Culture Fuels Success: LRN Benchmark of Ethical Culture Reveals Correlation Between Strong Corporate Culture and Business Performance
• Organizations with strong ethical cultures experience high scores across business metrics, from customer satisfaction to employee loyalty and even company growth
• While more corporations emphasize diversity, equity, and inclusion, there’s a long way to go: Black Americans and people identifying as female still observe unequal treatment across organizations
NEW YORK (November 1, 2021)—Culture is something we hear organizations talk about often. They want to foster one; they want to improve theirs; they want to build on a culture that’s working. But is culture something that can be measured? Does it actually drive key business metrics? In a word, yes.
The 2021 LRN Benchmark of Ethical Culture offers proof from a comprehensive survey of thousands of employees at corporations around the world. A multi-year, collaborative research effort, the report builds on three decades of work and supporting research proving ethical culture both protects corporate reputations and propels the bottom line.
The findings reveal that in an era of stakeholder capitalism with eyes on environmental, social, and corporate governance (ESG), culture is the key to authentic or inauthentic expression of a company’s commitment to purpose, values, people, society, and planet.
Here are some of the key takeaways:
• Companies with the strongest ethical cultures outperform others by 40%. Across all measures of business performance—including customer satisfaction, employee loyalty, innovation, adaptability, and growth.
• There is a need to shape ethical culture globally, but some industries outperform others significantly. Data from the survey show a pervasive and consistent need to improve ethical culture in all regions, regardless of company size. Information technology, entertainment and hospitality, and marketing and media had the highest average ethical culture scores, while chemical, education, not-for-profit, and the automotive and transportation industries ranked the lowest.
• There is a leadership disconnect. Senior leaders report more favorable perceptions of the state of their organization’s culture. Middle management reports average and individual contributors and those on the front lines report the lowest perception of culture.
• Some aspects of culture have an outsized influence on achieving ethical behavior. There are strong correlations between Cultural Catalysts and demonstrated ethical behavior. For example, companies that foster trust and maintain a sense of fairness—meaning they score high marks on Trust and Organizational Justice—experience lower levels of misconduct as well as more people speaking out when they see it.
• Black Americans and people who identify as female observe unequal treatment in the workplace. While companies have made commitments to diversity, equity, and inclusion, there is a wide gap in the perception of equality at an organization. African, Black, Afro-Caribbean, and African Americans report a less positive experience of cultural dimensions, while people identifying as female report less than those identifying as male.
• Employee loyalty is notably higher in environments characterized by high trust. Employees are more loyal to companies that are ethical and purpose-driven with a clear commitment to diversity, equity, and inclusion.
• There’s a Pandemic Paradox with frontline workers. Even though frontline workers were heralded publicly as heroes for keeping the economy running early on during the pandemic, they gave their organization the lowest scores across the various dimensions of culture. There seems to be a disconnect between what a company says are its values and the real-life experience of employees.
“How business defines and achieves performance has evolved,” said LRN Chief Advisory Officer Ty Francis MBE. “We’re proud to introduce a new model for achieving ethical performance and a new benchmark for an ethical corporate culture that explores the values and needs of all stakeholders.”
Said lead author Emily Miner, Senior Ethics & Compliance Advisor, LRN, “The data prove that prioritizing ethical culture isn’t just the right thing to do it is the smart thing to do. And yet, even the best performing companies, the Cultural Catalysts, have work to do to ensure values resonate at every level of the organization.”
The LRN Benchmark of Ethical Culture is based on comprehensive data collected from nearly 8,000 employees worldwide, ranging from frontline employees to the C-suite, and representing 17 industries. It offers a unique view of ethical culture and its impact on ethical conduct and business performance.
For more information, access the LRN Benchmark of Ethical Culture (free with registration).
LRN’s mission and purpose is to inspire principled performance and help people around the world do the right thing. Since 1994, LRN has worked to propel organizations forward with the partnership, knowledge, and tools to build ethical culture. More than 1,000 companies and 30 million learners worldwide utilize LRN services and take LRN e-learning courses to help navigate complex regulatory environments and foster ethical, responsible, and inclusive cultures. In partnership with LRN, companies translate their values into concrete corporate practices and leadership behaviors that create sustainable competitive advantage. By acting upon shared values, companies and their people find the means to outbehave and outperform. Learn more at https://lrn.com and follow on Twitter, LinkedIn, and Facebook.
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About the Author
Ethics and compliance leader providing tools, education, and advisory services for global companies to inspire principled performance. LRN’s overall approach recognizes the inherent limitations of rules and regulations in influencing behaviors. In our view, focusing on actions that help build and maintain a values-based culture will mean more compliance and reduced costs as a result of tangible and sustainable behavioral change.More Content by LRN Corporation