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Closing the Behavior-Standards Gap
Setting standards is the easy part

April 2004 If there is a recognizable problem in your organization -- a legal crisis, lowered productivity, or a product quality issue -- do you ignore it? Of course not. But in many companies an unacknowledged danger of equal or greater proportion threatens not only profits, but overall corporate health.


That danger is the Behavior-Standards Gap, which is the disparity between the standards articulated by a company (in a code of conduct, policies, and procedures) and the behavior of its employees. This disparity erodes integrity, undermines even the best-laid standards and allows unethical behavior to become the de facto norm. With loss of integrity comes increased financial and reputational risk, making an organization vulnerable in terms of legal liabilities and declining consumer and investor confidence. Yet the source of this risk -- the Behavior-Standards Gap -- is often ignored or unrecognized. 
 
The problem is with behavior, not standards. Setting standards is the easy part. Most companies have a code of ethics and compliance training. However in many corporate reform efforts the focus has been on developing standards without equal emphasis on communicating and modeling the behaviors that demonstrate those standards. 
 
This article will cover the following topics regarding the Behavior-Standards Gap:

Why Does the Behavior-Standards Gap Exist? 
A Behavior-Standards Gap can develop for several reasons. At its root is often a misunderstanding by an organization's leaders of the relationship between standards and behavior. Leaders may believe, for example, that because it has established a set of rules, employees will naturally follow them. The reality is that making rules is only a first step, and that standards alone cannot guarantee integrity.
 
The critical element in narrowing the Behavior-Standards Gap is a company's control environment, the foundation of the corporate culture. The control environment is the context in which decisions are made and sets the tone for the entire organization. It is comprised of the attitudes, abilities, awareness and actions of a company's employees, especially its leaders. Ultimately, a poor control environment is responsible for the widening gulf between an organization's standards and the way its employees behave.
 
In order to understand how the control environment affects behavior, it is important to understand the importance of context. Ethical (or unethical) behavior does not exist in a vacuum, but is part of a broader organizational culture that develops over time.
 
 
The Power of Context
Older models of organizations focused on individual behavior. It was assumed that an employee's natural inclination was to act only in his or her self-interest, and therefore needed close monitoring. More contemporary and inclusive thinking focuses on the environment in which individuals act. Even good people are susceptible to negative environmental influences. For example, in his book, The Tipping Point, author Malcolm Gladwell discusses what he calls the "power of context" in terms of students cheating on school exams. Some students, he found, will never cheat. Others will always try to get a dishonest edge. But the vast majority -- the largest section of the bell curve of the class -- will cheat or not cheat as the classroom environment (their "control environment") dictates. Little supervision and no perceived punishment, for example, will encourage more students to copy answers off their peers' papers, while the opposite conditions seem to compel what we would call honesty. Clearly, a trait that we may have believed is part of a person's innate character is influenced by context.
 
 
Corporate Culture as a Risk Factor 
Weaknesses in a corporate culture or control environment increase risk and create the Behavior-Standards Gap. Such weaknesses include:
Lack of leadership and vision. The absence of strong leadership in an organization will result in a lack of role models for the organization's employees. If leaders do not "walk the talk" and model the desired behavior, then they cannot expect employees to behave appropriately. Lack of leadership may also be manifest in a lack of vision. The dearth of a clear vision of organization goals and proper ethical practices creates a control environment likely to increase the gap between standards and behavior. Without vision, for example, it is difficult to set appropriate standards: rules for behavior that are neither too high, and thus discouraging, nor too low, and not challenging for employees. Lack of vision can also result in apathy. Leaders who can't communicate and demonstrate a commitment to integrity can't possibly instill it in others.
 
Poor communication. The inability to communicate effectively can undermine the ethical standing of the control environment further by fostering a lack of clarity, mixed messages, and the inability to deliver bad news. Without clarity, employees cannot be expected to understand what standards are and how they should behave. Mixed messages further confuse employees concerned with correct actions and responses, and the inability to communicate bad news means that enforcement and results are never made concrete to the employees.
 
Undue pressure to perform. Unrealistic or unchecked pressure to produce results can also widen the gap. If the control environment places undue emphasis on results, without keeping an eye on integrity, it encourages employees to cut corners, risking and even encouraging unethical behavior. In a competitive environment, management must be careful not to encourage the belief that "anything goes," in other words, that it is acceptable for employees to break the rules for a quick profit. Such an imbalance in priorities risks long-term corporate health for the sake of short-term gains.
 
Lack of access. Employees must be provided with established, open channels of communication that allow them to ask for help with ethical dilemmas and through which they may report violations. Lack of such channels sends the message that management does not truly want to hear about questions or problems and even ethical employees may decide not to take the extra step to inquire about a problem or file a report.
 
Fear of retaliation. The firing of "whistleblowers," (those who report unethical behavior) widens the Behavior-Standards Gap. Even ethical employees will fail to report unethical or illegal behavior if they fear that they may lose their jobs because of it.
 
Inconsistent enforcement. Different rules for different employees, rules that change according to the situation, and rules that are randomly or rarely enforced send the message that standards are not solid or truly valued by a company. On a smaller level, the ethics of many corporate cultures are undermined when employees see that the rules are different for different groups of people. For example, colleagues who bring in profits are often not penalized for "cutting corners," or securing those profits through unethical maneuverings. This short-sighted policy hurts the entire workplace and cannot help but lead to lower morale, poor ethical compliance, and long-term issues.
 
Lack of education, tools, and support. In many situations, the employee does not know what the right decision is, or how to act when faced with a particular dilemma. An organization that does not give employees tools and training to support integrity in the decision-making process sends a bad message. An organization that wishes to foster an ethical workplace will make learning tools available. It will make an effort to regularly educate and monitor the ethics awareness of its employees. It will support and reward ethical behavior and increase awareness of ethics as part of its regular corporate code.
 
Narrowing the Behavior-Standards Gap
The key to narrowing the Behavior-Standards Gap is a two-step process. First, an organization's leaders must identify the specific risk factors that have created and widened the gap. Then, the organization must put a plan in place to mitigate and manage those risk factors. As with any other business goal, leaders must face this threat with a sure vision, strategic planning and a commitment to change. In order to really change behavior, leaders need to commit to a process of continuous improvement.
 
Narrowing the Behavior-Standards Gap must also involve establishing processes, tools, communication and ongoing education to support the organization's standards. Creating a rule book will not suffice, nor will any other "quick fix" approach. Only by accepting the ongoing nature of this challenge can organizations bring employee behavior in line with the organization's standards.
 
 
Benefits of Narrowing the Behavior-Standards Gap
The benefits of narrowing the Behavior-Standards Gap are threefold:
  Improved financial outlook,
  Improved reputation and
  Increased effectiveness in an increasingly competitive workplace.
Bringing behavior closer in line with organization ethics greatly reduces the financial risks associated with unethical behavior. An organization that works to narrow the Behavior-Standards Gap will benefit by avoiding punitive fines in the short term. It can also provide protection against declining stock values. 
 
An organization that works at narrowing the Behavior-Standards Gap gains in terms of public perception: a company that demonstrates a commitment to integrity and plays fair within its field is a company that will be trusted by the public and investors.
 
 
Best Practices to Positively Change Corporate Behavior  
In an increasingly competitive global marketplace, corporate leaders are becoming aware that new products and technologies can no longer be counted on to proffer a competitive edge. As the market tightens, the only sure edge comes from the commitment, involvement, and engagement of employees. These qualities are not fostered by a rule book; they spring from a values-oriented corporate culture that encourages and supports ethical behavior.
 
In order to positively change corporate culture, organizations must use all their resources, starting with giving their people the proper tools. As a May 27, 2002, editorial in Fortune magazine advised, corporations must "turn employees into corporate governors" by engaging the entire workplace in the goal of an ethical corporate environment.
 
Younger executives want to help: An Aspen Institute survey recently asked students at 12 international MBA programs what they would do if they found their values conflicted with those of a company that employed them. Nearly half (44 percent) said they would try to have others at the company join them in addressing their concerns.
 
 
It is Up to Leaders
Employees, too, are invested in corporate ethics: Recent history at some organizations has illustrated the cost to employees of unethical behavior as management misconduct has caused employees to lose jobs and financial security in the form of devalued retirement plans funded by company stock. The effect of corporate ethics on real-world job security and future retirement income has made employees sensitive to the need for a reliable, ethical workplace and opened them up to increased ethical compliance that moves beyond passively following rules.

It is up to leaders to bring these potential forces together by having both a vision of integrity for the organization and a strategic plan for ensuring such integrity. This vision must be articulated in a way that is relevant and actionable by employees; it must be seen as inspiring but also within reach. A vision that aims too high will not be taken seriously while one that is too pedestrian will not motivate employees.
 
 
Communication, Training and Development, and Business Process Improvement
The strategic plan that leaders must design and implement has to contain several elements. In order to develop the infrastructure that will support and encourage ethical behavior, it must incorporate communication, training and development, and business process improvements that carry out the vision of integrity. By creating this vision and implementing such a strategic plan, leaders can act as role models. Leaders can advance the organization beyond simple rules-based ethics into the more comprehensive world of values-based ethics. Leaders can create a system that allows employees to actively engage and participate in an ethical corporate culture.
 
WORKING VALUES LTD. is a business ethics and training company. Through a variety of products and services, including Web-based compliance and ethics programs, on-site training, video and award-winning ethics games for employees, Working Values aims to align employee behavior with company values. For more information as to how Working Values can narrow your company's Behavior-Standards Gap, visit www.workingvalues.com or contact cgebler@workingvalues.com. For news on ethics in the workplace, visit SmartPros Ethics & Compliance.

2004 SmartPros Ltd. All rights reserved.

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