How to Build a Culture of Integrity?

Why do so many organizations with formally strong Ethics & Compliance programs still find themselves embroiled in major ethical scandals?

This question becomes even more pressing in light of the The Global Business Ethics Survey 2023, conducted by the Ethics & Compliance Initiative. The results are alarming: Key Findings:

1. Employees continue to face exceptionally high levels of pressure in order to compromise workplace standards or even the law
2. Workplace misconduct is at an all-time high.
3. Reporting of observed misconduct is at a record high.
4. Retaliation against employees who report misconduct is on the unacceptable rates.
5. Only a few employees say they work in a strong ethical culture.
6. Companies are not taking the steps that have been proven to significantly reduce their risks.
   These findings make it clear that formal Compliance programs alone are not enough. Organizations cannot rely solely on rules and policies— a deeper shift is required at the levels of culture, leadership, and personal accountability.

 

Leaders are the key to creating an ethical culture
Organizational culture does not emerge by chance. It is a reflection of the values and beliefs of both current and past leaders, embedded over time into structures, policies, procedures, and reward systems.

“If you want to transform your organization’s culture, you must first transform its leaders.”
Richard Barrett, vodeći autor na području vrijednosno vođenog leadershipa, ističe da organizacijska transformacija započinje osobnom transformacijom lidera. Ako se lideri ne mijenjaju, organizacija neće evoluirati i kultura će ostati ista.

Understanding internal values and motivations
Why do people make unethical decisions—even when they know the rules?

One answer lies in unconscious value limitations – deep-rooted psychological drivers that influence behavior but often go unrecognized. Barrett highlights that values are:

• A reflection of our internal needs.
• Guidelines for decision-making and behavior.
• An expression of what is missing in our lives.

When employees become become aware of their values and the internal motivations driving them, they can consciously regulate their behavior. Otherwise, their decisions are controlled by subconscious impulses, leading to ethical lapses.
This moment of realization “the AHA momentom” – occurs when individuals recognize their unconscious behavioral patterns and gain the opportunity to change them.

 

Developing a self-regulation mechanism
Since personal values do not change easily, the goal is not to force employees to alter their personalities. Instead, they should be trained to pause automatic reactions and make conscious ethical choices. Key tools in this process include:

1. Self-reflection and recognizing ethical dilemmas – Employees must develop the ability to stop and think when faced with ethical gray areas.
2. Developing a self-regulation system– Engaging in slow thinking (System 2 Thinking) to analyze situations logically rather than reacting impulsively.
3. Applying critical thinking to ethical decision-making – While critical thinking is not inherently ethical, it can be adapted to support ethical choices.
4. Authenticity and personal accountability – – When employees take responsibility for their thoughts and actions, they develop a stronger commitment to their organization and improve overall performance.

 

Leaders and managers must build a culture of trust
Trust within an organization does not develop overnight, nor can it be established through mere declarations about ethics and integrity. Instead, it grows through the consistent and authentic actions of leaders and managers, who must demonstrate that they genuinely uphold the values they promote.

Leaders and managers must be steadfast in their convictions and act in alignment with the values they advocate. If they emphasize honesty but turn a blind eye to unethical practices—or worse, justify them when it suits business objectives—employees will quickly notice the contradiction. When trust erodes, so does organizational culture. People do not follow words—they follow actions.

Beyond their personal consistency, leaders must build mutual trust within leadership teams. If distrust, insecurity, or secrecy prevails among executives, the same dysfunctional pattern will permeate the organization. Employees will hesitate to share ideas, report concerns, or make ethical decisions if they see that their leaders lack unity and transparency.

When leaders live by their principles, act consistently, and trust one another, they cultivate a culture of trust. In such an environment, employees feel safe to express their perspectives, make ethical choices, and contribute to a healthy, high-performing workplace.

 

Confidence and growth through a coaching approach
To support the ethical growth of employees, leaders and managers must first develop themselves.
This involves:

• Self-confidence and emotional intelligence – Awareness of one’s emotions and the ability to regulate them are crucial for sound decision-making.
• A coaching mindset – Instead of simply issuing directives, leaders should ask meaningful questions, listen actively, and seek to understand their employees’ challenges.
• Clear and effective communication – Summarizing key points, guiding employees through options rather than dictating solutions, and recognizing their strengths and needs.

Barrett underscores a fundamental truth of leadership:

“I can only control what I am aware of. What I am unaware of controls me.”

Raising awareness—both personal and organizational—is the cornerstone of leadership development and, ultimately, cultural transformation.

 

A culture of integrity begins with personal change

A strong ethical culture is not built through policies and regulations alone—it emerges from the everyday decisions and actions of the people within an organization. True change does not come from external pressures but from within, through the personal development of leaders, managers, and employees who are willing to take responsibility for their choices and become more aware of their impact on others.

If we want to build a culture of integrity, leaders must take the first step. They set the standard through their actions, foster trust, and encourage ethical decision-making. When leaders and managers understand their own values, develop self-regulation skills, and apply critical thinking in ethical dilemmas, they become role models for the entire organization.

Organizations do not change by themselves—they are shaped by the people within them. If we want to create workplaces where ethics and integrity are priorities, we cannot rely solely on rules and procedures. Employees must be equipped with the tools to recognize risks, navigate ethical challenges, and act in alignment with their core values.

Because ethics is not just about following rules—it is about how we live, work, and create lasting value for ourselves, our organizations, and society as a whole.It is time for Compliance programs to go beyond regulatory checklists—they must serve as a roadmap for personal accountability, ethical awareness, and conscious decision-making.