How to Cultivate a Culture of Ethics and Compliance

From Uber’s privacy intrusions to Wells Fargo’s fraudulent sales practices – misconducts seem to linger within every organization. Despite putting several policies and procedures in place, why do organizations continue to relapse into corporate wrongdoings? The answer lingers somewhere along the lines of having an almost non-existent or weak compliance culture.

Sure, no company is perfect and the possibility of an “ethical utopia” doesn’t seem anywhere in sight. However, a robust culture of ethics brings down the non-compliance risks to a minimum. In fact, organizations stand to glean countless benefits from it. For starters, it helps keep exorbitant legal cases at bay, creates a shield against any bad reputation that may spring out from media or social media, helps create a healthy work environment, and avoids heavy losses when employees leave an unethical workforce.

The Building Blocks of A Compliance Culture

The usual paraphernalia needed to build a solid corporate compliance program includes the Code of Conduct, Compliance training, an internal reporting system, and the due diligence process. While these are simply the tools that fuel the compliance culture, a company requires a troupe of several strategies to hold its ethical ground together. Here are the footsteps a company must engrave on its path to a lasting compliance culture:

Compliance Starts with Leadership

“The effectiveness of a compliance program requires a high-level commitment by company leadership to implement a culture of compliance from the middle and the top.” States the U.S. Department of Justice in its Evaluation of Corporate Compliance Programs.

Senior leaders are the flagbearers of a good compliance culture. They deploy the signals the middle management must follow in their routines. This in turn sets the compliance path straight for employees on the lower rungs of the corporate ladder.

Big or small – every act by a senior leader sets a strong example for the rest of the company. From firing the best-performing sales exec for misconduct to opting to fly coach for a business trip – every step a leader leaves a direct impact on how well the employees follow the company’s compliance standards.

Align Compliance with Risk Management

Many view risk and compliance differently and prefer to avoid teaming them up. Unfortunately, this can damage the company’s compliance culture down the line.

It’s critical for HR risk management departments to factor in the repercussions that may emerge from the risk of non-compliance. Similarly, the compliance department must navigate the scope of risk a company is willing to take to reach its strategic goals. While risk is all about uncertainty, compliance stresses more adherence. In other words, compliance is the anchor that keeps the ship of risk in control.

Not reporting suspicious transactions, cases of corporate espionage, or neglecting to run due diligence on new customers are a few of the common outcomes that emerge from the risk of non-compliance. If not addressed, it can crumble the overall compliance culture down the line. 

Implement Training Related to Compliance 

The kind of training an organization offers can make or break the compliance culture. The greatest challenge emerges when it comes to ensuring everyone “soaks in” the training. Dry lectures and lengthy handbooks do very little to help trainees retain what they learn.

For maximum effectiveness, it’s critical to make your training as interesting and engaging as possible. Help employees find a way to enjoy the training process instead of simply listening passively. Using creative and interesting activities such as short videos, games, or skits can help employees actively engage with the training – so they retain most of what they’ve learned.

Test the Effectiveness of Compliance Training

Regardless of how innovative a company’s training is, it’s critical to evaluate the results it brings to the table. After all, no company wants to pour its time and resources into something that fails to yield results. In other words, it makes no sense to offer training if the employees will end up damaging the compliance culture down the line.

Deploy regular employee assessment and policy reviews to gauge the outcome of the training. This will help you understand if the training is effective or if it needs a revamp for better results.

Incentivize Adherence to Compliance

Incentives are a great ingredient to ensure maximum adherence to compliance. From the “Employee of the Month” program to quarterly contests – companies deploy several incentives to help boost their employees’ productivity. The same strategy of incentives can be applied to encourage employees to adhere to compliance standards in everyday duties.

It’s critical to ensure that incentives are strictly in line with the company’s compliance standards. They can range from monetary benefits to culturally relevant rewards that leverage social esteem or proof.

Harness the Right Technology

Weaving a solid compliance culture takes hard work. Consistency is key to ensuring your compliance program remains in adherence. Maintaining consistency involves following specific patterns.

Using outdated approaches (such as spreadsheets) to track compliance can become overwhelming over time. This is where the need for compliance technology comes in. Compliance software can help HR teams effortlessly stay compliant with labor and employment laws.

Nominate the Right Person or Committee to Oversee the Process

To ensure maximum functionality of the entire compliance process, it’s critical to assign a person or a committee to keep track of everything. Typically, people from the HR department are the best choice for this role because they tend to know the employees better than others.

This step can be beneficial for both the employee and the company. When employees report an ethical issue, companies can make way for more incidents of ethical misconduct.

Many companies assign this responsibility to a professional third party to ensure complete anonymity.

To Sum Up

It takes small, consistent steps to cleanse a company of misconduct and prevent serious ethical lapses down the line. Organizations must craft efficient compliance systems that pave a smooth ethical path. In other words, companies should make it extremely easy for employees to “do the right thing”. This includes encouraging ethical behavior in day-day-day practices, well-researched and implemented foundational strategies and policies, careful investigation of every ethical hiccup, and thoughtful incentive programs to encourage a speak-up culture.

About Ady Wilson

Ady is entirely tech savvy with an obsession with technology matters. He loves to explain things about science & technology that focus on tomorrow's world.

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