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Reward: Performance and Incentives

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YOU’VE NO DOUBT HEARD THE STORY OF PAVLOV’S DOG – where the animal comes to associate hearing a bell with getting food and learns a new behaviour. Human beings are not so different: if we connect particular actions with rewards we adapt our behaviour to suit. A very powerful way to influence employees is by tying pay and promotion to strong ethical conduct.

Incentivising ethical behaviour through positive support is highlighted by both Transparency International and the OECD as an important means to demonstrate your organisation’s E&C commitment. This means working cross-functionally with HR to bring compliance and compensation together so that ethics becomes integrated into performance evaluations. One company that has joined the dots between a culture of integrity and annual performance reviews is Novartis, which has made good conduct a component in its associates’ yearly assessments, with the explicit aim of incentivising ethical behaviour.

“Performance Management plays an important role in embedding ethical values and behaviour in the culture of the organisation. It is an excellent way to reinforce desired behaviour year after year. Knowing that they will be appraised on how they do business as well as what they achieve will increase employees’ sensitivity to the ethical matters they may confront in their day-to-day business.” INSTITUTE OF BUSINESS ETHICS
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Keywords: compliance; corporate responsibility; corruption; reputational risk; sustainability; values

Document Type: Research Article

Publication date: January 1, 2015

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