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Ethics and Compliance as a “Marketing” Program

Right up front, I want to confess.  I am a lawyer, and I love being a lawyer.  So forgive me for this posting and perhaps my narrow-minded view but I have to take a moment to express some concerns about ethics and compliance.

I am continuing to hear CCOs, especially at global companies, who describe their ethics and compliance program as a “marketing” program or a “public relations” program.  In describing their programs, these CCOs carry with them a number of slick videos touting the company’s commitment to ethical principles, integrity and “feeling good” messages.

Perhaps today’s culture and communications are passing me by, or I am a little outdated, but I am not so sure that a positive message of ethics and integrity is all there is to an effective ethics and compliance program.  I understand the value of a brand, the importance of building commitment and the need to underscore a company’s ethical culture.  But slick feel good videos, while fun to watch, may not be as effective as CCOs think.

My legal-focused thinking may be getting the better of me, but I tend to see things a different way.  An effective ethics and compliance program depends on two core missions – a culture of ethics and compliance and a set of compliance controls that are designed to mitigate risks and prevent and detect potential violations.

In this mix, there definitely is room for – indeed even a critical role for – internal (and external) communications touting the company’s mission, its commitment to trust and integrity and building of employee support and adoption of this message.  The “feel good” videos have a place in a compliance program but describing  a compliance program as a “marketing” program or “public relations” campaign misses the point.  It is one aspect of a multi-faceted system.

In my view, an effective ethics and compliance program is a complex management system that incorporates a company’s culture and its controls.  Keep in mind, the ultimate purpose is to “prevent and detect” potential code or legal violations.  Certainly, promoting a culture of ethics is an important aspect of prevention.  Indeed, I have often stated that a company’s cultured is its most effective control, even better than the complex complement of 25 specific controls designed to prevent misconduct.  But there is culture and then there is culture.

A company’s mission statement is a valuable guidepost for everyone and can be an effective rallying cry.  Employees want to believe in their company and they want to believe that they are contributing to the company and overall society.  We can see how the public has been devoted to community service, public good, and helping others in need.  This is a great trend.  But I am not sure that the mission of a corporate ethics and compliance program can be defined through the communications of feel good videos touting the company’s commitment to trust and integrity.

There has to be a balance – CCO have to spend some time promoting a message of ethical principles and values.  In addition, CCOs have to attend to the efficacy of their controls, the company’s risk profile and the design of controls needed to mitigate the company’s risks.

CCOs have to avoid losing perspective – they cannot solely operate as legal technocrats to the exclusion of the company’s culture, and conversely, they cannot focus only on the company’s culture to the exclusion of its controls.  As I always say (and repeat myself), a company’s ethics and compliance program requires a careful balance between culture and controls.  These two functions reinforce each other and create a perpetual cycle of effectiveness.

In the end, there is a place for the slick videos and the feel good moments, but there also has to be a place for controls, accountability and enforcement.  These two categories of effort have to co-exist in a healthy balance.

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1 Response

  1. Dennis Myhre says:

    Mr. Volkov,

    Your comments relating to “an effective ethics and compliance program” plays a defining role in the success or failure of a company’s plan for avoiding corrupt practices, yet the first four paragraphs of your post focuses on apologizing for bringing this issue to the attention of your readers.

    The same mentality holds true for the typical CCO exposing corporate corruption to the Board of Directors. That same board, holding the ultimate responsibility for proper corporate governance, will also use an apologetic approach when presenting their concerns to corporate leaders. I am sure the Board of Directors at Wells Fargo had plenty of corporate compliance advice leading up to a Federal investigation, yet even today, the prevailing news is that the present CEO is failing to meet an expected corporate standard set by the Feds. I had my personal identity stolen by Wells Fargo long after the DOJ had initiated their investigation.

    Corporate Ethics and compliance failure is about control. Control by the corporate executives that fully understand the implications of their actions, but do it anyway. As lawyers and critics of such activities, you and I have no reason to use an apologetic approach in exposing this culture. I have never heard a CEO or CFO “apologize for stealing millions, if not billions, of dollars from unsuspecting clients. You have no reason to apologize for presenting the truth.