Putting Ethics Back Into Compliance (Part IV of IV)
My final posting on this week’s ethics series is a call to action for all compliance professionals. Every compliance officer should insist on and embrace a title – “Chief Ethics and Compliance Officer.” Some larger organizations have a separate ethics officer, and I am not suggesting to merge the positions. Every company should have a chief ethics officer, either as a separate function or as part of the compliance function. In mid-size and smaller organizations, the chief compliance officer should be responsible as the chief ethics and compliance officer for both the company’s ethical culture and compliance with the law and the code of conduct.
Compliance is much more than just compliance with the law and the company’s code of conduct. A company has to define, maintain and promote its ethical culture. And a chief compliance officer has to recognize the importance of the company’s ethical culture. As I often say, an ethical culture is the most effective control that a company can implement.
CCOs have to avoid a narrow focus on the intricacies of compliance controls to the detriment of the company’s culture. A company’s culture is reflected in its controls and overall compliance with the law and code of conduct. Too often, chief compliance officers carry ethics around as an afterthought to the company’s compliance program. The legal intricacies and day-to-day management of compliance controls can be overwhelming when you consider the scale and monitoring, oversight, review and continuous improvement responsibilities.
If you assume that the company’s ethical culture is a valuable intangible assets and an effective compliance control, it is easy to conclude that CCOs need to refocus their efforts and attend to the company’s culture.
To do so, CCOs have to assume responsibility for the company’s culture, assuming the company already has defined its values and principles. A values statement is essential, and must be concise and to the point.
A company’s culture, once defined, has to be communicated and embedded in the workforce. On a number of occasions, I have observed employees who ask a very specific question – how does the company’s ethical culture and values apply to my job? CCOs have to anticipate this question and address the meaning of the company’s values mission in real and concrete terms.
This is when the CEO and senior management have to communicate in words and in conduct how they live by the company’s values, as reflected in the values statement and the company’s code of conduct. Without this support and effort, the company’s attempt to embed its culture will fail.
To reinforce this message, the CCO has to conduct training on the company’s culture as part of the code of conduct training, provide concrete examples tailored to the specific audience, and make sure managers and supervisors repeat the message.
One of the more important strategies a CCO has to use to train and enlist the support of managers and supervisors to promote, reinforce and communicate brief daily ethics messages to immediate employees. These ethics reminders are critical. This is ethics on the frontlines and in the trenches, where it counts.
A CCO has to measure and monitor the company’s
culture by partnering with human resources. Periodic measurements of discrete functions, divisions, product lines, geographic units should be conducted on a rotating and rolling basis so that the CCO and HR can collect data on whether the company’s culture is being embraced, how to fine tune its operations and whether remediation may be required. Focus groups and targeted interviews provide additional data points.
With this active culture program, CCOs have an obligation to educate and report to the board, the CEO and management on the company’s culture. If necessary, additional efforts may be needed to address specific deficiencies in the company’s culture.
There is much more to this effort that has to be done but these are just some of the basic requirements for defining and maintaining an active culture compliance program. Companies have developed creative strategies and maximize opportunities to reinforce culture messaging and conduct – it is the lifeblood of every company, and should be part of every CCO’s lifeblood.