Balancing Perception-Based Cultures with Fact-Based Compliance

Anna Romberg

Business is all about KPIs, metrics, targets and measuring progress, and we have to speak the same language to ensure that ethics and compliance is operationalised and not a side business.

After my session at the 2019 Ethics & Compliance Virtual Conference, ”Driving Lasting Impact for Compliance Investment,” I got a few thought provoking questions on balancing facts and perceptions. Those who listened to my session know that I am a firm believer that facts speak louder than feelings, and that we in ethics and compliance have to be able to substantiate our work and impact in concrete, factual terms. Business is all about KPIs, metrics, targets and measuring progress, and we have to speak the same language to ensure that ethics and compliance is operationalised and not a side business.

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One attendee asked this highly relevant question regarding whether facts actually matter today as "perception is reality"? I agree that perceptions form a basis for how we act and make decisions within organisations. However, I do think it is vital that we in ethics and compliance strive to be objective and consistent. We should establish routines and governance around ensuring that we give a truthful view of “the state of the business” to the board and management. And this view should be based on facts, not perceptions. Coming from a Northern European context, I am used to the board and management perception that “we do not have an issue, because we have trusted employees and we are different from the scandal-ridden companies portrayed in the media.”

As an ethics and compliance officer, you must make the real risk concrete and tangible to ensure that the compliance program is adequately designed and staffed. If a compliance program is based on perceived risk and perceived levels of behaviour within the organisation, the program will not be adequate. A trust and perception-based compliance program will not be adequate; we have to ensure that we base our work on facts and reality. Otherwise, regulators may eventually step in and ensure that a thorough reality check is done.

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We can’t forget the context, situational pressures, and cultural drivers at play.

Another question that I got was whether we actually can change behaviour? This is a great question, and unfortunately my answer will only be able to scratch the surface. As we all know, changing behaviour is a complex thing; on a personal level, we struggle to establish good routines, eat healthy, exercise and sleep well. We know that changing a habit requires persistent and deliberate action. It will not happen by itself. But sometimes (oftentimes) I think we forget this when we talk about corporate conduct and employee behaviour. It is not as easy as putting three new values on the wall and speak about “doing the right thing.” We can’t forget the context, situational pressures, and cultural drivers at play.

Focus on the Systems

I view one of the main tasks of ethics and compliance to be influencing the organisational context by situational and cultural awareness, and in this way we can influence how employees, operating in the context, will behave. Sometimes, we focus too much on changing the individual behaviour (e.g., do not take the customer out for an expensive dinner, instead of focusing on why the employee is even inclined to take the customer out to a Michelin star restaurant.) Are the sales incentives skewed? Do we allow over-sized entertainment budgets and lax control of personal expenses? Or do we push the employees to work long hours so they feel “entitled” to some entertainment on the company's expense?

My short answer to this fundamental question is, yes, we can change behaviour. But in order to do so in an organisational context, we should not focus on the individual as such but more on the system in which the individual operates. 

Thanks to all who listened in and have provided encouraging feedback. Let’s continue the discussion!

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