Culture of Compliance: A Low-Cost Compliance Strategy
Do the right thing. It will gratify some people and astonish the rest – Mark Twain
Mark Twain would have been a terrific chief compliance officer. His words would have inspired people, and for those that obstruct rational decision-making, his words would have cut them into shreds.
We always hear about the cost of a compliance program, and the lack of resources available for the compliance function. We know that such limited thinking ignores the positive financial benefits to a company with an ethical culture. In addition, we know that an effective ethics and compliance program is an important protection against enforcement harm and collateral damage.
When it comes to compliance strategies, the compliance profession is quickly embracing one significant, low-cost tool – a culture of compliance. It is somewhat simplistic to characterize a culture of compliance as “low-cost.”
A culture of compliance requires discipline and dedication. It starts with the Board of Directors and the CEO, is pushed by the CCO, and then is carried out by every officer, supervisor and employee. It becomes a part of a company’s fabric.
When viewed this way, the cost of communicating and instilling a culture, requires frequent communications – speeches, company messages, promotional materials and other creative techniques. Talk is cheap and so is a board member or CEO who can dedicate time to express the importance of a culture of compliance.
Making sure that the message flows down in the organization requires resources to promote a message beyond just spoken words. Corporate messaging techniques, like public relations strategies, have to be used to spread the word and make sure that managers and employees understand the message.
When assessing the real cost of a culture of compliance, the most significant costs are “opportunity” costs – meaning that the time devoted to expressing and promoting a culture of compliance is time taken away from direct bottom-line business activity. Such opportunity costs are very low, especially when compared to the palpable benefits of a culture of compliance.
The old way of thinking about compliance focused on an outmoded analysis – time spent on compliance meant lower revenues and profits. That limited perspective has been discredited, and with time, should completely be thrown into the ash heap of discredited arguments.
With new and innovative approaches to compliance being developed and implemented, old ways of thinking have to be abandoned. Creative approaches to spreading a message of ethics and compliance are now the norm in the compliance world.
CEOs who recognize the changing compliance landscape are embracing a culture of compliance. The cost of a culture is small – every company’s budget can accommodate a disciplined approach to a culture of compliance.
For small and mid-sized companies, a culture of compliance can be the most effective strategy for minimizing risks. CCOs need to put this strategy at the top of their “To-Do List.” CEOs need to support CCOs in this effort.