IT Governance

Can an Ethical Culture Enhance Your Firm’s Governance?

Effective governance can help your firm stand out from your competitors in several ways. It gives you a better idea of the company’s operations and technological models that need improvement. However, some enterprises often overlook the significance of an ethical culture in establishing a well-functioning governance model. It is essential to understand that an effectively introduced ethical culture plays a crucial role in a company’s governance policies. In her article for Compliance Week, Jaclyn Jaeger talks about several components of governance and how they can be improved with an ethical culture.

Components of Governance that Involve an Ethical Culture

Ethics and Compliance

According to LRN’s Ethics and Compliance (E&C) Program Effectiveness Report, 96 percent of the respondents stated that ethics and compliance are crucial for firms. These played a vital role in tackling business challenges during the pandemic.


According to the survey, high-impact organizations are in a better position to nurture a positive culture that strengthens business leadership and adaptability to change.


Ninety percent of the participating organizations stated that they made significant changes in their ethics and compliance to facilitate online training. Such firms plan to prioritize the following elements for better functioning:

  • Incorporating the E&C program in mobile apps
  • Introducing simple and effective policies
  • Using digital certifications for employees in the context of on-site audits
  • Creating an online version of the code of conduct
  • Facilitating professional training on online platforms
  • Implementing customized methods to assess risks

How Metrics Affect Ethical Culture

High-impact organizations generally value the following components of E&C metrics. These give them an advantage over low-impact firms:

  • Employee involvement
  • Misconduct assessment
  • Analysis of strengths and weaknesses of ethical culture
  • Policy clicks
  • Data analysis for compliance lapse
  • Data reporting
  • Hotline complaints
  • Training maintenance

Human Resource Allocation

Most of the participating firms mentioned that raising and resolving issues can improve the ethical culture to a great extent. If there is a case of misconduct against a senior executive, you should address it swiftly. These are some of the elements you should include:

  • Conducting a performance management procedure
  • Hiring employees for distinct operations
  • Considering employee promotions
  • Having a bonus-based reward process

Board’s Participation

Another aspect that gives high-impact firms an advantage over low-impact ones is the involvement of the board. When a board of directors encourages an ethical culture in a company, it improves the probability of its practice.

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