Measures for Corporate Responsibility Program Effectiveness

Responsible management recognizes that an effective ethics and compliance program touches every decision and action of the enterprise.  As such, it will guide patterns of thought and action that will subtly shape the organization culture of the enterprise.  An essential factor in designing and implementing a responsible ethics and compliance program is to include the means to measure its performance. 

A responsible ethics and compliance program will have specific, measurable, action-oriented, relevant, and timely performance measures.  These are captured in the acronym SMART.  It is important to discuss expected program outcomes as an integral part of setting management policies and procedures. 

There are two principal areas to consider in setting Corporate Responsibility Program objectives: how management thinks the organization culture will be affected and what specific outcomes management desires from the program.  Measurement tends to drive performance. 

Some factors are more or less measurable; others are not.  While it is difficult to directly measure common values such as trust and integrity, there are a number of specific organization culture and expected program outcomes that are valuable to track, measure, and report.  It is debatable just how much management can measure enterprise fundamentals such as values.  But there is much wisdom to the management truism that “What is valued gets measured, and what gets measured is value.”  This is especially true to the extent employee compensation is based on measured outcomes. 

1.  Essential characteristics of organizations and communities

The primary purpose of an ethics and compliance program is not to change organization culture, but there are a number of organization culture factors that will influence the effectiveness of an ethics and compliance program.  Moreover, with few exceptions, an effective program will influence the development of the organization culture itself, and management will want to monitor this. 

For any organization, we have found it helpful to organize both qualitative and quantitative data into five "characteristics" of a highly effective organization and other, more generic “influential factors.”

            The character of the enterprise can be captured in the following five characteristics:

1. Extent to which leaders and members alike embrace the organization’s core purpose and values, and are adept at preserving them while stimulating progress.
2. Extent to which leaders and members hold themselves responsible—and others accountable—to high standards
3. Extent to which leaders encourage members—and members welcome/accept the opportunity—to participate in organizational/community affairs,
4. Extent to which leaders and members have the knowledge they need, when they need it
5. Extent to which conflict and mistakes made in good faith are seen as opportunities for learning and growth

A number of measurable influential factors of organizational climate/culture are set forth below:

1. Perceiving that leadership cares about ethics/values as much as the bottom line
2. Openly talking about ethics and values
3. Using values in decision-making
4. Feeling treated fairly
5. Feeling pressure to compromise values
6. Believing ethical behavior is rewarded
7. Believing unethical behavior punished

  Taken together, these 12 factors of organization culture will give management a profile of the enterprise that will help them design and implement an effective ethics and compliance program.  Moreover, when tracked over time will be extremely valuable in evaluating program success over the years.

2.  Measurable Program Outcomes

The primary purpose of an ethics and compliance program is be an integral part of an RBE as it meets the most urgent needs of its customers.  An effective performance measurement system will capture those critical few measures of an ethics and compliance program that are important to the enterprise. 

Recent research and experience suggest that the following nine outcomes capture the essential outcomes of an effective ethics and compliance program for all four levels of responsibility:

1. The amount of observed violation of enterprise standards, including legal requirements
2. Awareness of ethics and compliance issues at work
3. How often employees and other agents speak in terms of core beliefs and standards
4. How often employees and other agents make decisions in terms core beliefs and standards
5. How willing employees and other agents are to seek advice on standards
6. How willing employees and other agents are to report observed or suspected violations
7. How satisfied those who reported observed or suspected violations are with management’s response
8. How committed employees are to the enterprise
9. How satisfied stakeholders are that the enterprise meets their expectations