Character Reputation of Senior Leaders Is Foundation of Compliance ROI

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There is a rise in organizations looking to character as the means to elevate their current compliance and risk initiatives. In powerful 2015 research published with Harvard Business Review Press (Return on Character: The Real Reason Leaders and Their Companies Win, Kiel), the collective Character Reputation of a leadership team has a unique, significant and predictable relationship with corporate risk, profitability and employee engagement.

Character reputation of a collective leadership team is now known to be one of the strongest leadership attributes in terms of impacting overall success of an organization. 

Character reputation of a collective leadership team is now known to be one of the strongest leadership attributes in terms of impacting overall success of an organization. Compared to organizations whose senior leaders have a self-focused reputation at least 50 percent of the time with their workforce, teams with a strong character reputation find notably less risk – not to mention, ~5x greater ROA and 26+ percent employee engagement. 

In light of this compelling evidence, leading-edge compliance and ethics programs are moving away from a focus on the individual and are beginning to think in terms of teams. A close look at the 28 leadership character habits with the strongest correlation to business results reveals there is always one character habit that is dragging them down the most. This habit could be anything from having a leadership team with a reputation for telling the truth only 50 percent of the time, to a leadership team who does a poor job of publicly admitting personal mistakes and failures. This sort of internal leadership reputation promotes environments where cover-ups and skirting corners are unintentionally encouraged, even with the best risk management systems in place.


Read More: Character from the Top: An Interview with Fred Kiel


It is the collective Character Reputation that matters at the bottom line

Most leaders, approximately 7 in 10, are only able to tell you their intent around acting with character. Assessments that rely solely on self-analysis, team and/or peer feedback are not reliable nor predictive when it comes to identifying which leadership behavior is creating a significant risk in the culture. However, when you ask a random sample of employees to rate the Character Reputation of a collective leadership team, you can start to identify where good intentions have fallen short. Also, it’s important to note that employees will always hold a collective leadership team’s Character Reputation to a higher standard than any one person on the team. It is the collective Character Reputation that matters at the bottom line.

The good news here is that with the right process and support in place, risk and ethics and compliance leaders can be successful at changing the collective leadership Character Reputation within their organization – especially if they know which specific habit is most strongly correlated with both their unique risk environment and bottom line.

Read More: Directors Need to Step Outside the Boardroom on the Issue of Sexual Harassment


Amy Swenson, EVP & Leadership Character Strategist, KRW International, Inc. swenson@krw-intl.com KRW International, Inc. is the firm behind Moral Intelligence (Financial Times Press, 2011) and Return on Character (Harvard Business Review Press ,2015).


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