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Touting Corporate Culture to Excuse a Commitment to Compliance

There is no question that corporate leaders, senior executives, legal and compliance staff, and internal auditors recognize the value of an ethical corporate culture.  It is the latest “fad” in corporate governance, and it is a welcome development.  I have written extensively on this important trend and the value of a company’s culture of ethics and compliance.

CEOs and corporate executives, however, have embraced this important objective.  But there are some CEOs and senior executives who may be embracing or spouting a commitment to a company’s culture without follow through and meaningful allocation of resources and strategies. 

If you ask every senior executive to assess their company’s culture, they will invariably respond with positive comments and assessments.  Some CEOs and senior executives are being honest, some do not really know the answer, and some are spouting hopeful comments in a meaningless collection of words.  CEOs and senior executives know the words they have to say but they do not know (and sometimes do not care) to make sure that a company really does maintain a culture of ethics.

The Justice Department and compliance professionals know that a company’s culture requires action not just words.  Some CEOs and senior executives are unwilling to dedicate time and effort to design, implement, monitor and measure a company’s culture.

Recently, some CEOs and senior executives are relying on positive messages of corporate culture to avoid responsibility for nuts-and-bolts compliance strategies.  Some CEOs and senior executives proffer a company’s culture as a means to avoid allocating money and people to advance a corporate compliance program.  It is a false dichotomy – a company’s culture depends on effective compliance controls and vice versa.  One cannot live without the other. 

A company that touts its culture of ethics without maintaining effective compliance programs, policies and controls will inevitably suffer harm.  A reasonable assessment of such a program will focus on the lack of controls, gaps in policies and procedures, and inadequate resources.  This is a recipe for disaster.

Corporate leaders often embrace a company’s culture as a “feel good” and positive message for employees, shareholders and stakeholders.  Unless these leaders commit to follow through with a real and tangible commitment to measuring and monitoring a company’s culture and its complement of corporate compliance controls, the senior leaders are doing little more than offering words to surround what is otherwise a “paper compliance program.”

I know this sounds pessimistic and cynical, but a realistic assessment of corporate  leadership is critical.  CCOs have to maintain objectivity and avoid being convinced or sold on whether senior leaders are really committed to an ethical culture and compliance. 

A compliance program depends on real and tangible commitment thru appropriate levels of authority, communications, resources, and controls.  Words alone mean little and CCOs should not fall for corporate leaders who spout the importance of ethical culture.  Instead, CCOs have to demand real and tangible commitment, backed by independence, authority and resources.

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