Featured Author: Matt Kelly, CEO, Radical Compliance
Ethics and compliance officers might often feel like your company’s corporate culture gets tied into knots, with so many groups imposing demands on your organization’s behavior.
But really, a better turn of phrase here might be to call that tension a tug of war.
Uber’s predicament demonstrates just how messy the lines now are between corporate culture and reputation
One case in point is Uber, which just saw CEO Travis Kalanick resign from the President’s economic advisory council. Why? Because too many people—Uber customers and employees alike—believed that Kalanick’s participation on the council was a tacit endorsement of the new administration’s executive order to curb immigration from seven Muslim countries. They mounted a social media campaign, #DeleteUber, which prompted 200,000 people to cancel their accounts.
Those critics have arguments that shouldn’t be dismissed. But so do the people who support Kalanick’s original stance, that like it or not, executives may be better served by working with a president rather than standing apart from him.
Uber’s predicament demonstrates just how messy the lines now are between corporate culture and reputation, and how easily other stakeholders can barge into a CEO’s plans and clamor for a different course of action. A company’s reputation is the door those stakeholders use to get in.
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Stuck in the middle is the ethics and compliance officer, trying to nurture a strong culture that can withstand all those pressures—including ones trying to pull corporate behavior in opposite directions.
Culture and Reputation: Two Sides of the Same Coin
Let’s start with the basics. Reputation comes from what people outside your company believe about your company’s behavior. Sometimes what they believe is accurate; other times it isn’t. Culture is how people inside your company believe your company behaves and works to reaffirm those beliefs. Sometimes that response strengthens a winning culture; other times it undermines it.
More types of conduct can become a threat to your company’s reputation, and it could become a threat more quickly
The problem for corporations is twofold. First, in our hyper-transparent world, outsiders can see more of what transpires within a company’s extended enterprise. Second, in our social media-saturated world, judgments and perceptions about those corporate behaviors can take root much more quickly.
Together, those two points create quite the cauldron of reputational risk. More types of conduct can become a threat to your company’s reputation, and it could become a threat more quickly. It could even become a threat instantly; that is, by the time executives realize the company’s reputation might be in jeopardy, its reputation is already under siege.
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In the modern world, those stakeholders can form alliances more quickly—including alliances between stakeholders inside and outside the business—to pressure corporate conduct
The problem is even more acute for technology and services companies, whose success depends on well-educated employees invested in their company’s culture. If your company’s business model is predicated on keeping those employees around, your corporate culture must anticipate their expectations of what “good conduct” is.
That point bears repeating. Every company has multiple stakeholders that it cannot avoid, regardless of whether it wants those groups or not. In the modern world, those stakeholders can form alliances more quickly—including alliances between stakeholders inside and outside the business—to pressure corporate conduct.
And because reputational risk is now so fraught, companies can’t easily wage rear-guard actions to salvage a damaged brand. The smarter move, by far, is to ensure that corporate conduct doesn’t harm reputation in the first place.
Enter Political Risk
Ensuring that corporate conduct doesn’t harm reputational risk is incredibly difficult to do in our highly polarized society. As shown by the Uber controversy, we’ve entered an era of dramatically increased political risk at an intensity which many companies (and compliance officers) haven’t had to deal with before.
Traditional approaches to ethics and compliance won’t work well here. You cannot issue a policy for all employees to have uniform political beliefs. A company can’t certify that its reputation is strong. Trust in an organization cannot be downloaded from the cloud and implemented via software update.
Trust in an organization cannot be downloaded from the cloud and implemented via software update.
But clear communication from senior managers will be indispensable. Every compliance officer knows that when employees or customers start saying, “That’s not what this company is about!”—something is deeply amiss between corporate culture and actions; those two things are out of alignment.
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It’s not up to corporate ethics and compliance officers to make judgments about which political views the company will support, or what the company will consider morally right. Ultimately that responsibility lies with the board and the CEO.
But compliance officers now should be part of those conversations, since the implications can affect corporate culture and performance so profoundly—and upholding a strong culture is the compliance officer’s job. The compliance officer is well-positioned to be a conduit between senior executives who try to steer the culture, and employees who live the culture.
Will clear, frequent communication like that inoculate your company from political and reputation risk? Probably not. But it will make your corporate culture into something more healthy and hardy, and in these volatile times, your company is going to need it.
Talk to an Expert: Connect with a member of our Advisory Services team to get a professional consultation on your company culture.