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Diggin’ Your Company’s Culture

ccSome things are hard to define and measure in compliance. Culture is the prime example often cited by commentators. I do not share that opinion.

Whether it is quantified or not, there is one unmistakable truth – you know when you have a positive culture and you know (but often try to ignore) when your company has a poor culture.

When I work with companies to conduct a risk and compliance program assessment, I can quickly tell how effective the company’s culture is working. It is easy to make this determination. Once I reach that determination about tone-at-the-top, the only real question then is whether that tone has been effectively communicated throughout the organization and embedded in lower-level management and employees.

The future of the compliance profession will depend on how it addresses those issues that appear to be difficult or indefinable. The most critical area – I often repeat myself – is measuring and attending to your company’s culture.

The basic elements of an effective tone-at-the-top are well-known and often written about. They include:

Real CEO Commitment: Most companies are pushing their CEOs to commit to ethics and compliance by making personalized statements, sending out regular communications with the CEO’s name on it, and filming a video statement from the CEO about the importance of ethics and compliance.

Frankly, the above-list does not mean very much. It is a basic requirement, and it is present in most companies, with good or bad cultures. The rubber meets the road on the issue of whether the CEO personally embraces the importance of ethics and compliance, and actually believes in the values associated with an ethical culture. If he or she does believe in that culture, they will act consistent with that culture and they will make sure senior managers do so as well. That is the difference between a CEO committed to the idea and a CEO who gives lip service to the idea.cc2

One other telltale sign – if you have to give your CEO talking points or script him or her on the issue, you have an uphill climb. It is not part of the CEO’s fabric and their need for presentation crutches are a valid indicator that they do not see the value nor have they made it part of their personal fabric.

As Mel Brooks said in one of my favorite shows, Curb Your Enthusiasm – “You either got it or you ain’t.”

Senior Management Follow Through: Assuming your CEO is committed to ethics and compliance, the commitment and follow through of senior management typically occurs as a natural leadership modeling technique. Senior managers understand the importance of ethics and then they perform to meet the CEO’s expectations. When interviewing senior managers, it is easy to identify those senior managers who share the CEO’s vision – it is either in their blood and communicated, or it is expressed through disingenuous platitudes without any real substance.

Positive Incentives: The bar for effective ethics and compliance programs is always being raised. Best practices and benchmarking is the usual route for companies to begin improvising their ethics and compliance programs. Creating positive incentives for ethical performance is one of those areas where more companies are seeking to create positive messages around ethics and compliance.

An ethical company will have a number of strategies in this area, including: an ethics and compliance element to every employee’s evaluation; specific requirements for senior managers to complete ethics and compliance tasks or functions; internal communications promoting positive behaviors by specific managers and employees;  leadership training programs cc3that underscore the importance of ethical attributes; and bonuses and compensation raises specifically targeted to ethics and compliance tasks and measurement of such tasks.

Attention to Speak Up Culture: A company committed to an ethical culture pays substantial attention to its speak up culture and each of the interdependent parts of such a culture. A speak up culture is the life-engine of an effective ethics and compliance program. The company has to focus on each component of that speak up system – avenues for complaints, timely response to such complaints, effective internal investigations, consistent discipline, and protection of whistleblowers against retaliation.

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