Managing misconduct is often described as 'a fight'. This illustrates that looking to eliminate, or even reduce, misconduct isn't an easy task: it can feel like an ongoing battle. However, this can lead to a major imbalance when organisations focus virtually all their attention in the field of workplace ethics on curbing misconduct. While this focus is vital, it isn't enough.

Taking away misconduct doesn't necessarily promote ethical conduct

Doing away with misconduct isn't sufficiently effective for creating an ethical culture on its own. While in language, being 'ethical' is the opposite of 'unethical', in practice diminishing or eradicating misconduct doesn't imply that it will result in all that 'being ethical' entails, such as the positive actions associated with sound values. This means that the ethics strategy that guides the organisation's ethics management system needs to include a distinct emphasis on reducing misconduct and promoting and improving ethical conduct.

The effect of the divide between ethical conduct and misconduct is illustrated and supported by well-known research done by American psychologist Frederick Herzberg:

  • His 'motivation-hygiene' theory - also known as the 'two-factor' or 'dual-factor' theory - was based on research into employee satisfaction and dissatisfaction.
  • It showed that satisfaction and dissatisfaction were shaped by separate factors and that the absence of dissatisfaction didn't lead to satisfaction.
  • Similarly, the absence of misconduct doesn't lead to the deliberate, positive actions that constitute ethical conduct.

Interestingly though, the presence of ethics and an ethical culture will positively impact compliance and thereby help to reduce misconduct.

Doing the right thing versus minimalist compliance

The tendency to focus largely on tackling misconduct is sometimes coupled with an internal focus on compliance, instead of a comprehensive focus on ethics. Recognising this distinction, King III recommends that business leaders should "do business ethically rather than merely being satisfied with legal or regulation compliance ... or limiting themselves to current social expectations".

However, the increasing demand to be compliant with a multitude of laws and regulations is making compliance an onerous task in many countries. Compliance officers are battling to balance the many duties of the function, including establishing standards for business conduct, ensuring compliance with anti-bribery and corruption requirements, tracking and analysing regulatory developments, board reporting, amending policies and procedures and liaising with internal stakeholders and control functions.

The problem that can arise from these cumulative demands is that compliance comes to be seen as the totality of the organisation's ethical focus and ethics initiatives – that companies decide that no more time, funds or resources can be allocated to anything else beyond compliance. This risk is enhanced by the reality that compliance is almost always obligatory (for example relative to legislation) while much of ethics can be considered voluntary.

The distinction between compliance and broad-based ethics is also reflected in the legal recognition of the letter and spirit of the law. Obeying just the letter of the law limits behaviour to the literal interpretation of the legislation, often in a minimalist manner. However, this ignores the intent or the spirit of the law. A purposive interpretation of the law, on the other hand, entails acting to give effect to the intention of the law, which is viewed as acting in a more comprehensive and ethical manner. So too for ethics: only complying with rules doesn't necessarily extend to the intended bigger-picture outcome of an ethical workplace.

The unsatisfactory consequence of a choice in favour of compliance - instead of broad-based ethics - would be to limit the company's ethics to only one facet of ethics, the rule-based side of ethics. However, to be an ethical organisation and create an ethical culture require an equal focus on fostering value-based behaviours, which are much more sustainable and contribute significantly to an ethical culture. Rules and compliance are not sufficient to achieve an ethical culture.

The question of whether an organisation needs values and rules shouldn't be a choice. Both are necessary. And organisations need values more because ethical behaviour can be achieved with sound values and very few rules, but not vice versa. Thus, ironically, more focus on fostering value-based behaviour, increasing ethical maturity and creating an ethical culture directly support the compliance function since the commitment it entrains includes compliance.

By Cynthia Schoeman
Posted on HR Pulse, 20 June 2014