How creating an ethical workplace can boost your bottom line

Want to defy the Great Resignation and boost your bottom line? My ethics and compliance company, LRN, surveyed 8,000 employees across 14 countries and 17 industries and found that corporate culture has a significant impact on retention and results. Companies with the strongest ethical cultures outperform their peers by 40% across all measures of business performance: from levels of customer satisfaction to employee loyalty, innovation, adaptability—even growth.

Focusing on ethics is especially important to Gen Z, which will make up 27% of the workforce by 2025. A recent Tallo survey shows that 72% of Gen Z applicants seek a fair and ethical boss, 61% want the ability to be heard, and 87% say DEI strategies are very important. There’s a reason why ESG—environment, social, and governance—is top of mind for forward-looking business leaders.

By evaluating your organization’s own performance, in 2022 you can create a more sustainable, ethical culture. Here are five steps for effecting change: 

Assess the current state of your culture

Culture is more than ping-pong tables, beer taps, or even flexible work schedules. Culture includes creating a sense of belonging and respect for all employees, actively supporting DEI initiatives (which catapulted into the spotlight following the murder of George Floyd), the ease at which employees feel empowered to speak up and contribute, and your firm’s stance on the environment. 

With that in mind, companies need to have a pulse on their collective culture. You can’t manage what you don’t measure. While there are many ways to collect data, the best is to simply ask your people. Ask everyone—from senior leaders to middle management to individual contributors—questions about how they experience the company’s culture to uncover how it impacts employee behaviors. Doing so helps identify gaps that need immediate attention in access to people, tools, resources, and training. Gathering and analyzing data illustrates objective insights and can let you know where and how to intervene. 

Be honest and transparent about where your organization stands

Be prepared: Surveying your people about company culture might reveal some harsh truths. 

Perhaps your culture varies from what you thought, or employees want something different. It is important to maintain an open dialogue that acknowledges the realities presented by other employees and focuses on improving the culture for all. Data from LRN’s recent Benchmark of Ethical Culture report reinforces the longstanding concept of “leadership disconnect” across more than a dozen dimensions of culture. From corporate ethics to transparency, DEI, and  performance under pressure, leaders score themselves an average of 11 points higher than their teams do. 

Respond to cultural strengths and critical risk areas

Companies that have conducted an audit of their culture should review the results and choose one to three areas of opportunity to develop strategic plans around. You can’t solve everything right away, but you can make incremental changes. Too often, we see companies effectively assess their culture but then fail to implement the change initiatives necessary to improve. That’s why it is so important to commit to change in 2022. Your action plan for cultural improvement should contain:

  • Key objectives (What are we trying to get better at and why?)
  • Action items.
  • Realistic timelines.
  • Stakeholder participation and accountability.
  • Budget to accomplish.
  • Metrics for gauging success .

Also, it is vital to communicate your assessment results and action plans across your organization. Doing so reinforces a culture where it’s safe to speak up, and one where leaders listen and respond to needs in the workforce. 

Acknowledge all key stakeholders and keep them engaged

It’s important for companies to have a common set of values and cultural ideals everyone comprehends. It takes an entire organization to uphold standards of workplace conduct and to understand they will be held accountable for doing that. Upholding ethical culture is not just the responsibility of HR or your ethics & compliance team. Culture is a living, breathing, and evolving, entity defined by everyone’s participation. The moment leadership thinks, “We’ve arrived,” your culture has stopped growing and advancing. Cultivating a strong culture in an organization is like raising a child in that your responsibility never stops, but it does evolve as the child becomes their own person. 

Assess, track, and report on progress

Culture is impossible to manage or change without measuring. Resources that provide a comprehensive look at the state of ethical culture are a good starting point. Tracking cultural progress over time—seeing how your assessments change year-over-year and how you’re improving in target growth areas—is particularly important to effectively govern, mitigate risk, ensure compliance, and lead on ESG, DEI, organizational justice, trust, and other metrics.

Acting on these five steps in 2022—starting with an open, honest audit of where you are and considering where you want to be—will help your organization ignite cultural change. With culture as your compass, your organization can continue to evolve into the best version of itself. 

Emily Miner manages LRN’s ethics and compliance advisory practice for organizational culture and behavior assessment processes. She advises organizations undergoing large-scale culture transformations across a variety of industries, emphasizing cocreative processes, and relying on data-driven insights.