The most permanent lessons in morals are those which come, not of book teaching, but of experience — Mark Twain

The most effective ethics and compliance program starts with a CEO.  But that is not the end of the story.  Life is easier with a CEO who understands the importance of ethics and compliance, promotes it as a financial driver for profitability and sustainability, and protects a company’s ethical reputation.

Some CEOs are committed to this; some are not.  Successful CEOs share a number of common traits.  CEOs committed to ethics and compliance are not guaranteed financial success.  Ethical CEOs can fail, and many times do.  But one thing is for sure – an ethical CEO will never fail because of a compliance issue.  You will never see a systemic breakdown in an ethics and compliance program in a company where the CEO is committed to ethics and compliance.

Corporate boards need to pay greater attention to ethics and compliance when selecting a new CEO.  How do you find such a CEO?  How do you measure whether a candidate is committed to ethics and compliance?

As always, Mark Twain said it correctly – the best lessons in ethics and compliance come from experience.  In other words, the best predictor of a CEO’s commitment to ethics and compliance is the candidate’s prior experience.

Life experiences provide important insights into a person’s character.  They are important not just to make a value judgment as to the person’s behavior and handling of a specific issue but to examine how that experience molded the CEO’s thinking, problem solving and approach to interpersonal strategies.

There are certain traits indicative of a leader who is committed to ethics and compliance.  Some are very basic (some might say obvious): courage, generosity, modesty, fairness, justice, and self control.

But there needs to be more to the person – an ethical leader is someone who is altruistic and committed to promoting the best interests of others, while willing to sacrifice their own best interests.  Another way of saying this – an ethical CEO is someone who is hardwired to create the greatest good for the greatest number of people.

Ethical CEOs have a strong orientation towards their employees, and most especially their senior management team.  The CEO can inspire the senior management team to follow his or her lead – this has a dramatic cascading impact on an organization.

One clear indication of a strong and ethical CEO is when senior managers, and even middle managers repeat catch phrases expressed by the CEO.  Managers and employees are no different than the public – we all respond to, and embrace, strong leaders who promote what we believe are the common interests.

Intra-company psychology and motivations are no different.  Managers and employees want to believe in their CEO.  Ethical leaders carry a powerful message – they are attentive to their managers and employees, and try to address their concerns.

Ethical CEOs lead by example, more than just words, and they respond to cues from their managers and employees.  They are sensitive while being strong and they demonstrate their commitment to ethics and compliance in their activities, leadership style, and priorities set in the company.