Tales from the CryptNote-I asked the Two Tough Cookies if they could put together a series of blog posts wrapping up the lessons they have seen and learned and written about in their series of Tales from the Crypt. They graciously put together a series of posts on the seven elements of an effective compliance program from their 10 tales of Business Conduct. Today, Part III of a Three Part Series…

Wrapping it all Up

So, now you’re ready to start your culture audit… Some key questions you want to ask before you start are:

  1. Do I have the support of Executive leadership? If not, go back to your E&C steering committee and work through the objections there first. It should be comprised of empowered executives who can understand the value of what you propose, and give you insight how to get buy-in across the organization. Give yourself MONTHS to get this accomplished, if not years. If they don’t understand the value of what you do, it will take a lot of mini-meetings to get your point across. If you don’t have an E&C steering committee, start by forming one, and include your CEO, CFO, GC, CHRO, IA, and top business line leaders. Also include global representatives if you have a global footprint. If you have an executive management council, they should be on your E&C steering committee, because they are the decision-makers. Be careful not to have overwhelming representation on the administrative side. And make sure the CEO has representation – if he or she doesn’t have time to manage for integrity, then you need to go elsewhere.
  2. Have you clearly articulated the ethical standards of your organization and the procedures to follow in order to meet those standards? If not, or if you’re not sure, start with a small sample survey of some key expectations and do a small focused study on what critical pieces are missing, and work to fix it. That’s your baseline, and you will then have metrics to measure against when you really start to change things for the better!
  3. What are the operational values – the values that define “how things really work around here”?

Your continuum looks like this depending on your ethical climate:

Aethical

Compliance

Emerging Ethical

Integrity

Ego/Profit

Rules Based

Rules Plus Values

Principled Performance

Organizations that are Compliance-oriented typically

  • Have a goal to prevent, detect, and punish legal violations
  • Channel behavior in lawful directions
  • Underlying model is deterrence theory
  • People are rational maximizers of self-interest, responsive to personal costs and benefits of their choices
  • May be seen as a rule-book, a constraint (especially if overemphasis on punishment)

Organizations that operate with Principled Performance (High-Integrity) typically

  • Combine a concern for law with emphasis on managerial responsibility
  • Define companies’ guiding values, aspirations and patterns of thought and conduct
  • Focus on Accountability, leveraging self-governance in accordance with a set of guiding principles and encouraging independence of thought with an introspective view on personal accountability. Each employee = Ethics Officer

Successful integration of Integrity in your organization is hard work. It takes guiding values and commitments that make sense and are clearly communicated. Company leaders are personally committed, creditable, and willing to take action on the values they adopt. The adopted values are integrated into the normal channels of management decision making and are reflected in the organization’s critical activities. It’s not enough to start every meeting talking about integrity, it has to be woven into every word and action of the leadership team, and done so authentically. The company’s systems and structures have to support and reinforce its values. Managers must be developed to ensure they have the skills, knowledge, and competencies needed to make ethically sound decisions, and resources must be made available on a non-discretionary basis to enhance those skills, knowledge and competencies. Continuing effort, investment, and integration is needed. Close enough is not good enough, and the work is never done.

Sample Gap Analysis of Culture

Crawl

Walk

Run!

Organization Type

Aethical

Compliance

Emerging Ethical

Integrity

Work Climate Type

Instrumental, Rules & Procedures

Rules & Procedures, Law & Professional Codes

Law & Professional Codes, Caring

Independence

Policy Type

None

Code of Conduct

Code of Practice

Code of Ethics

Policy Control

None

Use of rules

Seek advice, Act then disclose

Use of guiding principles

Training Type

None

Orientation, General courses

Seminars, Courses for some managers

Courses for most employees, Personal interviews

Training approaches

None or General Info

Rules and guidelines, Lectures

Decision-making frameworks, Case studies

Cognitive approaches, Exemplary modeling

Top management commitment

None

Formal communications of legal aspects

Some informal and formal means of communication

Various informal and formal mechanisms, partnering

Communication

None

Orientation, one-time distribution, annual review

Periodic distribution, Input into review

Frequent distribution, Two-way communication

Enforcement Officer

No one, Unimportant role

Legal or HR Dept, Compliance Officer

Sr. mgmt. committee, Ethics Officer, Supervisors

Each employee, High-ranking employee(s)

Sanctions

Ignored

Arbitrarily enforced

Semi-consistently enforced

Consistently enforced

Rewards

Keep job

One-time story, award

Special recognition

Publicity, bonuses

Help/hot lines

None

800 number, limited hours

Third-party staff, feedback

Follow-up, regular reports

Performance appraisal systems

None

Idea or suggestion only

High-level managers only, Affects pay or bonuses

All employees, affects pay, Affects promotions

Many thanks to the Two Tough Cookies for this great series!

 

Topics:  Audits, Best Management Practices, C-Suite Executives, Chief Compliance Officers, Compliance Commitees, Corporate Culture, Corporate Social Responsibility, Employment Policies, Ethics, Policies and Procedures

Published In: General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox | Attorney Advertising

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