Compliance Glossary

Ethical Congruence

Ethical decisions are expressions of individual values, but they can also be influenced by social and organizational behaviors. Corporations can promote ethical decision-making by striving for alignment between organizational values and the interests or objectives of key decision-makers, a state known as ethical congruence.   

What is Ethical Congruence?

Ethical congruence is a state where an individual’s decision-making aligns with the appropriate set of values for that situation. We can explore the idea of ethical congruence by understanding the nature of values and the contexts in which individuals make value-based ethical decisions.

What are Values?

Values are the core beliefs we hold about what is right in terms of how we act and how we interact with others. Many of our values fall into one of two categories: terminal values and instrumental values.

An instrumental value is a type of value that prescribes a mode of conduct for the individual. Instrumental values relate to how we characterize our daily actions and the ideals that we wish to embody, both on the personal and organizational levels. Instrumental values include things like:

  • Ambitiousness
  • Rationality
  • Open-Mindedness
  • Transparency or Honesty
  • Personal Accountability
  • Duty
  • Social Responsibility

A terminal value are the goals and objectives that individuals and organizations work towards, sometimes for their entire lives. On an individual level, terminal values may include things like happiness, self-respect, or financial freedom. On an organization level, terminal values include business objectives like maximizing shareholder value throughout the organization’s life cycle.

Terminal values reflect our vision for the future, while instrumental values describe the methods by which we hope to attain that future. For both individuals and organizations, values become the ultimate criteria for judging right and wrong.

Ethical Congruence in Business Ethics

In business ethics, ethical congruence is an organizational state where the actions and behaviors of decision-makers are effectively aligned with organizational values and ethics. 

Through effective corporate governance, business leaders strive work towards ethical congruence by:

  • Establishing and promoting a set of organizational values or core beliefs to guide decision-making within the organization.
  • Establishing and enforcing an ethical code of conduct that requires agents of the corporation to conduct themselves in accordance with organizational values and beliefs.
  • Assessing the background of potential hirees in executive management positions to determine whether their personal values are sufficiently aligned with organizational values to produce a high level of person-organization fit.
  • Ensuring that managers and supervisors within the organization are positively promoting and modeling organizational values and ethical decision-making for employees.
  • Providing leadership on business values and setting the tone from the top on ethical decision-making.

Why is Ethical Congruence Important?

Ethical congruence reflects alignment between the values of the individual decision-maker and organizational values. This is ultimately shared when the individual and the organization adopt similar value systems, a state known as value congruence. 

Individuals whose personal values do not align with those of their employer have difficulty making decisions at work, experience lower job satisfaction and higher stress, and are less committed to their employer, resulting in higher turnover. These challenges are effectively addressed when corporations hire for fit and establish clear guidelines that promote ethical conduct amongst their employees.

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