Wake Up and Mind Your Culture — Practical Approaches to Managing a Company’s Culture

Ethical culture is the flavor of the year these days. We are seeing more postings and articles about the importance of ethical culture, and even pushing the idea of measuring and monitoring culture.

It was only seven years ago, 2010 to be exact, when the US Sentencing Commission added ethics to the applicable guideline defining compliance program requirements. We have definitely come very far in the last seven years.

An ethical culture takes work, and is not just a mish mosh of laudatory, feel good values and principles. I would argue that compliance officers have to be careful not to get lost in the feel good aspect of ethics, and remember the importance of applying practical measures to  promoting a company’s ethical values as an important guidepost for corporate conduct.

It is easy to get lost in the dizzying descriptions of “doing the right thing,” or “acting with trust and integrity.” A company’s culture is not a political message or a call to arms. To the contrary, a company’s culture is designed to promote several basic objectives: (1) to reduce employee misconduct; (2) to embed a speak up culture; (3) to improve employee performance and reduce employee turnover; (4) to enhance corporate sustainability and financial performance; and (5) to provide common principles for the company or organization to project to others in the community, government, business partners, vendors and suppliers.

My point is that compliance practitioners have to keep their eye on the ball and approach their company’s culture as an essential resource that needs to be carefully monitored and promoted. CCOs can design all the fancy controls and policies they can dream up, but without a culture of ethics and compliance, their efforts are likely to end up in an ash heap of broken and ignored policies.  This mission, however, is often confused with assembling and communicating a bunch of empty value phrases that have no practical application to employees’ work responsibilities and day-to-day conduct.  Therein lies the rub and the challenge.

A CCO has to devote time and attention to the company’s ethical culture. Such an efforts requires quarterly reports to senior management and the Audit/Compliance Committee on culture issues – measurements of geographic offices and divisions, focus group results, survey results, and other creative approaches to engaging the company’s culture.

For some reason, CCOs have satisfied their culture focus by relying on human resources to conduct an annual or bi-annual survey of all employees concerning culture questions. A company that conducts these cut and paste surveys is basically ignoring its culture.

CCOs have to take the lead in this area and push the board, senior management, human resources and managers and employees to engage on this critical issue. There are a number of creative strategies being employed in the compliance community and professionals need to share culture strategies with each other.

One simple requirement that a CCO can set for himself or herself is to report quarterly to the Audit/Compliance Committee on the company’s culture. In this way, the CCO will have to come up each quarter with a practical objective and result to report to the board. For example, the CCO may conduct a survey of a high-risk office, or even a part of an office. Each quarter could be used to focus and report on one culture objective.

CCOs have to start from the beginning – a code of conduct and statement of corporate values. Based on this foundation, a CCO has to adopt strategies and communications techniques to embed the company’s culture, relying on a mix of board and senior management conduct to highlight, middle manager training and talking points used to spread the culture message and principles, and monitoring and evaluation projects to pay consistent attention to the company’s culture.

CCOs have to approach a company’s culture just like any other control, recognizing that culture has a broad and significant impact on corporate conduct and financial performance. Many in a company may resist such attention to culture, but the CCO should continue to educate and enlist “believers” in the value of a company’s culture, and the substantial benefits from investing in culture promotion and management. 

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