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By Tiffany McDowell, PhD and Jos Tabuena, JD, CFE, CHC Editors Note: Dr.Tiffany McDowell is a Manager in the Human Capital practice for Deloitte Consulting in Santa Ana, CA. She is a specialist in interview and survey methodology, program design and evaluation, research results presentation, change management, talent management, and organization design solutions. She may be reached by e-mail at tmcdowell@deloitte.com. Jos Tabuena is with the Center for Corporate Governance at Deloitte & Touche USA LLP in Irving, TX and formerly served as a compliance officer and in-house counsel. Jos has evaluated numerous compliance and ethics programs in highly regulated industries. He is a member of the Advisory Board for Compliance and Ethics Magazine and may be reached by e-mail at jtabuena@deloitte.com. monitor progress against their own results (i.e., trending historical company survey data), as well as allowing for comparisons to industry peers, and national averages. Perhaps you have decided that to better understand your existing corporate culture(s), and/or to determine if your programs are having the desired impact, you need to survey your organization, either by using an o-theshelf measure, hiring experts, or by creating your own instrument. And likely, at some point during this process, you have asked yourself, What is this thing called culture? And how can I be sure that I am assessing the right things in the right way? Culture or Climate? The dierence between culture and climate is commonly confused, and the terms are frequently and erroneously used interchangeably (even in the Sentencing Guidelines!). They are, however, derived from very dierent ontological traditions and represent distinguishable perspectives. And while the two constructs are complementary, for the purposes of quantitatively assessing organizational ethics, we are best to conceptualize an ethical climate. Culture is commonly dened as the beliefs and values which guide the thinking and behavior of an organizations members. Traditionally, culture was assessed by qualitative methods such as case studies, observation, story telling, and unstructured interviews to examine symbolism, sense-making, and socialization

in an organization.3 Culture research is often concerned with the evolution of social systems over time, and has inconsistent results when predicting outcomes of interest. In contrast, climate researchers place a greater emphasis on an individuals perceptions of observable practices and procedures in an organization, and the categorization of these perceptions into analytical dimensions that can be measured.4 Climate, rather than culture, reects employees perceptions of the organizational structures that help them to make sense of their world.5 Emerging evidence suggests that specic climates are predictive of specic outcomes. For example, a climate of safety has been shown to relate directly to safe behavior.6 Similarly, a climate for customer service has been shown to predict customer satisfaction.7 Thus, a climate for ethics would conceptually refer to employee perceptions of the practices and behaviors that get rewarded and supported with regard to ethics in the workplace, and could potentially predict ethical outcomes of interest. Climate or Program? The 2004 amendments to the Sentencing Guidelines also call for organizations to regularly evaluate the eectiveness of their comContinued on page 12

he U.S. Sentencing Commission explicitly recognized the significance of culture in its 2004 amendments to the Federal Sentencing Guidelines, stating that businesses must promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.1 To assess whether such an environment exists, organizations are increasingly making use of employee perception surveys. And more and more board directors, given their oversight duties and personal exposure, are requesting such surveys be undertaken.2 These surveys are used to obtain quantifiable data on workforce perceptions that can be applied by companies to benchmark and

TIFFANY MCDOWEL

Measuring Your Organizations Climate for Ethics: The Survey Approach

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Measuring Your Organizations Climate for Ethics: ...continued from page 11 pliance and ethics program.8 Thus, not only must organizations demonstrate the presence of specic program elements, they must also provide evidence that these programs are actually working. Prosecutors and regulators still consider implementation of basic program elements (such as the amount, attendance, and type of compliance training, etc.) as well as how eectively these elements are put into action. In addition, companies are using surveys to measure ethical outcomes, or the impact of their program activities.9 However, assessing an ethical climate and assessing program eectiveness are not one in the same. Often, practitioners confuse these two distinct constructs and create tools that confound the measures. Questions pertaining to the possible eect of program activities should be distinguished from items that seek to measure a climate for ethics. In reality, an organization may have the required program elements in place, but still lack a climate for ethics, which could result in problems down the road. This is not to say that surveys cant be used to measure the eectiveness of an ethics and compliance program. Questions that ask employees about the awareness and impact of training concepts, their use of various program resources, and perceptions regarding compliance and ethics communications, etc., are valuable measures of program impact. In addition, there may be value in analyzing the data for correlations between program inputs and ethical climate items. Measuring Ethical Climates The concept of an ethical climate reects organizational practices with moral consequences. Such a climate arises when members believe that certain forms of ethical reasoning and/or behavior are expected norms for decision making. Thus, ethical climate is not characterized by the individuals ethical standards or level of moral development. Rather, like all
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work climates, it represents components of the environment as perceived by the employees.10 Ethical climates serve many functions in organizations. They help employees identify ethical issues within the organization.11 In addition, ethical climates help workers address ethical issues by giving them answers to What should I do? when faced with an ethical dilemma. In other words, climate serves as a perceptual lens through which workers diagnose and assess situations. There is no agreed upon approach to measuring a climate for ethics. Several attempts have been made by both researchers and practitioners to dene this construct and its corresponding measurement, but, as yet, there is no academic or industry standard.12 A review of the scientic literature reveals that much of the discussion revolves around the moral philosophy that forms the basis by which to examine the ethical climate.13 Moral philosophy refers to the rules and principles that an individual considers during decision making to distinguish between right and wrong. Ethical climate surveys often include an assessment of what is considered successful behavior, what is rewarded or punished, what is valued, and what is perceived as fair or just. Other surveys have examined the extent to which individuals, coworkers, supervisors, and leaders demonstrate commitment to ethics by setting a good example, keeping promises and commitments, and supporting others in adhering to ethical standards.14 As the eld continues to evolve, there is a need to rene, validate, and standardize ethical climate measures. Pros and Cons of Survey Research Surveys can be extremely useful tools for assessing the current state of the ethical climate in your organization. Organizational surveys also communicate a strong message to employees.

Ideally, surveys can signal to employees, customers, or other stakeholders that their opinions are valued, that the organization is committed to them as individuals, and that their input is being used to make positive changes. Transmitting these messages can have a powerful inuence on your desired outcome (e.g., increased compliance, reduced violations, heightened integrity). When done incorrectly, surveys also can communicate the wrong messages. If, for example, employees see a survey on ethics as nothing more than a way for top management to protect themselves from blame, a survey will likely do more harm than good. In addition, because surveys are specically designed to be standardized so that every employee receives the same questions and response choices, you may not uncover enough information to tell you why the employees answered the way they did. However, this information can be supplemented with information gathered from interviews with individuals or groups of employees, or with open-ended questions in the survey itself. Ideally, a data gathering project on the ethical climate uses a triangulation method in which managers and leaders are interviewed, a select number of focus groups are used to generate and validate items, and nally, a survey is sent to a representative sample of employees. Further, Continued on page 14

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JOS TABUENA

Measuring Your Organizations Climate for Ethics: ...continued from page 12 interviews and focus groups can be considered subsequent to a survey, if certain issues require deeper probing and more nuanced evaluation. The Survey Design Process Before beginning the survey process, it is a good idea to form a survey committee. The group should be composed of representatives from dierent parts of the organization who have unique areas of expertise that relate specically to corporate governance, risk, and compliance (and a survey expert if you have one!). This team is responsible for developing a strategy to manage all phases of the survey project. The process of designing, implementing, and reporting the data from an organizational survey is as important, if not more important, than the actual results. It is imperative you remember that the survey is a means to an end, not an end in itself.Given this, several things should be considered as you design your survey: Objectives. You and the survey committee may believe the objectives are clear, but it is critical to ensure agreement on what you are trying to find out before you start to create a survey. Your research objectives ultimately drive everything else, including what questions to ask, whom to survey, and the optimal format to use. Before getting started, it is helpful to write a statement of purpose.15 In developing this statement, consider the following questions: n Why is this survey being conducted? n What is to be accomplished by this survey? n What will the organization do with the survey results? Once this is developed, the survey team should be able to articulate the survey objectives clearly. Audience. The population to target in any survey research is the group of individuals who possess knowledge
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and views pertinent to the survey content. In ethical surveys, the target population will be all members of the organization. Obviously, you want a response rate (the percentage of people who complete the survey) high enough to feel condent the survey results are generalizable to the organization as a whole. There is no ideal percentage to aim for, as the response rate will depend on such things as the length of the survey, the eectiveness of the survey communication, and how eective any previous survey research has been in your organization. However, a 50% response rate is considered acceptable.16 of Survey Administration. Selecting the most appropriate survey administration mode depends on factors such as the number of respondents desired, how fast the information must be collected and analyzed, and the degree of anonymity required. Today, most companies are opting for on-line surveys for ease; however, no evidence supports that the response rate is dierent from the traditional paper survey. Whatever the method of administration, it is critical that the target population is assured of their anonymity, as this will increase the likelihood of participation. to participate. Any survey should include a description of the purpose of the project. This description should address the need for the project and attempt to overcome participant anxieties about the purpose of the survey. Employees will likely want to know why they were chosen to participate, what will be done with the ndings, and how the survey will impact them personally. Specic language answering these questions should be included in the invitation. The invitation to participate should also include assurances of anonymity, so participants understand that individual respondents
n Invitation n Mode

cannot be identied. Employees should be reminded that the survey is not a testthere are no wrong answers and honest answers are best. They also must be assured that only group-level data will be examined, not individual data. For example, the data is analyzed in terms of how the entire accounting department responded, not in terms of any accountants individual responses. Another set of fears employees may have is that the survey will be used to punish them or their co-workers in some way. These anxieties are likely to inuence employees willingness to complete questionnaires and may aect the honesty of their responses, if they choose to participate. If possible, provide assurances that the project has no malevolent intent. Supervisors should also communicate the nature of the survey to their subordinates, and, if relevant, provide examples of how similar surveys have been used in the past.
n Instructions and Response Scale. You should include clear instructions for accessing and completing the survey. The instructions can include tips like where to write responses and whether the questions refer to the employee or to employees in general.

The choice of a response scale is a function of a number of statistical and practical concerns. The most important point is to choose a response scale that matches the information requested in the question. In one of the commonly used ethical climate surveys, the scale range is anchored from Completely False to Completely True. In general, there are two rules for response scales. First, use an odd number of response options (3, 5, 7). This is particularly relevant where a middle value can be used to assess no opinion or neither agree nor disagree. Although oering a dont know or no opinion option for perceptual questions

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is sometimes perceived as losing information, forcing people to express an opinion when they genuinely have no opinion, or are unsure, may lead to misinterpretations of the data. Second, use no more than seven points in the scale, because little or no increase in precision is gained beyond seven points. (See side bar on page 18 for examples). of Questions A good guideline for organizational research is that You only get what you measure and, conversely, If you dont want to know, dont ask. Here are some guidelines17 to keep in mind when constructing questions: n Keep questions short, unless a detailed explanation or clarication of an issue is absolutely necessary. (e.g., Successful people in my company operate by the book). n Avoid ambiguity. Questions should be specic, avoiding generality. For example, On a scale from 1 to 5, how popular is the companys ethics program? begs the question, popular with whom? Some respondents will answer an item like this in terms of how they, personally, would rate the program; others will answer in terms of popularity with their peers. n Avoid unfamiliar terms and jargon. Employees may not understand what is being asked in The CRO reports to the (1) CRO (2) CEO (3) BOD (4) Board Level Risk Committee. Terms such as CRO may not be well known by typical employees. When a term that is not in common usage must be used, it is wise to precede the item with a brief explanation. n Avoid requiring inaccessible information. Avoid asking employees for information that they would not know or do not have access to. For example, My company has a superior ethics program as compared to what is oered by other companies assumes that employees are familiar with both their employers ethics program
n Wording

and those oered by other companies. hypothetical questions. Questions that begin with What would you do if (e.g., What would you do if someone committed an unethical act?) are dicult for employees to answer. They require greater mental eort on the part of the employee and take longer to answer. n Write questions in the present tense. Peoples ability to recall the past is limited. The more current and specic the question is, the better. If a recall question is necessary (e.g., Over the past six months, I have witnessed an unethical act at work), the time frame should be as recent as possible, and not over six months unless the reference is to a major event, such as the compliance program roll-out or mandatory ethics training. n Avoid causing anxiety. Some questions may cause employees to feel anxious about their futures, (e.g., I would feel nervous if my organization was ring employees for occasionally using their company laptop to check personal e-mail.) Where possible, avoid these questions. n Do not use double-barreled questions. Double-barreled questions tap more than one topic and can introduce ambiguities into the responses. For example, The organization has created strong awareness about its ethics and compliance guidelines and principles and has trained employees how to use them. If employees disagree with this statement, they may be answering about the awareness, the training, or both. Generally, the use of conjunctions like and or or should be carefully considered. Double-barreled questions should be separated into two questions. n Do not use leading questions. Leading questions are sometimes used deliberately to achieve personal goals. For example, the ethics training director might ask Most people feel that ethics training is extremely
n Avoid

important for career advancement. Do you agree? Be aware of this potential issue, and eliminate these questions. n Watch for potential cultural bias. When conducting a cross-cultural survey, just translating it into a dierent language may not be sucient. Keep in mind that U.S. benchmarks may not be appropriate. Consult a local expert when exporting your survey to a dierent culture. n Use multiple measures of the same topic. If a survey is designed to assess attitudes or opinions about issues that are subject to some interpretation by employees (as is the case with a climate survey), you should include multiple questions on each topic. This ensures that the responses are a function of the employees perceptions of the issue and not a function of the idiosyncrasies of a single question. When multiple questions are asked, the average of the answers to these questions produces a total score for that topic. For example, if the topic of interest is supervisors setting an ethical tone, the questions might be My supervisor talks about the importance of ethics and doing the right thing in the work we do, My supervisor sets a good example of ethical behavior, and My supervisor supports me in following our Code of Ethics and Conduct. n Keep the survey to a reasonable length. Generally, the survey should take no more than 20 to 30 minutes to complete. If it takes longer, the employee may become bored and begin responding in a careless fashion. Also, management may not fully endorse the survey, because of concerns about loss of productivity.
n Open-Ended Questions It is advisable to include at least a few open-ended questions in any survey. At the minimum, a comments section will provide Continued on page 18

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Measuring Your Organizations Climate for Ethics: ...continued from page 15 respondents the opportunity to voice their opinions on issues that they feel are important, but that were not addressed in the survey. Specic open-ended questions such as, What advice would you give your CEO to improve the ethical climate of the company? are more eective at eliciting specic and useful answers than vague or general questions. Open-ended questions are often used as a follow-up to important structured items. An open-ended question can point out unanticipated interpretations of questions and variations in the actual meanings in responses.
n Background

Recommended Resources Edwards Jack E, Thomas Marie D, Rosenfeld Paul, and Booth-Kewley, Stephanie: How to Conduct Organizational Surveys: A step-by-step guide. Thousand Oaks, CA: Sage, 1997. Kraut, Allen I. (ed): Organizational Surveys: Tools for Assessment and Change. San Francisco, CA: Jossey-Bass, 1996. DeVillis, R F: Scale development: Theory and application. Newbury Park, CA: Sage,1991. purpose. Survey questions that touch on any of the above topics should be examined by an attorney familiar with labor law at local, state, and federal levels. Steps Once the survey is designed, you will ideally conduct a pilot study to pre-test the survey. This procedure can help avoid numerous problems later in the process, and save many additional hours of work. After rening the survey, you will want to administer it to your selected population, being sure to communicate eectively during the roll-out and data collection phase of the survey. Upon completion of the data collection phase, the challenging but rewarding task of analyzing the data begins. This should be followed by feedback sessions with leadership and management about the results and recommendations, and nally communication of the endorsed action plans to the organization as a whole. Part of this action plan usually involves a follow-up survey scheduled for some point in the future. In summary, not only must you consider the eectiveness of your formal compliance Continued on page 30
n Next

Sample Questions Reflecting Different Types of Response Scales

Ethical Climate My supervisor sets a good example of ethical behavior. o Completely false, o Dont know, o Completely true What advice would you give the CEO to improve the climate for ethics around here? Drop-down menu (select all that apply): o Better communication o Hire more ethical people o Reward ethical behavior o Deliver ethics training o Set ethical tone at the top o Other (box for comments) Program Impact The training I receive helps me comply with legal requirements. o Strongly disagree o Disagree o Neither agree nor disagree o Agree o Strongly agree There is a means for employees to communicate, anonymously if so desired, other than through a direct supervisor. o Yes, o No
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(Demographic)

Questions In many cases, it is useful to include questions on employee characteristics. These questions concern personal characteristics (e.g., age, gender, marital status) or job/work characteristics such as geographical location, functional unit (e.g., sales, marketing, nance), supervisory unit, and hierarchical level. These questions are useful to divide the respondents into sub-groups of interest. For instance, you might be interested in whether reactions dier by factors such as gender, shift, location, exempt vs. non exempt, full-time vs. part time, and job classication. These issues need to be identied in the planning stage because, if they are not, the organization will be unable to identify the characteristics of a given response group during the data analysis. However, the survey should measure employee characteristics only if they are important for a particular survey purpose. Background measures are often seen as intrusive or unnecessary and may be viewed by employees as a way to identify them (particularly if many dierent characteristics are used). Generally speaking, it is best to avoid asking any question that deals with race, color, physical appearance, disability, citizenship/national origin, or religion. Such questions can be interpreted as oensive and as an invasion of privacy. Survey questions should be constructed on a need-to-know basis. That is, any question that is asked should have a specic, defensible

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Measuring Your Organizations Climate for Ethics: ...continued from page 18 programs, you must also address a little thing called culture. Survey design teams should know how to begin thinking about what creates a climate for ethics and how to measure it appropriately. Because survey research has become increasingly popular as a method to assess organizational life, it is important to address some of the fundamental principals of survey design. Knowing the design fundamentals is helpful, whether you choose to draft your own survey or employ an existing measure. Rememberthis is only the beginning. The data collection, analysis, and the feedback and sharing of results warrant separate articles all on their own. n This publication contains general information only and Deloitte Consulting LLP is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte Consulting LLP, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.
REFERENCES 1 Federal Sentencing Guidelines for Organizations, 8B2.1.(a)(2) 2 Noted anecdotally by panelists at the New York Chapter Meeting of the National Association of Corporate Directors (NACD), December 12, 2006. A number of compliance and ethics program surveys have attempted to benchmark whether organizations regularly conduct an employee perception survey. See, e.g., Corpedia and The Conference Board 2006 Compliance Program and Risk Assessment Benchmarking Survey. 3 Denison, D: What is the difference between organizational culture and organizational climate? A natives point of view on a decade of paradigm wars. Academy of Management Review, 1966, vol 21(3), pp. 619-654 4 Ibid. 5 James, L., & Jones, A: Organizational climate: A review of theory and research. Psychological Bulletin, 1974, vol 81, pp. 1096-1112 6 Zohar, D: Climate as a social-cognitive construction of supervisory safety practices: Scripts as proxy of behavior patterns. Journal of Applied Psychology, 2004, vol 89, pp. 22-333. 7 Schneider, B., & Reichers, A: On the etiology of climates. Personnel Psychology, 1983, vol 36, pp. 19-39 8 Federal Sentencing Guidelines for Organizations, 8B2.1.(b)(5)(B) 9 Martinek P: Focus should be on ethics program outcomes, not process. Compliance Week, June 5, 2005 10 Victor & Cullen: The organizational basis of ethical work climates. Administrative Science Quarterly, 1988, vol 33(1), pp. 101-125 11 Ibid. 12 Cullen, J. Victor, B. & Bronson, J: The ethical climate questionnaire: An assessment of fits development and validity. Psychological reports,1993, vol 73(2), pp.667-674; Cullen, J, Victor B, Stephens C: An ethical weather report: Assessing the organizations ethical climate. Organizational Dynamics, 1989, vol 18(2), pp. 50-62; Honeycutt E, Glassman M, Sugelder M, Karande K: Determinant of ethical behavior. Journal of Business Ethics, 2001, vol 32(1), pp. 69-79; Reidenbach R, Robin D: A conceptual model of corporate moral development. Journal of Business Ethics,1991, vol 10(4), pp.273-284 Wimbush, J, Shepard J: Toward an understanding of ethical climate: Its relationship to ethical behavior and supervisory influence. Journal of Business Ethics, 1994, vol 13(8), pp. 637-647; and Weaver G, Trevino L: Compliance and values oriented ethics programs: Influences on employees attitudes and behavior. Business Ethics Quarterly, 1999, vol 9(2), pp. 315-335 13 Ibid. 14 Seligson AS, Choi L: Critical Elements of an Organizational Ethical Culture. Ethics Resource Center, 2006. Retrieved June 10, 2007 from www.ethics.org 15 Edward J, Thomas M, Rosenfeld P, Booth-Kewley S: How to Conduct Organizational Surveys: A step-by-step guide. Thousand Oaks, CA: Sage, 1997 16 Ibid. 17 Kraut, Allen I. (ed): Organizational Surveys: Tools for Assessment and Change. San Francisco, CA: Jossey-Bass, 1996.

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