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Measuring Organizational Integrity, and the bottom line results one can expect 30 September 99


Matters of Importance and Measurement. In the previous questions, we addressed the integral relationship between the ethics of purpose (especially business ethics), social responsibility, and organizational ethics. One of the principal debates in organizational ethics is over the issues of whether one can measure the degree to which desired values, principles, and practices have been integrated through out the organization, and how one might do so. Another, less frequently debated, issue is whether it is ethical to change a culture. more

The dominant thinking in organizational life is that if you cannot measure it, it isn't important. And it is a fact that what is measured is what tends to get attention and resources. Our sense, however, is that if it is truly important, you cannot measure it, at least with precision. Instead, what is important needs to be interpreted.

This goes counter to most management theory and practice: total quality management, management by objectives, reengineering, and bottom line thinking of all stripes. It is essentially the difference between asking why, in its most appreciative sense, and how or what. The threat from a requirement for precise measurement lies in the limits such measurement places on vision and values, on moral imagination.

In short, we must attempt to measure the integration of desired values, principles, and practices into the organization with reference to how effective it has been in terms of its essential social responsibility to a dynamic community. But we must also be mindful of the admonition Aristotle made in his Ethics over two thousand years before: "Now our treatment of this science will be adequate, if it achieves that amount of precision which belongs to its subject matter."

Outcomes of Effective Ethics Programs. Studies have recognized eight generally expected outcomes of ethics/compliance programs:

  • Unethical/illegal behavior
  • Awareness of ethical/legal issues
  • Seeking advice
  • Willing to report wrongdoing
  • Bad news to management
  • Values in judgment processes
  • Employee commitment to organization
  • Meeting external stakeholders' needs

These eight outcomes, together with the seven parameters of organizational integrity, provide a framework to identify and gather pertinent data. Three of the outcomes and parameters overlap, so there are 12 primary factors to assess.

The primary tools for gathering the required information are observation, individual interviews, focus group interviews with representative groups of involved and affected stakeholders, analysis of documents, and surveys. This data is then analyzed and integrated. Assessment is best accomplished through a combination of these tools.

Program Assessments. Program assessments may be based on the fundamental underpinnings of organizational integrity and ethics/compliance outcomes:

  • Community-What communities do the involved stakeholders recognize? How broadly do they define the community of which they are a part? What do they believe are their responsibilities to these communities? How well do they know the history of the organization? How well do they honor organizational values? How well do they honor established organizational practices?
  • Excellence-Do stakeholders have the skills, knowledge,

    The Good leader, the people praise; The Bad Leader, the people blame; But of the Great Leader, the people say, "We did it ourselves."

    understanding and attitudes to be excellent? Do they have the capabilities needed to meet the challenges assigned? Does the organization have the capacities to support involved stakeholders? Is work intrinsically valuable?  To what extent is excellence honored? To what extent is it rewarded? How often does excellence figure in the ordinary language of the organization? How much mediocrity is tolerated? How often is mediocrity rewarded?
  • Membership-How is membership in these communities recognized? What is good about being a member of the organization as a whole? What is bad about being a member? How attached are employees to the organization? What conflicts arise due to membership in multiple communities? How are people treated who are not members?
  • Integrity-How much does one feel a part of the organization and its broader community? How much loyalty do both involved and affected stakeholders feel toward the organization? Can one make independent values-based judgments? How often do ethical dilemmas result because identities and responsibilities overlap? How often must one make one's own rules rather than follow the organization's?
  • Judgment-How well do involved stakeholders identify potential ethical and legal issues in their areas of responsibility? Do they know where to go for advice? What decision-making processes are used in the organization? How much voice do that they have in the decisions that affect them? What values or principles are applied? Are applicable legal requirements considered? Are most decisions generally seen to be fair? If not, why not?
  • Holism-Do people think and dialogue with reference to the "big picture"? Is the environment considered to be part of the community  of which the organization is a part? Are thoughts, feelings, and actions taken into account in determining reality and expectations? Does the organization think, communicate, and act with a view to its responsibility to the broader community? Are affected stakeholders, such as families, communities, and society as whole considered and discussed?
  • Trust and Hope-Do involved stakeholders have a sense of being a part of something bigger than themselves? Do people find it intrinsically valuable to be involved with the organization? Is health and safety a top priority? Do people look forward to going to work?

Eight expected outcomes of an ethics/compliance program:

  • Unethical/illegal behavior-To what extent have employees observed specific unethical or illegal behaviors?
  • Awareness of Ethical Issues at Work-How quick are employees to notice when a situation raises ethics or compliance issues?
  • Looking for Ethics/Compliance Advice-Once an employee is aware of an issue, do employees look or advice within the company? If not, why not?
  • Delivering Bad News to Management-Are employees comfortable delivering bad news to their managers? If not, why not?
  • Reporting Ethics/compliance Violations-If someone knew that a coworker was doing something unethical, would he or she report it to management? If not, why not?
  • Better Decision Making-See "Judgment" in the seven parameters of organizational integrity.
  • Employee Commitment to the Organization-See membership and community in the seven parameters of organizational integrity.
  • Satisfaction of external stakeholders—See membership and community in the seven parameters of organizational integrity.

Leadership, Culture and Integration. The integration of leadership and culture, as a measurement of success, is captured in Peter M. Senge's adaptation of Lao Tzu in the Tao-te ching contained in the box above.

  • To the extent that rules are required because stakeholders cannot be trusted to know to do the right thing, values have not yet been integrated.
  • To the extent that leadership is perceived to act inconsistently with desired values, integration has not occurred.
  • To the extent that the organization takes action perceived to be inconsistent with values, integration has not occurred.
  • To the extent that people don't understand what they or their leaders are doing, integration has not occurred.
  • To the extent that mistrust or cynicism abounds, integration has not occurred.
  • To the extent that the community it serves does not believe that the organization meets its dynamic needs, integration has not occurred.

Data Analysis. Organizations are awash with data, which reflect its overall health. Statistics that might be considered to determine organizational integrity include:

  • Profitability and growth.
  • Human resource data, employee absentee, turnover,  grievance rates.
  • Physical and mental health records.
  • Safety records.
  • Discovered misconduct versus reported misconduct.
  • Frequency, nature, and subject of helpline calls for advice.
  • Employment discrimination claims, including sexual harassment.
  • Labor-management disputes.
  • Customer satisfaction.

An emerging data analysis approach is third-party auditing. The Social Accountability standards of the Council on Economic Priorities is one such approach. Patterned on the International Standards Organization certification processes, SA8000 is based on the principles of 11 Conventions of the International Labour Organization (ILO), the Universal Declaration of Human Rights and the United Nations Convention on the Rights of the Child. The standard covers eight workplace conditions: child labor, forced labor, health and safety, freedom of association and the right to collective bargaining, discrimination, disciplinary practices, working hours and compensation. The ninth area covered by the standard is management systems, which stipulates necessary systems for ensuring ongoing conformance with requirements of the standard.

Bottom Line Results for a Learning Organization. Learning organizations better their bottom lines by:

  • Releasing human potential through harmonizing individual and enterprise purposes, visions, views of current reality, and expectations.
  • Substituting creative or constructive tension for emotional or destructive tension.
  • Taking to heart the notion of adding value through each action and every important relationship.
  • Accessing the minds of others for more information and knowledge.
  • Learning from mistakes, problems and conflicts.
  • Reflecting on change, conflict, and experience and inquiring into their impact on enterprise and individual purposes, visions, and views of reality.
  • Developing awareness of the elements of human action and how they direct our actions and our understanding.
  • Increasing individual and group responsibility for decisions and communications.
  • Shortening competitive cycles, as in developing new products or services more quickly; and
  • Leveraging key learning points, such as learning to acquire the most critical data, not all available, data.

Conclusion. We hope this journey through the world of organizational ethics, organizational integrity, and their progeny, the learning organization has been stimulating, thought-provoking, and educational. It is, to be sure, a complex study. We hope this has simultaneously challenged and encouraged you to consider the full depth and breadth of organizational life, and its ethical and policy implications.

We invite you to join us as we continue to explore.

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