Corruption and bribery in business have become major concerns worldwide, with estimated yearly expenses of $3.6 trillion. Unfortunately, many people believe that the situation is worsening, as shown in a recent study by consulting firm EY, which revealed that 40% of Indian corporations acknowledge the existence of pervasive bribery and corruption in their business operations.

Despite the high-profile scandals and court cases that have taken place over the years, the current method of preventing company misconduct has been deemed ineffective by some. The rule-based approach, which involves developing and enforcing policies and procedures to instruct employees on how to deal with ethical dilemmas, may not cover every situation, and employees may find it difficult to comply with such policies if they clash with the company's or team's overall culture.

To effectively combat corruption, it is essential to adopt a values-based approach that aligns with the company's culture and beliefs. This approach seeks to influence employee behavior and promote a culture of honesty, which in turn reduces the risk of unethical actions. By having a two-pronged approach to governing employee conduct, companies can promote self-regulation and inner drive, which is far more effective than relying solely on legal compliance policies.

Establishing a Foundation for a Values-Based Approach: The Essential Building Blocks

When it comes to combating corruption and promoting ethical behavior, a values-based approach can be highly effective. But what exactly does this approach entail, and how can organizations implement it? Let's break it down into four key blocks.

What are values and what is their purpose?

Values are core beliefs that guide attitudes and behavior. In a business context, values are critical to ensure that employees work towards a common organizational vision and create a company culture. Company values are a set of principles or concepts adopted by organizations to achieve shared objectives. However, if these values are not fully integrated into the company culture, they risk being mere surface-level gestures. For instance, "respect" is a commonly cited company value, but it may not always be prioritized in practice. In 2021, Petrofac, which included respect as one of its core values, was found guilty of bribery. To make values effective in an anti-corruption approach, companies must ensure that they are fully integrated into the company culture to influence employee behavior. This can encourage decision-making that aligns with the company's values.

What role can values play?

Companies define their culture through a set of values that often reflect in their mission statement. These values, such as responsibility, innovation, and excellence, provide a flexible framework for implementing an adaptable anti-corruption strategy that can align with changing business objectives. By maintaining a consistent set of values, businesses can ensure that employees and management can apply these principles to evolving situations. The integration of core company values into anti-corruption policies can enhance an organization's ability to make ethical decisions, reduce exposure to bribery, and promote positive organizational culture. Some anti-corruption programs are exploring this approach to leverage company values as a means of influencing employee behavior and preventing unethical conduct. This strategy emphasizes that a company's values should not just be a statement, but a part of the company's DNA.

A values-based approach to anti-corruption

Several companies have embraced a values-based approach to cultivate a positive anti-corruption culture, and they have implemented these approaches in various ways. One minimalist approach is to create a set of company values that are referenced briefly, such as in the company's Code of Conduct or regular messages from the CEO. In contrast, a maximalist approach involves embedding company values throughout the organization to promote desired behaviors actively. The latter is done by mandating that employees confirm they have read and understood the company values by signing declaration forms to foster greater accountability, honesty and accuracy.

How do values and rule-based anti-corruption link?

When developing an anti-corruption approach, there are typically two approaches to consider. The conventional approach is a rule-based method that establishes an anti-corruption scheme with a set of regulations that employees must follow. This approach provides clear guidelines, but it can be overly restrictive and encourage compliance rather than ethical behavior.

In contrast, industry leaders are advocating for a value-led approach in addition to the rules-based method. This approach focuses on consistently reinforcing and applying company values to motivate employees to act ethically. Integrating values into an anti-corruption program can foster a sense of responsibility and promote a positive company culture. However, relying solely on values can have drawbacks, such as potential misinterpretation or misapplication without accompanying rules. Combining both approaches can lead to a more effective anti-corruption program.

How Embedding Values Can Enhance an Anti-Corruption Approach

Increased ownership

A significant advantage of implementing a values-based approach is that it can enhance employee ownership of the anti-corruption program. When employees perceive themselves as accountable for their organization's anti-corruption efforts, they are more likely to strive towards reducing corruption, even when external monitoring is not present, and to report any misconduct they witness. A culture that fosters an environment of speaking up is critical in the fight against corruption. If such a culture is not established, employees may remain silent about corruption issues out of apprehension for adverse outcomes. Creating a supportive and safe work environment is therefore essential to encourage employees to report incidents of corruption.

Employee Attraction

A company's values are essential in defining its identity and are critical for attracting and retaining employees. In a recent study, 71% of professionals stated that they would be willing to accept a lower salary to work for a company that shares their mission and values. Moreover, nearly 39% of professionals said that they would quit their current job if asked to perform an action that conflicts with their moral or ethical principles. By leveraging this attachment to values, a company can strengthen its anti-corruption efforts.

Creating a Healthy Culture

How to Implement a Values-Based Approach to Combat Corruption: Best Practices

Incorporating company values into the workplace in a meaningful way requires more than just slogans. Here are some suggestions for encouraging employees to apply these values in their daily activities, particularly in the context of anti-bribery and corruption:

Training

is an effective method of communicating and reinforcing values. Traditional rules-based training mainly focuses on the company's do's and don'ts and legal requirements. In contrast, values-based training often uses storytelling and scenarios to engage employees effectively. The training should demonstrate the connection between anti-bribery and corruption and the tangible impact of corruption in the real world. By understanding the consequences of corruption in the real world, employees are more likely to consider these impacts when making decisions. This understanding can help reduce the likelihood of promoting negative behaviors.

The "nudge" approach

is a well-established technique in behavioral science that employs positive reinforcement and subtle suggestions to guide individuals towards behaviors and decisions that align with a company's values. One effective way to apply nudge theory to anti-corruption programmes is by encouraging commitments. When individuals commit to an action, either publicly or privately, they are more likely to follow through on that commitment. Encouraging employees to publicly commit to acting with honesty and integrity can nudge them towards making ethical decisions and acting in line with company values.

Case Study -

In an experiment where MBA students acted as financial advisors, researchers found that completing an ethics checklist before suggesting investment funds resulted in fewer recommendations for risky funds. This demonstrates that simply reminding employees of a company's values can impact their behavior. Similarly, companies could utilize a similar checklist to remind employees of their legal obligations under anti-bribery and anti-corruption laws and ensure their compliance with the company's policies on these issues.