For a Culture of Integrity, Focus on Fairness.

• Author: Harris, Anne R.
• Position: Ethics Corner

Organizational ethics and compliance is about encouraging people to conduct business with integrity. It is also about mitigating risks: the risk that the organization could lose money, that it could face legal liability, that its employees could be injured, that its customers could suffer damages, that its reputation could be ruined and so on.

Business leaders who pursue a strategy to "promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law," as recommended in the Federal Sentencing Guidelines for Organizations [USSG [section]8.B2.1(a)(2)], aim to create a work environment that will sustain positive performance and long-term success, partly by reducing the likelihood of ethical or compliance failures.

These leaders want to create a workplace in which people will adhere to ethical and legal standards and raise suspected lapses to management so that they can be resolved promptly and the risks can be alleviated. But creating a culture of integrity, in which employees will speak up, is challenging.

One element of organizational culture that has a powerful impact on ethics risk mitigation--because it profoundly affects employees' commitment to compliance--is procedural justice, also known as procedural fairness. A great deal of research exists, particularly by Tom R. Tyler, a professor at Yale Law School, into procedural fairness and its impact on behavior in the context of organizations.

Procedural fairness pertains to how people perceive the decision-making processes that create outcomes. Are people given the chance to present their views? Are decision processes neutral, transparent and based on objectivity and facts? Are rules and policies applied consistently over time and across the population? Are people taken seriously and treated with respect? Do decision-makers sincerely try to do the right thing for everyone involved? These are the key factors influencing perceptions of procedural fairness.

According to a 2008 study by Tyler, John Dienhart and Terry Thomas, "If organizations want to build a culture that encourages ethical conduct and a commitment to compliance, the research shows that they should focus on fairness." This research draws powerful conclusions. If employees believe the workplace is procedurally fair, they will be more likely to view management as legitimate and moral and they will be engaged at the level of their own values. This engagement, in turn, leads to greater...