Hannah Luce, Governance Director at TMGA Wealth Management, discusses the impact of integrity on organisational culture, and how silence can play an adverse role in shaping behaviours…

For better or worse, organisational culture is shaped by collective behaviours, and each member’s integrity plays a crucial role.

When people think about integrity in a business context, they may picture dramatic moments like a whistleblower exposing serious wrongdoing or someone stepping in to prevent a major crisis. However, integrity is more often tested in everyday decisions.

It is rare that a single “big” decision leads to a large-scale failure. It develops gradually, as patterns of behaviour take hold and minor compromises become normalised. Signing a document without reviewing or bending the rules to meet a client deadline may seem harmless in the moment, but over time, such compromises embed themselves into the culture of an organisation, with each one subtly shifting the boundary of what is considered acceptable.

Organisational culture is often described as “how things are done around here”.

When employees observe that rule-breaking is tolerated, or that results are prioritised over doing the right thing, they are more likely to adjust their own behaviour accordingly.

Silence plays a crucial role in this process. A 1968 study by Latané and Darley placed participants in a room which would slowly fill with smoke. Where the participant was alone, 75% reported the smoke, however, that number reduced to a staggering 10% when the participants were accompanied by two unknown stooges. The lesson? When others are present, responsibility is seen as shared, and individuals feel less personally responsible for acting, even when acting is in their best interest.

This study, together with others, led to what is now known as the “Bystander Effect”; the principle that people are significantly less likely to act when others around them remain silent. In the workplace, this means that unchallenged behaviour can quickly come to be seen as acceptable simply because no one has objected. Silence, in effect, becomes a form of approval.

This dynamic is especially relevant in governance and compliance. A culture of compliance is created by a shared understanding about what behaviour is acceptable. If people believe that raising concerns will lead to blame, or that no-one else seems concerned by the issues, silence is likely to follow. When issues are consistently met with silence, individuals may eventually stop recognising them as issues at all.

One of the challenges is that defining what “success” looks like in a compliance culture is inherently difficult, because when compliance is working well, very little happens. Success is characterised by the absence of serious incidents or material breaches. Unlike other areas of the business, there is no obvious event that signals achievement, such as meeting business growth targets. A strong compliance culture operates quietly in the background, preventing problems before they arise and resolving issues early. Its effectiveness is therefore largely invisible, making it hard to measure and easy to overlook. When nothing goes wrong, it can be tempting to assume compliance is a box to be ticked, rather than the outcome of healthy behaviours and effective challenge.

By contrast, a poor compliance culture is far easier to identify because it announces itself through problems. Whistleblowing cases, regulatory findings, repeated control failures, and patterns of misconduct or wilful blindness all provide clear signals that something is wrong.

These are noisy indicators that attract attention and demand action. A good compliance culture, however, leaves fewer traces. People raise concerns early, and issues are addressed before they escalate. This makes it harder to diagnose success than failure and creates a risk that strong compliance cultures are undervalued, and weak ones only become visible once damage has already been done.

If integrity is rooted in everyday actions, then protecting it must also be a daily practice. That starts with awareness. Simple questions such as “Would I be comfortable explaining this later?” can act as effective safeguards to prevent gradual drift.

Speaking up early is equally important. Acting while issues are still easily addressable is far easier than trying to deal with entrenched behaviour and practices later. Encouraging staff to ask questions and engage in healthy debate can also counter the “Bystander Effect” before it becomes a problem.

Leaders and managers have a particularly strong influence. Their responses to minor issues send clear signals about what really matters. Creating a culture where staff feel afraid to raise breaches or incidents can undermine the most carefully curated mission statement about values and integrity, and instead encourage staff to hide, rather than learn from, mistakes.

For compliance professionals, focusing solely on major risks and headline breaches is not enough. Equal attention must be paid to the everyday behaviours that reveal the true health of an organisation’s culture: how mistakes are handled, and how concerns are received.

Integrity is rarely lost in dramatic moments. It is shaped, for better or worse, in the ordinary decisions people make each day. After all, as CS Lewis famously said, “Integrity is doing the right thing, even when no one is watching.”

TMGA Wealth Management Limited is an independent local Wealth Management business, delivering investment solutions to clients in a thoughtful and transparent way.

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