This may be my final post-Compliance Week update – I haven’t decided yet. But I’m excited to share thoughts about another session that had some great ideas and discussion. It was about the notion of measuring corporate culture as a top level control. I love this concept and expect this will become a hot topic. Certainly we’ve heard clients and prospects discuss the importance of an ethical culture; we all know it’s important. We all know the correlations between ethical culture and success. We know some of the basic building blocks to creating and sustaining that ethical culture: a solid Code of Conduct, “tone from the top” messages that encourage open communication, resonant code of ethics training and awareness programs, clear policies that guide employee actions. But if we’re to use corporate culture as a control, we have to be able to measure it. How can we measure ethical culture?
One of the participants in the session was James D. Berg, VP and Chief Ethics and Compliance Officer for Apollo Education Group. I really enjoyed his part of the presentation because he shared concrete measurements that Apollo uses to track employee perception of how ethical their culture is and then comparisons against industry benchmarks.
First, he shared that there are five attributes to corporate culture: knowledge, courage, decision-making, trust and belief. Then he shared how he measures each of those five attributes every year via an employee survey and compares them against benchmarking data.
How to Measure 5 Attributes of Ethical Corporate Culture
James indicated that he measures two data points under knowledge: the employees’ knowledge of the company’s code of ethics and their knowledge of job-specific laws, policies and regulations. Employees receive code of ethics training annually as well as training on the policies and regulations they need to understand to perform their jobs. In terms of the code of ethics, in 2012, 94% of employees had knowledge of it and in 2013, 97% of employees had knowledge of it, which is quite strong compared to their benchmark of 83%. They are doing similarly well in terms of the job-specific laws, policies and regulations; in 2012, their score was 95% and in 2013 it was 97%. The benchmark in this area is 84%, so in terms of knowledge, Apollo is measuring quite well.
In this area, Apollo measures how comfortable the company’s employees are in reporting misconduct to the whistleblower hotline, which they call their Ethics HelpLine, and how many people identify themselves when they report misconduct, thereby forgoing the chance to remain anonymous. I think this is fascinating because courage is something we all want and yet it cannot be taught in a code of ethics course, it can only be encouraged. Apollo’s measurements improved from 83% in 2012 to 86% in 2013, both of which are higher than the benchmark of 78%, in terms of how comfortable employees are in reporting misconduct to the whistleblower hotline. Measuring self-identified misconduct reporters is a new measurement for the company in 2013; its score of 82% is very high compared to the national benchmark of 52% and their education industry benchmark of 21%.
James presented two revealing survey statistics to show how decision-making is measured as a part of corporate culture at Apollo. The first is whether employees believe that they can handle situations that could violate company policies. They fell slightly in 2013 to 86% from 87% in 2012, however, both numbers are still well above the 77% benchmark. The second survey question reminds me of a blog I wrote about ethical emotion; the question asks employees whether they believe their co-workers apply ethics and values to decisions. The company should be proud that 90% of their employees answered “yes” in 2013, up from 87% in 2012, and significantly higher than the 75% industry benchmark.
When James was presenting the statistics around trust, he specifically pointed out that this really a way to measure the tone from the middle and the top. We talk so often about tone from the top but I don’t hear many people talk about how they are measuring it. The two survey questions are “my supervisor sets a good ethical example” and “the CEO and senior executives set a good example.” In 2013, 90% of Apollo employees agreed that their supervisor sets a good ethical example, up from 89% in 2012, both of which are well above the industry benchmark of 66 percent. However, it seems far fewer employees trust the CEO and senior executives: in 2013, 79% – 11% fewer – agreed that the CEO and senior executives set a good ethical example. This is above the 66% industry benchmark but was not measured in 2012. I suppose that is intuitive; we tend to trust the people we are closer to and we are naturally closer to the people with whom we work more closely, e.g., our supervisor. However, I also think that beyond just the obligatory introductions in the Code of Conduct and code of ethics training courses, companies should get creative and come up with some more authentic tone from the top messages to encourage trust for this exact reason.
James pointed out that belief is the one he and the company feel is the most important of the five. It comes down to whether the employees truly believe the company has an ethical culture. Apollo’s employees are also more optimistic in this area, as they were in nearly every other area, this year; in 2013, 87% of employees believe the company has an ethical culture, up from 85% in 2012. Both numbers are significantly higher than the dismal 58% industry benchmark.
What are your thoughts? Does your company measure corporate culture? Do you think it’s a valuable top-level control?
Do you believe, truly believe, your company has an ethical culture? If not, why are you working there?