Over the next five episodes, I visit with Vin DiCianni, founder and CEO and Eric Feldman, Senior Vice President both of Affiliated Monitors, Inc., who is the sponsor of this series. In it, we explore corporation culture and its relationship to ethics and compliance. In this second episode I visit with DiCianni on what some of the factors are which influence the ethical culture of an organization.

We began with senior leadership. A company does not have an ethical culture unless the top management commits to it going forward. Employees not only listen to what they say but they watch how they act. Employees look for signals about what really counts in an organization. But you must then move down to implementation of this goal. Employees want to know if senior leadership is committed to the company’s core values. But equally important is a sense of organizational justice and fairness. Employees want to not only see they will be treated fairly but there is not a delineation of favorites and non-favorites in an organization. DiCianni emphasized that it is the senior leadership who really drives the alignment between incentives and performance.

DiCianni next turned to one of the key elements for any effective leader, which is listening. Are the senior leaders in the organization listening to their people? He went to explain this meant are they giving their people the opportunity to be heard as to whether or not the employees are receiving those messages? Do the senior leaders get out of the ivory tower, go to the field and meet with employees. Are there town halls or other types of group get-togethers?

Finally, do the employees see whether or not the leaders are living those kinds of values? All of this means establishing good communication from management with line staff. DiCianni stated, “They never take the time to actually go sit with people or have an all hands meeting or just reach out to a few people, have a cup of coffee with them, see how they’re doing. Those kinds of behaviors are very important” in terms of driving ethical behavior from the top.

As many listeners to my podcast, 12 O’Clock High, a podcast on business leadership, know I  consistently talk about the importance of listening for a leader. However DiCianni tied this basic leadership skill directly to an ethical culture. Listening can make employees feel like they are a part of the company but it also allows management to further articulate and expand on their desire for an ethical culture throughout the company. By going out into the field and listening, senior management can further get the mission and vision of the company out and employees will have a greater understanding of how it all applies to them in the field.

DiCianni emphasized how important it is for perception to equal reality. It is one thing for a CEO to say he has an open-door policy; that he wants to hear from anyone about nefarious conduct or that type of conduct which is antithetical to the company’s values. However, if no employee has ever brought forward any information because they are too afraid to approach the CEO there is an obvious disconnect between practice and reality at that company. It is even worse if there has been retaliation for any employee who raised his or her hand in that manner.

Employees are watching for signals on what is important to senior leadership. If top management says compliance is number one but a person who skirts the rules is not disciplined, or worse rewarded through promotion for such conduct; that word gets around. It is more than simply modeling the conduct, it means running your business based upon those ethical values. A key insight is how senior leaders treat their staff. But if senior leadership is only driven by the bottom line, that message will get out to the employees. In short, words are important but actions are where the rubber meets the road.

The key is that there be an alignment between what top management says, coupled with the company’s core values and what the organization says together with what they do. This all comes from senior management getting out of their office and talking to employees in the field to see not only what they think but how they feel. No company aspires to be unethical and most assuredly employees do not want to engage in unethical behavior but if senior management does not talk to employees they will not know how their messages are being received. Feldman says that it does not take long when there is a disconnect between what senior management says and what the employees take away. Feldman finds its disconcerting how little top management really understand their employees. Because of this, senior leaders do not know what messages they are receiving, both verbal and non-verbal.

Tomorrow we consider the role of the CCO in strengthening the ethical culture of an organization.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.