your ethical climate and managerial competence evolve over time.

For example, if you’ve been hired to help turn around a dysfunctional organization, employee attitudes are probably mired in the lower left quadrant. Maybe then you start your overhaul with a new Code of Conduct, new messaging on ethics and business conduct (hopefully from new management), and new policies. Over time, as you roll out training and enforce those policies, employee attitudes might drift into the upper left quadrant.

So far, so good; and if your efforts lead to a reduction in compliance or legal violations, your compliance program is doing great. Your organization as a whole, however, still has issues. If management can’t deliver on operational needs because managerial competence is low, employees won’t feel supported and they won’t be as engaged in the overall mission.

Of course, it’s not your responsibility as compliance officer to address managerial competence. The HR team is supposed to do that, through training programs and personnel evaluations and all the other usual talent development efforts. But if HR fails at those efforts, then employees still won’t feel supported — and that will have consequences for the services they provide, the products they sell, the innovation your business needs, and overall success. 

Or, as the authors wrote:

These findings highlight the importance of viewing staff retention not solely through the lens of individual resilience or financial incentives, but as a function of the broader organizational environment. Ethical norms, competent management, and supportive teams emerge as interdependent job resources that help … workers feel valued, satisfied, and willing to remain in their organizations.

It’s not enough to have great ethics or great managers. For a company to succeed, it needs both. Put that into the next board packet.

One Other Point

I also appreciated this study because it included a useful definition of ethical culture. Consider this:

In healthcare, an ethical organizational culture is reflected in fair decision-making, openness to discussing ethical concerns, and consistent support for patient-centered values, which foster trust and psychological safety among staff. 

This definition is great because it clarifies that an ethical culture isn’t just about what the company’s values are; it’s also about the process to resolve ethical conflicts when those conflicts arise. 

That process needs to be fair and transparent so that people trust it; and when employees trust the fairness of the process they trust the whole organization; and when they trust the organization they feel safe to focus more on their job, which is to provide solid patient care.

Cut out the reference to healthcare, and that’s another statement you could put into the next board packet too. It’s perfect.