While the “culture of compliance” concept has been around for more than a decade, compliance and ethics scandals continue to demonstrate that such cultures are still lacking in many organizations. And without organizational commitment to compliance, policies and procedures are merely documents.
Extreme examples, including Boeing’s epic compliance failures, demonstrate how a corrupt culture pervades an entire organization. Other incidents can be attributed to management, such as Samsung’s recent legal woes.
Sustained, programmatic attempts to build ethical workplaces can yield significant benefits.
Misconduct by individual employees is more difficult to analyze. Take for instance the sexual harassment case surrounding the (now former) Philadelphia Museum of Art Manager – or, for that matter, any number of the harassment scandals that have come to light in the #MeToo era. While one may be inclined to think of these as stories about single bad actors, they lay bare corporate failures to prevent, detect, and discipline at an institutional level.
If one rogue employee’s behavior can cause significant damage, a “culture of compliance” may seem unattainable. However, sustained programmatic attempts to build ethical workplaces are effective not only at curbing bad behavior; they can yield significant benefits as well. Former U.S. Department of Justice Compliance Counsel Hui Chen likens today’s focus on building ethical workplace cultures to previous generations’ worker safety movement, which resulted in both increased worker engagement and improved bottom lines. She predicts “The benefits a culture of safety achieved for the manufacturing sector 30 years ago are similar to what a culture of respect and dignity can achieve for all workplaces today.” So, businesses should do all they can to foster a culture that encourages compliance at every level and throughout the organization.
To build a foundation for a culture of compliance, look to the following tips:
- Start with leadership. As the current U.S. Department of Justice states in its Evaluation of Corporate Compliance Programs, “The effectiveness of a compliance program requires a high-level commitment by company leadership to implement a culture of compliance from the middle and the top.”
- Align compliance with enterprise risk management. The compliance program should address risks that arise in each strategic area.
- Train and test. Companies should invest in employee training that explains corporate policies, as well as what behaviors are prohibited. Training should be ongoing with regular policy review and employee assessment. Investing in an effective compliance program is not cheap, but it’s favorable to the unlimited costs of noncompliance.
- Incentivize ethical behavior by incorporating it into performance reviews. If compliance is tied to compensation, employees are much more likely to learn, adhere to and incorporate policies into everyday duties.
- Don’t ignore compliance mistakes. Mistakes that occur are often likely to occur again, so analyze the incident to help others avoid the same mistake. Be aware that a violation may be an indication that a policy needs to be modified. Furthermore, businesses should be willing to discipline employees who violate company policy, which provides further motivation to comply.
- Put effective technology in place. Spreadsheets can only go so far in tracking compliance before the struggle with scalability and reliability takes over. Compliance technology solutions can alleviate much of the burden of creating a program that is consistent and repeatable.
For more information, download our ebook Ten Steps to Create an Organizational Culture of Ethics, Integrity & Compliance. You can also read our use case on how to build a culture of ethics and respect, or view the 2019 ECVC session on creating a skill-based culture of compliance & respect.