UK Bribery Act

Every organization has a culture, and in most cases, many. Some cultures promote conduct that will lead to long-term meaning and sustainable performance for the organization, and some do not. A rules-based culture, a culture where conduct is driven by compliance with an imposed set of standards, is inadequate to this purpose. A system of rules, no matter how complex or sophisticated, is never going to be enough to drive appropriate behavior. In a world that is increasingly fast-moving and unpredictable, it is simply not possible, or desirable, to establish and enforce a rule for every eventuality. Nor could employees internalize a set of rules that even came close.

By contrast, behavior that derives from a set of sustainable values, a common understanding about the right thing to do, will promote better and more robust behavior in a wider variety of situations because the guideposts to proper conduct have become internalized. When employees share a set of values, appropriate behavior follows more naturally than when it is driven by externally-imposed standards. Behavior that is self-governed is more immune to the shocks and uncertainties that employees confront. Behavior that derives from values is adaptive and flexible. Behavior in a culture of rule-following is more rigid, less adaptive, and often more troublesome because there is no common understanding of appropriate conduct to guide employees in those frequent situations where no particular rule applies.

Rules not anchored in values are too easily broken when other, more immediate, incentives intervene.

Every organization must have rules, but the rules should derive from a set of baseline values. Rules not anchored in values are too easily broken when other, more immediate, incentives intervene. Take for example, a simple rule that most companies, appropriately, have established: “We do not pay bribes.” What is the basis of this rule? Because bribery is against the law, and there are serious consequences for breaking these laws, including fines and jail time? Fair enough, but how effective is this motivation in a situation where there is little or no chance of getting caught? When a needed machine part is stuck on the dock because the local customs official is demanding some form of payment, a rule against bribes may be ignored because it confronts the more immediate need to get the machinery running again. The bribe becomes particularly likely where the company culture is one where productivity is rewarded, and compliance with the law is expected, but not particularly incented.

More robust and powerful is a rule against bribes that derives from more sustainable concepts: that we do not take actions that might harm the reputation of the company, that might lead to more demands for improper conduct, or that foster a system of corruption that undermines the rule of law and economic development. Moreover, in a culture that values this conduct, the manager who refuses to pay the bribe to the customs official, who finds other mechanisms, perhaps more expensive and time consuming in the short-term, to get the machine part, will be celebrated for these actions rather than disparaged for allowing production to be delayed. And this is how a values-based culture is built—through explicit and repeated communication about values and the importance of proper conduct over short-term goals, backed by incentive structures, of both reward and punishment, that align with and reinforce these messages.

The emphasis on communication is key here, because incentive structures alone will only go so far. An indispensable part of values-based culture building is charismatic and inspirational leadership that communicates the organization’s values in a way that will truly change behavior. Effective communication means more than just saying the right things; it means inspiring proper conduct through passionate evocation of values, of mission and purpose. This kind of leadership can and should come at all levels. Inspirational leaders throughout the company will set the culture for the organization.

Just as rules divorced from values are easily ignored, the converse also is true: rules not aligned with values may be slavishly followed in circumstances where other values may indicate they should not. In many parts of the world, for example, it is unfortunately the case that some government officials may demand payments to allow individuals safe passage through or out of the country. Employees who refuse to make such payments may find themselves in physical danger. Employees should not be conflicted here. As bad as it is to pay bribes and contribute to corruption, employee safety must be an overarching concern. Yet, for companies that have powerfully enforced a no bribes rule, but have not established safety as a higher order value, safety may suffer. We have seen several recent examples of companies who failed to establish a culture where safety was paramount, with disastrous consequences for employees and the environment. Safety as a value, honesty as a value, integrity as a value, will endure when the rules may be, and perhaps should be, ignored.