The Tangible Benefits of a Positive Ethical Culture

We all enjoy citing Supreme Court Justice Potter Stewart’s famous description relating to obscene materials, “I know it when I see it.”

To apply this maxim in the corporate compliance field does not take much imagination.  Let’s start with the most important corporate control for any organization – its culture?

How do we define a positive culture of ethics and compliance?  We can throw out a number of general terms filled with phrases and buzzwords, but in the end the best way to define it is to see it and “feel” it.  What do I mean by that?

If you work at a company with a positive ethical culture, you will readily agree with my point.  You already know what a positive ethical culture looks like, what it is like to work at such a company, and the importance of such a culture. Once you experience it, you can never go back to working at a company that lacks a positive culture.

In my work with corporate clients, I have had the benefit of seeing and experiencing a positive corporate culture of ethics and compliance.  In many cases, I leave the company after an engagement with a feeling of pride and honor to have been a participant, albeit for a brief period of time, in such a culture.

As I try to explain to others, a positive ethical culture is tangible, you can feel it, you can touch it and you can experience it in every interaction with corporate leaders, managers and employees.  I am not losing my mind here, or falling into a delusional state.  A positive ethical culture is a beautiful thing and should be at the top of everyone’s list in terms of priorities.

I have spent much of my career advocating for organizations to dedicate time and resources to preserving and promoting their respective culture of compliance and ethics.  I have cited economic arguments – ethical companies over the long run are more profitable and likely to achieve sustainable growth.  This argument is simple and follows from intuition – employees at ethical companies are more satisfied, turnover rates are low, productivity increases, and misconduct declines significantly.  All of these factors, when combined, improve a company’s performance.  Hopefully, everyone understands this relatively straightforward chain to thinking.

Of course, there needs to be more research and intellectual rigor around these ideas but it appears fairly obvious to me.  Compliance officers have to integrate this important idea into their work – they have to prioritize the company’s culture and avoid getting lost in the minutiae of controls and “small” issues.  It is easy to lose focus and harder to know how to balance between important objectives that advance the ethics and culture of a company, and its compliance controls.

I fully acknowledge that a company’s culture and compliance with its controls are mutually reinforcing.  However, one area should not be ignored in balancing the two important functions of ethics and compliance programs.  I have seen examples of out-of-balance focus – a CCO who is lost in the design and enforcement of compliance controls, and a CCO who is out of kilter the other way, spending all of his or her time advancing the company’s culture, putting together communications strategies and awards programs, to the detriment of the company’s policies and procedures.

It is a delicate balance but one that requires CCOs to devote adequate time and resources to advancing the company’s culture.  Such a priority may not be as “tangible” or rewarding as overall compliance with policies and procedures, but it is worth it in the end – there is nothing like working at a company with a positive ethical culture – CCOs know when they have it and they know when they do not.

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1 Response

  1. Jasper Edrich says:

    Compiance is “hard stuff”: non-negotiable compulsory compliance with and to legislatiive and regulatory and industry and contractual and and environmental and community and health and safety and watchhdog/ activists and professional relevant noms and standards. This includes compliance with what each formally identified stakeholder ( e.g. customer, supplier, banker, union, shareholder, investor, financier, stock exchange, et al . . . does or should be complying to and with. It includes how this is achieved and how the subject entity and each of its servants is societally expected to do it. My entity would have within its codes, polcies, procedures, rules, etc., a measurable and monitored expection of exceeding requirements and achieving public recognition as an expert, leader and example of practising excellent compliance and respect for influencing and advocating what is and should be complied with. Etc. . . .
    The CCO looks after that lot, and has no specific responsibilities for ethics and governance function. How that compliance is achieved in terms of spirit, willingness, roles and responsibilities, integrity, resources, “culture”, enthusiasm, motivation, behaviour, org structure, oversight, etc. is other functions’ and disciplines’ job – e.g. CEO, board, ethics, corporate services, HR, legal, internal audit, each line manager, and so on.
    That approch would remove all the tightrope walkers, don’t you think?
    Best, Jasper.

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