This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.
Humans have an innate desire to complicate things. When it comes to ideas, professionals are no different; compliance consultants, lawyers, financial advisers and others enjoy solving complicated problems. Such an approach, however, does a disservice to clients and other professionals.
Creating complications is not a sign of professional talent; rather, an effective consultant, attorney or financial adviser should be able to take complex issues, simplify the analysis and develop practical solutions that engage the client audience.
When it comes to creating and maintaining an ethical corporate culture, the solutions are not hard to define. The difficulty usually arises from the lack of commitment or understanding by a CEO and senior leadership. A chief compliance officer has to educate a company’s board, CEO and senior leadership about the important benefits of corporate culture and their critical role in promoting a company’s ethical culture.
This is not rocket science, as I like to say, but it requires board members, CEOs and senior executives to understand how to accomplish this task. Some leaders are natural communicators in this area and do not need to be guided, nor given talking points or scripts. We like to say they “get it.” These leaders make CCOs (and everyone else) look good when they speak off the cuff about the importance of the company’s values and its commitment to trust and integrity.
We all know that the foundation of an ethical culture is built on two important words: trust and integrity. Employees understand these terms, and when surveyed, respond most strongly to these two terms as guideposts for assessing corporate behaviors and values.
A CCO who does not work with a “natural” CEO in this area has to bring them along by pinning these two words (figuratively, not literally) on a CEO and reminding the CEO at every step to speak about the importance of trust and integrity.
Trust is an important requirement for corporate leaders, managers and employees. When a company is built on trust, employees feel proud of their company, the people that work there and the work they do. It is easier to work hard and commit oneself to an organization built on trust among its employees.
A company also has to commit to operating with integrity. Everyone wants to believe in the positive attributes of the organization in which they work. Government employees believe in the public interest mission of the agency or department in which they work. Private sector employees feel the same way and expect their leaders, as well as their colleagues and immediate supervisors, to act with integrity. When an employee witnesses his or her immediate supervisor acting contrary to this value, the employee’s belief system is challenged. When an employee reads about senior leadership’s involvement in a corporate scandal, the employee’s belief in the company’s integrity drops.
A company’s board, CEO and senior executives need to understand that trust and integrity are created not just by the words they use at company meetings or gatherings, but in their day-to-day activities. Words and actions are the means by which a corporate culture is created. When a company’s reputation for trust and integrity suffers, the company and all stakeholders suffer real and significant harms, both financial and emotional.
I have witnessed companies fall into various states of corporate culture. In my world of simplicity, it is not hard to see (and feel) a company’s corporate culture. It permeates throughout an organization and its employees. It is tangible, and it is real.
In the end, as I often repeat myself, a company’s culture is its best and most effective internal control. A company with an ethical culture is less likely to suffer employee misconduct and reputational harm than a company that has no commitment to an ethical culture.
Corporate leaders who ask themselves why they suffered a scandal or government enforcement action do not have to look far or stretch for an explanation – the answer usually lies in the company’s culture and the commitment of the board, the CEO and senior executives to promoting and maintaining the company’s commitment to trust and integrity.
Published by Conselium Executive Search, the global leader in compliance search.
