CCO’s and Delusions About a Company’s Ethical Culture
It is easy to say something and convince yourself it is true. As George Costanza advised Jerry Seinfeld when Jerry had to take a polygraph examination when he failed to admit that he watched “Melrose Place,” “Remember Jerry. It’s not a lie, if you believe it.” See Video Here.
This statement from this Seinfeld episode (Season 6, Episode 16) reminds me of compliance professionals who routinely inform me that their company has an “ethical culture,” and cite isolated statements of support made by the CEO to support their claim. My reaction to such a statement varies – sometimes their statement is confirmed by my evaluation of the company’s program, but often the statement rings hollow.
Compliance officers sometime confuse their role in a company between cheerleader and an objective analyst. In some cases, the compliance officer’s personal belief is used to motivate (or convince) the compliance officer (or his or her staff) of his or her mission at the company – to instill a culture of ethics and compliance. Sometimes a compliance officer comes across as “needing” to believe in the company’s culture of ethics as a requirement.
Compliance officers’ need to assess honestly their company’s ethical culture. I suspect that most will find their company’s culture is deficient. I am not trying to launch a vitriolic complaint against CCOs. But, I am reminding CCOs that an objective assessment of this issue is a basic prerequisite for a CCO to implement an effective ethics and compliance program.
A CCO that reflects this common scenario of unjustified belief reflects a significant weakness in a corporate compliance program. The CCO’s belief often is based on misunderstanding (conscious or unconscious) in the board and/or CEO’s commitment to a culture of ethics. A CCO cannot drink the kool-aid; instead, the CCO has to focus on solutions to the problem.
A CCO has to start with one basic principle – a company’s culture of ethics requires work, not just by the CCO, but by the board and the C-Suite. If the board and the C-Suite are not committed, the CCO has to retreat and begin to educate the board and C-Suite on the importance of a culture of ethics.
A CCO’s education program has to emphasize and demonstrate to the board and the C-Suite the tangible benefits from a culture of ethics — increased profits, sustainable growth and improved employee morale and productivity. While obvious to many, the CCO has to devote time to education on this important issue.
A CCO’s work is not finished there. It is just beginning. Perhaps the most difficult task is the dissemination of ethical principles to the company’s business managers. To accomplish this task requires more than just indoctrinating the board and the C-Suite. The CCO has to ensure that business managers devote time and attention to building a culture of ethics in its employees.
To do so, business managers themselves must embrace this message and then convince their employees that the company is committed to its ethical culture through ethical business decisions and maintenance of important support functions such as speak up and hotline systems, prompt investigation and discipline of infractions, incentives to reward ethical business conduct and commitment by conduct of board and C-Suite executives.
Once instilled, a company’s culture of ethics requires ongoing monitoring through targeted surveys, focus groups, and remediation in business operations to ensure ethically-based operations. A CCO’s work in this area is never done but provides important bottom-line benefits – a company’s ethical culture is the most effective compliance control in an organization. An ethical culture creates a solid foundation on which to build compliance controls to mitigate risk and promote ethical conduct.