Phillip Nichols and Patricia Dowden
Compliance and Ethics Blog
Originally posted April 10, 2017
Here is an excerpt:
People who study how individuals behave in organizations find that norms are far more powerful than formal rules, even formal rules that are backed up by legal sanctions.[ii] Thus, a norm that guides people to not steal is going to be more effective than a formal rule that prohibits stealing. Therein lies the benefit to a business firm. A strong ethical culture will be far more effective than formal rules (although of course there is still a need for formal rules).
When the “ethical culture” component of a business firm’s overall culture is strong – when norms and other things guide people in that firm to make sound ethical and social decisions – the firm benefits in two ways: it enhances the positive and controls the negative. In terms of enhancing the positive, a strong ethical culture increases the amount of loyalty and commitment that people associated with a business firm have towards that firm. A strong ethical culture also contributes to higher levels of job satisfaction. People who are loyal and committed to a business firm are more likely to make “sacrifices” for that firm, meaning they are more likely to do things like working late or on weekends in order to get a project done, or help another department when that department needs extra help. People who are loyal and committed to a firm are more likely to defend that firm against accusers, and to stand by the firm in times of crisis. Workers who have high levels of job satisfaction are more likely to stay with a firm, and are more likely to refer customers to that firm and to recruit others to work for that firm.
The blog post is here.