Culture matters. A strong ethical culture can supercharge an organization into outperforming its peers, attracting and retaining exceptional talent, and empowering long-term innovation. A weak culture, however, doesn’t just make those things impossible; it actively destroys value by driving off talent, sinking productivity, and giving permission to the kinds of bad behavior that can create significant regulatory and legal risk down the road.

We have all seen bad cultures at work. We might even have worked for one. But ethical cultures don’t just appear fully formed out of nowhere. They take time to build up, action by action, decision by decision. A culture is the cumulative record of an entire community’s behavior. That is what gives cultures their power, for good or for ill. Once established, they can be difficult to change. This is especially true with toxic cultures. After all, who wants to put in the incredibly hard work to save a culture from itself when the culture will actively punish you for even trying?

That’s why it is so important to know the warning signs for when your organization’s culture might be showing signs of toxicity, and what can be done to change course before it’s too late. Nobody wants to be the next villain story for the way they are forcing their people back into the office, or why their workforce is quiet quitting or rage applying for new jobs.

BLAME VERSUS SHAME CULTURES

There is a lot of anecdotal writing about the difference between blame-based cultures and shame-based cultures. Blame-based cultures focus on external accountability for wrongdoing, whereas shame-based cultures focus on internal accountability. Blame makes one ask if they will be punished for what they have done, while shame makes one ask if they will be ostracized for it.

These are two sides of the same coin, however, because it ultimately boils down to the same unifying questions: Am I going to be hurt for what I just did? The word for that is fear, and a fear-based culture is an inherently destructive one. It stunts innovation. Employees who fear mockery, sidelining, or infighting won’t feel safe enough to offer an idea that could deliver huge results but also carries a risk of failure. It destroys by-standing and speaking up in the face of misbehavior by making employees more worried about keeping their jobs than upholding high ethical and professional standards. And it promotes workplace bullying—something that our own research shows is disproportionately affecting Gen Z employees.

ORGANIZATIONAL ACCOUNTABILITY

How we hold people accountable for performance and behavior is a means to an end, not an end unto itself. The end we should be focusing on is the bedrock of all strong cultures: psychological safety, a term that Harvard Business School professor Amy Edmondson coined in 1999.

Since then, successful organizational cultures have become so by moving beyond toxic accountability and embracing values-based leadership, trust, and integrity. In his 2022 keynote address at the 13^th Annual Global Ethics Summit, organizational anthropologist Dr. Timothy Clark described how an environment of psychological safety delivers on four increasingly important stages: inclusion, learning, contributing, and challenging.

In a psychologically safe environment—that is, in a strong, ethical culture—first employees come to understand that they are welcome to bring the full dimension of themselves to their work. They understand that it is safe to learn because it is safe to admit their limitations. They understand that they can meaningfully contribute because they have not been shackled to acute fears of criticism or recrimination. And finally, they understand that they can challenge the status quo or unacceptable behavior. The first leads to true market innovation, and the second leads to a workplace that lives by its own standards.

BUILDING A CULTURE OF ETHICS 

This may seem like a difficult mountain to climb, but it’s not impossible. Many cultures have successfully put in the hard work to build a strong culture of ethics, trust, and integrity, and have seen the rewards that come from it. So many have done so, in fact, that at a time when our society can feel extremely raucous and fractured, our workplace can be an island of civility and trust.

There are various pillars that support an ethical culture, such as a willingness to report observed misconduct; a lack of pressure to violate rules and norms for the sake of performance; a strong sense of organizational justice; and a genuine trust that the leadership says what it means, and does what it says.

But all of these are ultimately directed by four key behaviors that will make or break any organization’s culture:

• Who you hire. Are you bringing people into the organization who aren’t just skilled, proven performers, but also uphold your own mission, vision, and values? (First question: Do you know what your mission, vision, and values are?) Bringing in a problematic loose cannon just because they have a great sales record is a cultural disaster.
• Who you fire. Are your standards being applied evenly? Or are there different sets of rules and expectations at different levels of the organization?
• Who you praise. How much do you encourage people to call out great behavior among their peers? How much is praise reserved only for a particular in-crowd?
• Who you promote. Are promotions carried out in a spirit of fairness, merit, and transparency? And are employees who regularly engage in bad behavior given professional rewards anyway?

These four elemental truths are at the core of your culture. And the extent to which you use them to create a sense of fairness, integrity, transparency, and respect within your organization is the extent to which you can expect to see your employees invest in your long-term success as their own, radically innovate, and over-deliver . . . not because they are afraid of what will happen if they won’t, but because they want to be a part of something incredible.

Erica Salmon Byrne is the chief strategy officer and executive chair for Ethisphere.