Why Measure Organizational Culture?
When a company measures its organizational culture, its leaders can gain some control over changing it for the better. Measuring ethical culture, in particular, can also help executives clarify the objectives of the company’s ethics objectives, improve decision-making, and evaluate impact on stakeholders.
It is best to think of organizational culture as a multi-system framework. It has two systems, one formal and another informal, that can support the firm’s values, decisions, and actions—but only if the systems are aligned. Formal systems include selection systems, policies and codes, orientation and training programs, performance management systems, authority structures, and formal decision processes. Role models and heroes, the norms of daily behavior, organizational rituals that support or detract from ethical conduct, the stories people tell about the organization, and the language people use make up the informal system.
Take leadership, which is, from a formal and informal perspective, essential to driving ethical culture. Leaders provide, on the one hand, resources to implement structures and programs that support ethics, and, on the other, serve as role models whose actions speak louder than their words, conveying “how we do things around here.”
How Does Culture Affect Profits and Productivity?
It’s easy to notice that corporate culture drives employee behavior and company outcomes. As the oft-cited strategy guru Peter Drucker has said, “Culture eats strategy for breakfast.” Researchers, such as James Heskett from Harvard Business School, have shown the benefits of effective corporate cultures. For one thing, such cultures lower employee turnover. Heskett measured the effect of this on operating profit. He found that lower employee turnover reduces costs in connection with recruiting, hiring, and training, and improves operational continuity, which can have positive effects on customer relationships, like encouraging customer loyalty, enhancing sales, and lowering marketing costs.
With today’s employee engagement rates around 34 percent since 2018, according to Gallup research, now would be a good time to invest in aligning a company’s mission and values with employee behavior. Please see here for details of our culture assessment framework.
Why Ethical Systems?
Ethical Systems is the only collaboration of leading social and behavioral scientists who number among the world’s top experts on designing ethical organizations. You will not find culture measurement tools like ours anywhere else online. They are a unique resource. The questions in our ethical culture survey, in particular, were vetted by academics in a peer-review journal process. We also convened a working group of leading practitioners and academics to assess the highest quality measures. Ethical Systems is committed, not only to raising awareness about the mechanisms that shape ethical culture, but also to helping organizations properly design systems that reinforce positive behavior. In this sense, we are an advocate, partner, and facilitator in the success and resilience of business.
Contact
To discuss the survey and your company, please contact Executive Director Todd Haugh at thaugh@iu.edu.