DEVELOPMENT OF A CULTURE OF

ETHICS & PROFESSIONALISM AT

BANK MORALE ISLAMIC
ETHICS & GOVERNANCE – MASTERS OF ISLAMIC FINANCE
PRACTICE

Mariyam Rafaa Abdul Latheef - 2100181

10th October 2021
INTRODUCTION
For this assignment, I will be drafting a report on the development of a culture of ethics and
professionalism at Bank Morale Islamic. In this report, I will be shedding some light on the
definition of compliance-based culture and value-based culture. Moreover, how to develop a
culture of professionalism and ethics which is practiced beyond compliance. In addition to that, I
will be highlighting how the culture of ethics and professionalism can be developed, managed,
sustained and the challenges involved in developing such a culture. Furthermore, will discuss about
the action plan which will ensure the successful transformation of the company’s culture.

Compliance-based culture
In the simplest term, compliance is the act of complying with a domineering standard which can
be a requirement which is obligatory if its law and legal standard. Or it can be a requirement which
is normative based on standards of the society, culture or based on contractual. According to the
author of ‘On how to understand and acknowledge risk’ compliance is the steps taken to or
followed to reach a number of requirements and procedures & guidelines which can be defined
internally or externally. (Aven, 2015) In an organization, the compliance behavior is regularized
and regulated by the protocols, policies, guidelines and job descriptions. A company which
practices a compliance culture will have a compliance which is central and irreversible and
integrated in the corporate culture. What determines the strength of the compliance culture is the
presence of ethics in the different level of the company. (Culture of Compliance, n.d.)

Value-based culture
Value-based culture or otherwise known as integrity-based culture is based on self-policing and
motivation rather than practicing intimidation or force. (Contributor, 2020) Implementing an
integrity-based culture in an organization is a conscious approach which defines what practicing
moral is rather than accepting and practicing values which are written in the standards of
procedures of an organization. In a value-based culture, self-governance is practiced based on the
standards of the organization.

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SUBJECT MATTER OF ORGANIZATIONAL CULTURE
Organizational culture is a package which include a values, expectations and practices which helps
to guide all the members of a team. A dysfunctional culture will tend to bring out qualities of team
members that will have a negative effect on the performance of even the most successful
organizations. On the other hand, a good culture will lead to actions that will significantly increase
the performance of the organization. A good culture cannot be practiced by a set of rules written
on policies and procedures. It can only be practiced through consistent and authentic and ethical
behavior. A great organizational culture will have their company’s objectives and the well being
of the employees aligned. And a good culture will practice the appreciation of their team members’
contributions while having the utmost trust on their employees.

In order to create a great organizational culture, it is important to have a plan that executes clear
objectives. The first step in developing an organizational culture is recognizing the contribution of
the team members. And the most important part of recognition is that it must not be done once in
a blue moon. Rather, the team members must be appreciated for the contributions more frequently.
The next step is ensuring that the employees of the team are vocal, and their feedbacks are
accepted. The management can ensure that they are paying attention to subtle expressions of their
employees and coming up with more effective listening tools that allows the employees to open
more comfortably. Also, it is important that the management creating members who are
advocative. Furthermore, integrating and practicing the set values of the company in every aspect
of the business is important in creating a good organizational culture. And implementing a work
environment where the bond between the team members is strong will ensure in bringing the team
together and will promote communication. Also, in order to sustain a good organization culture, it
is important to provide learning opportunities for the staff through trainings, workshops and
coaching. And for further sustain good organizational culture, keep culture in mind from day one.
When hiring new staff, improvise questions that will help to understand the personality of the
interviewee to see whether he/she will be fit for the work culture.

If the three basic techniques; communication, recognition and action is kept in mind, it will help
to practice a god organization culture. (HEATHFIELD, 2021)

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CHALLENGES IN DEVELOPING VALUE-BASED CULTURE
Developing a new culture or transforming into a new culture can be very challenging to the leaders
of an organization, as culture of an organization can be all-encompassing concept. One of the main
reasons why it can be so challenging is due to the resistance to change. An organization
encompasses a lot of different mindsets and different attitudes, and all individuals tend to have
their own perspectives and opinions and tends to do things in their own way. Even if nothing is
wrong with the way of each and every individual’s thinking, sometimes having different beliefs
and working under different assumptions can be very challenging when trying to transform the
culture of the organization. As humans, when we practice certain things in a particular way for so
long it becomes the norm, and we humans become resistance to change. However, just because
something has been practiced for a long time does not mean that it is the most efficient or beneficial
way to carry out a task. One of the reasons why people are resistant to change is because they are
scared of the failures that might come with the change. One way to tackle the idea of resistance to
change is by creating an environment that believes and embraces ‘fail first mentality’. As leaders
of an organization, it is important to teach their employees that not all ideas can be successful. And
it is important to create an attitude in the work environment that all employees can learn from
failures.

Moreover, having a rigid organization structure in the bank can be one of the challenges in shifting
to a value-based culture. Organizations tend to be hierarchical specially in larger organizations
such as banks. Having a middle ground for hierarchy is important, however, if its practiced too
largely, it gives the idea that work of the employees are not appreciated leading to a decrease in
motivation.

Another reason why it can be challenging to develop a different culture is management team not
communicating the purpose of change with their employees. One way to overcome this challenge
is by making all the employees of the bank feel important at the work environment and explaining
to them that what they do has an impact in making a real difference and elucidating that change is
inevitable.

Therefore, educate the employees of Bank Morale that improving the culture of the bank is
everyone’s responsibility. Because the culture of the bank not only affects the employees and

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employers but the customers as well. And in order to provide an excellent service to the existing
and potential customers, creating better solutions and having new ideas is important. Even though,
all challenges faced in developing a value-based culture cannot be overcome, the bank can try to
tackle them systematically. (Myllylä, 2019)

RESOURCES REQUIRED FOR EXERCISE

In order to transform the bank’s culture into a value-based culture, it is important to check what
the underlying values and norms with in the bank are. Some of the strategic questions that the bank
should be asking are;

- Is the change that the bank is trying to implement is data-driven for the employees of the
bank?
- Since financial transparency is an important element in building a value-based culture in
bank, is the management ensuring that the new culture ensures financial transparency?

In order to develop a value-based culture, the importance of the participation of stakeholders,

shareholders and board of directors suggests to be intensive and extensive. And new forms of
control and the feedback of all the employees of the bank are necessary. And the role of
management in communicating the values for their staff is an important role in exercising the event
of shifting to a new culture since this exercise is leader-centered. Also, the management of the
bank should reflect a good image and perceptions, therefore, it is important to replace the
Management team with managers who practices to do so. Since one of the most important
personnel in this exercise is the management team of the bank, it is important to ensure that the
management team of the bank are good staff. And whether they have skillset in communicating
the values to be implemented, to their staff efficiently and whether they have the skillset in
integrating new values within the bank.

It is very difficult to change a culture of a bank within an overnight. Therefore, it is important to

communicate the change to the employee’s way before the beginning stage of implementation. A
value-based culture cannot be implemented by handing out a set of rules and regulations on a piece
of paper. Communication and practice are the key elements of value-based culture. Therefore, be

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vocal about the change and explain the change to all the employees and maximize their
participation in the change by accepting the feedbacks. It is important to carry out workshops and
training for the employers and employees as well by hiring experts in the field of transforming
work environment culture. Since the bank will have managers who are reluctant to change, it is
important to identify such personnel and change their mind. (Viinamäki, 2009)

STRATEGY & ACTION PLAN TO ENSURE SUCCESSFUL

TRANSFORMATION OF VALUE-BASED CULTURE
STEP 1: Gain Senior Management Commitment: In order to implement a successful
transformation of the company’s culture, the bank needs to get the board of directors and the senior
management of the bank on board. If the bank does not receive a full commitment of the board of
directors and the senior management, then the transformation of the culture will lead to a failure
initiatively and will not reach the intended goal of the transformation. Therefore, the first step of
the change is educating the Board of directors and the senior management of what value-based
culture is and the benefits of the culture. And also explaining that change does not happen
overnight and coming to terms with some failures in the beginning. A strong conviction and
captivating style of the senior management will ensure efficiency of the value-based culture. This
will result in an improved working capital management and a significant change in the sales team
negotiating style which will create a volume focus leading profitability account focus.

STEP 2: Developing a customized value-based culture framework: While customizing a value-

based culture framework, the important step is to let go off the accounting-based metrics and define
value-based measures. Value-based measures include, economic profit, as the key performance of
the bank. The main goal of it must be to improve economic profit long term because when the
bank starts to focus on long term rather than short-term, their actions will become more ethical and
socially responsible. And since improving the economic profit is the long-term goal of the bank,
it is important for the employees to understand how the economic profit is calculated and what are
the decisions they can make in order to increase the economic profit. Also, in order for the
employees to focus on the economic profit of the bank, they must be compensated for the
improvements of the economic profit. It is also important to encourage the employees to come up

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with new performance measures into planning and budgeting. Also, the bank needs to organize
initial training and communication steps to ensure that the employees are aware of the importance
of value-based culture. Hence, the bank will need to acquire materials that will carry out trainings
and materials that will help them to communicate the transformation. Hence, a plan needs to be
carried out and written, for the process of training and communication. The plan must include the
details of the initial training which will be conducted in a manner that provides opportunities for
the staff to come up with ideas, concepts and feedbacks that will help with the transformation.

STEP 3: Implementation of Value-based culture: It is important that the bank does not think value-
based culture is not just a project, but a way of life. Therefore, it needs to be integrated to the whole
bank, including everyday tasks even the simplest tasks. The bank must be ready to offer a
significant amount of the bank’s resources for this exercise since this will be the hardest part of
the exercise. (Chopp, 2002)

CONCLUSION
In conclusion, I would like to say that if the transformation is implemented correctly, a value-based
culture in the bank will significantly improve the performance of the bank. But the important point
to remember is that, the improvement in the performance will be seen in the long-term. Even
though, implementing a value-based culture is hard with full of challenges, if the steps are followed
in a responsible manner, it would have a positive impact on the bank as a whole, the shareholders,
board of directors, employees and the customers of the bank. It is important for the Board of
directors to understand that, they might not see the positive impact of implementing the value-
based culture during their tenure since it is a long process which may take years to see the
fruitfulness of it. So, it is important for the board of directors and management to have a good
intention and have the best interest of the Bank Morale in their heart in order to transform the
culture of the bank in the most effective way.

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REFERENCE

Aven, T. (2015). On how to understand and acknowledge risk. Reliability Engineering & System
Safety, Pages 42-47. Retrieved from [Link]
Chopp, S. (2002). Build a Culture of Value Creation. Graziadio Business Review.
Contributor, C. (2020, July 27). Explain Compliance Based Business Ethics. Retrieved from
CHRON: [Link]
[Link]
Culture of Compliance. (n.d.). Retrieved from GAN Integrity:
[Link]
HEATHFIELD, S. M. (2021, February 17). How to Build an Organization Based on Values.
Retrieved from Careers: [Link]
on-values-1919185
Myllylä, J. (2019, April 18). Common Challenges in Transforming Corporate Culture. Retrieved
from Management Club: [Link]
transforming-corporate-culture
Viinamäki, O.-P. (2009). Intra-organizational challenges of values-based leadership. Electronic
Journal of Business Ethics and Organization Studies.