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ICAS publishes paper on organisational culture and values

By Ann Buttery, Head of Ethics, ICAS Policy Leadership

As part of ICAS’ ‘The Power of One’ business ethics initiative, the ICAS Ethics Board has published the next in the series of papers on ethical leadership – Organisational culture and values.

This ICAS paper recognises that corporate culture is an organisation’s guiding force; that successful organisational values are those that are “properly set, clearly stated and always lived”; and aims to provide practical guidance to this end. It also emphasises that CAs, at all levels, have an important role to play in embedding a culture of ethics within their organisation.

Values properly set

In the aftermath of corporate scandals, trust in business appears to have been eroded. To rebuild trust, organisations need to be trustworthy. There is a need for the leaders of all organisations to engender an ethical culture where the integrity of the organisation’s employees is seen to transcend all other business objectives and strategies.

“Tone at the top” is widely seen as the fundamental building block. It is essential for the leaders of organisations to establish a set of clear values, and to keep those values under review to ensure that they remain up-to-date and relevant.

These values lead to behavioural traits and serve as the basis upon which everyone in the organisation is expected to behave. CAs, especially those in senior positions, have a key role to play in establishing and embedding values in an organisation.

There is a need for alignment between the values of an organisation and those of its employees. It is therefore essential that employees are involved in the process of determining an entity’s values – the employees need to feel empowered and part of the process.

In today’s world, there is also wider stakeholder interest in the impact of business on the economy, communities, and society. This needs to be considered when organisational values are being developed.

There is some evidence that the younger generation has a stronger interest than previous generations in organisations pursuing long-term, sustainable goals; this younger generation may therefore be instrumental in ensuring the success of organisations in the long-term.

Values clearly stated

A code of ethics (or conduct) and values can be helpful as part of a framework for embedding the importance of trust and integrity across an organisation. A code can assist in communicating expectations on standards of behaviour – individuals can refer to it for guidance, and can also be held accountable against it.

The transparency of a published code can also be an effective means of informing an organisation’s internal and external stakeholders of its ethics and values, as well as being a useful catalyst for change.

Whistleblowing mechanisms within organisations are also vitally important – encouraging and empowering individuals to have the confidence to promote good behaviour, influence others, and “speak up” if they encounter ethical issues. Whistleblowing/ “speak-up” policies and procedures should be clear, with employees receiving training on how to use them.

Values always lived

The Chairman, the Board of Directors, and the shareholders, must all take responsibility for ensuring that a culture of ethics is cascaded down through, and lived by, their organisation. Indeed, management at all levels must also take on that responsibility – the “tone in the middle”. The same principles apply in all sizes of organisation.

It is imperative that those in charge of organisations not only set the appropriate tone, but also lead by example and “walk the talk”. It is also important that action is taken against senior people who do not uphold the organisation’s values.

Senior business leaders – the Chairman, the CEO, the MD or the CFO – should be the authors of their own respective statements for the annual report, rather than having these written for them; this would not only demonstrate that they truly know their organisation, but is also their opportunity to share their tone with the users of the annual report.

Organisations must also value their employees. How an organisation treats its employees, and how employees feel towards their organisation, can highlight the truth about the organisation’s culture. Many organisations will highlight their health and safety, well-being, training and whistleblowing/ “speak-up” policies – but it is essential that organisations adhere to these policies in practice.

Employees ought to feel that they have the ability to whistleblow / “speak up” without retaliation, and that they will be supported. There is also a need for managers to “listen up” – to listen to concerns and actually do something about it. Being able to show an example of a whistle-blower being promoted can speak volumes about the true values of an organisation.

The alignment of the objectives and remuneration of individuals with their organisation’s values, long-term purpose and strategy, is also a key component to improving behaviour and helping rebuild public confidence.

Where the culture is not appropriate within an organisation, CAs at all levels – whether they are newly qualified or have many years of experience – can be a key catalyst for change. Clearly, the more senior the CA is in an organisation, the easier it will be to influence change, but every CA has their part to play.

Are we doing what we say on the tin?

One of the difficulties faced by organisations is proving to investors, the general public, and indeed themselves that they are actually “doing what they say on the tin”. Organisational culture can be very difficult to measure; however, organisations will have to overcome this difficulty in order to provide the information which is much sought after by stakeholders.

It is essential that organisations not only have a clear and succinct statement of values and ethical principles; but also that they can clearly articulate to stakeholders how these values and principles relate to the current organisational culture and leadership. Properly set and embedded values “add value, not just protect value.”

This article was originally published by ICAS.