South Africa has faced no shortage of governance and auditing scandals in recent years. Improving ethical culture in an organisation, however, is not just down to one thing but requires several interventions working together – from the influence of senior management to having channels of accountability throughout the organisation.
According to the South African Business Ethics Survey for 2019, launched on Monday by The Ethics Institute, the ethical culture among SA corporates is still developing.
The survey is conducted in intervals of three years, with the first one being published in 2002, and measures the state of ethics in the private sector. Over 2 200 respondents from 19 organisations – comprised of listed companies and large businesses, participated in the survey.
In SA corporates, ethical culture may be present in some departments within organisations, but it has not yet permeated throughout the entire organisation, said Liezl Groenewald, co-author of the report. The report suggests several measures which can build ethical culture in an organisation.
1. Ethics accountability and responsibility
Of the respondents 20% believe ethics accountability and responsibility have the greatest influence on overall ethical culture. It calls for employees to be held accountable for their decisions and actions. Professor Deon Rossouw, CEO of The Ethics Institute, commented that accountability is not just about punishing those who do wrong, but also to recognise and reinforce ethical behaviour by employees.
2. Senior management and commitment to ethics
Senior management must be "consistently, audibly and visibly" demonstrating the organisation's values, the report read. Senior managers must invest time and resources to build ethical culture and not view it as an afterthought, the report read. Of the respondents 17% felt senior managers' commitment to ethics was important in shaping the ethical culture in an organisation.
3. Middle management commitment to ethics
Of the respondents, 16% believe middle management's commitment to ethics is important in addition to that of senior management. Middle management must be actively engaged by senior management to ensure they know the importance of "role-modelling" ethical behaviour to non-managerial employees.
"Middle management needs to realise that they are the conduit of the ethics message from senior management to non-managerial employees.
"Tone at the top can effectively stop at middle-management if they are not included in the journey," the report read.
4. Ethics awareness
Of the respondents, 15% believe ethics awareness is important in shaping ethical culture in an organisation. If employees are aware of acceptable and unacceptable organisational behaviour – it would enable them to comply with organisational values, the research suggested.
"It is imperative for organisations to ensure that employees know what to do when faced with pressure, who to ask for advice and where to report unethical conduct," the report read.
5. Ethical treatment of employees
The research also shows that 14% of respondents believe it is important that employees are treated with dignity and respect. Organisations should ensure that internal policies and relevant legislation is complied with. "Favouritism, nepotism, poor working conditions, unsafe working environments, and the like, are not conducive to job satisfaction," the report read. "Satisfied employees are motivated and productive employees are intrinsically driven to live the organisational values and contribute positively to the organisational goals and ethical culture."
Among the other factors necessary to improve ethical culture is to ensure that management is trained in handling information from whistleblowers, according the report. "Employees fear victimisation and would therefore be more likely to report misconduct if they were confident that their reports will be handled confidentially," the report read.
Confidential handling of reports signals to employees the organisation is committed to its values and ethical standards. In turn, there should be feedback to employees that action is being taken to address concerns, the research suggested.
Safe-reporting facilities will encourage employees to report misconduct, and could possibly discourage employees from unethical behaviour, the report added.