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Executive and professional education

 

Moral identity plays a role in achieving ethical organisational culture, as discussed by Dr Eric Levy of Cambridge Judge in an essay for a Financial Conduct Authority paper.

Your Culture Is Your Brand sign in a conceptual image

Dr Eric Levy

Dr Eric Levy

Dr Eric Levy, University Lecturer in Marketing at Cambridge Judge Business School, recently contributed an essay to a discussion paper for The Financial Conduct Authority (FCA) about “Transforming culture in financial services”. As the FCA says, essays in the paper “discuss what a good culture might look like, the role of regulation and regulators, how firms might go beyond incentives, and how to change behaviour for the better.”

Eric’s essay focused on how to recruit for and cultivate an ethical organisational culture, and specifically the role of “moral identity” in achieving such a culture. Eric shares some of his thoughts here on these topics:

How can organisations become more ethical, and what are the key business advantages of such an ethical push?

By showing the world that they are more trustworthy, ethical organisations might be able to attract better employees, have a better work culture, and possibly attract more outside investments and be more profitable. It’s not easy to simply “install” an ethical culture if it’s not natural to that organisation; it’s something that needs to be built up over time rather than assembled quickly or ad-hoc. But there should be clear rewards on many fronts in ensuring organisational ethics: firms may be able to spend less time monitoring employee behaviour, reduce government supervision, and avoid fines which often follow unethical actions.

How would you describe moral identity, and why is it important?

Moral identity refers to how important our sense of morality is to ourselves; i.e., whether we value traits such as being kind, caring, and compassionate. Moral identity is important because it predicts the degree to which people act ethically, and also the extent to which they are generous, for example donating more to charity and being a more helpful co-worker. If a person’s concept of self revolves around their moral beliefs, then it’s likely that these beliefs will be consistently translated into action.

What’s the role of a CEO or other leader in organisational culture?

The CEO is the face of the organisation, and he or she clearly sets the organisational tone by behaving in certain ways. Research shows that leaders with higher moral identity run business units that have less unethical behaviour and less conflict – so the leader’s traits clearly transfer to the units themselves in a sort of virtuous circle.

How feasible is it to hire employees who are high in moral identity?

There is no one magical approach, but preparation is essential. Organisations must acknowledge the value of hiring such employees long before starting the recruitment process: this allows the HR department to adjust recruiting materials to find out about candidates’ moral identity for use in vetting applications and conducting interviews. Another option is that companies could look for other organisations (either other businesses or university/civic organisations in which individuals might be involved) that are known for their ethical culture and try to recruit employees from there.

Is a moral/ethical organisational culture more important in some sectors (such as finance) than others (such as retail), and are there different expectations in the private and public sectors?

I think that a moral/ethical culture is important in all sectors, including public and private, though achieving this can be more challenging in organisations or industries rewarded by competitive behaviour. For example, financial services is very competitive and money-driven. Yet this may make it even more important for leaders of such organisations to demand the highest ethical standards – because the high rewards of such sectors as banking attract scrutiny from the media and regulators, and misdeeds which are uncovered can have a tremendously negative impact on the company’s reputation and financial standing.