Value a strong corporate culture

A strong ethical culture reduces the “work” of compliance. If employees have a deep appreciation of how the company defines ethical behavior and how it wants them to behave, you’ll have fewer instances of misconduct that trigger investigations, regulatory disclosures, or internal control audits.

The corporate culture should be laid down in your Code of Conduct (as you hopefully created after your signed the Integrity Pledge of the Integrity Initiative, Inc.

I chose the words “deep appreciation” in the above sentence deliberately. That’s not the same as “clear understanding.” A company can always state its ethical principles clearly, and employees can always then disregard those principles anyway.

Employees need to embrace those principles in their daily conduct. That’s what turns ethical culture into a preventative measure, which reduces the corrective actions a compliance function might need to take.

A strong culture allows you to weather the storm. Mistakes and misconduct will still happen at your company. Those “negative reputation events” can come quickly, cause enormous disruption, and might not even be accurate portrayals of what actually happened. That’s life in our highly regulated, highly polarized, highly interdependent world, more and more digital world, with social media waiting for the ‘stories’.

Companies with a strong ethical culture can reduce the disruption those events bring because a strong culture keeps the whole together — and that’s something all stakeholders, inside the organization and out, can see.

A strong culture wins favor with regulators. Regulators, from Data Privacy to Cyber Security, from Fair Competition to AntiCorruption, now talk about the importance of a strong culture constantly. That attention to culture could take the form of thoughtful incentive compensation plans (ones that discourage excessive risk-taking), or a clear determination to hold employees accountable for personal misconduct.

A strong culture lets a company execute business processes in a risk-assured manner. This is a corollary to our first point above. In organizations with a strong culture, where employees know what they’re allowed to do and how to do it, they can go about their jobs more quickly and efficiently. Ultimately that brings a strategic advantage over competitors.

For example, a company that takes due diligence of third parties seriously (and smartly!) might not onboard new business partners more quickly, but those relationships are likely to be more stable over time. That will alleviate your organization’s challenge of finding reliable business partners, and allow your company to focus more on putting those relationships to full work.

Along similar lines, a thorough process for training new employees on acceptable conduct won’t accelerate your hiring process, but it will allow those employees to accelerate all the other work they do after they’re on board — because you’ll have less risk of personal misconduct catching you by surprise, forcing you to fire that high-performing star who just grabbed an intern.

Investing in a strong corporate culture is important. Investing in automated tools to monitor compliance is equally important. Luckily, these tools are available and there are experts in stand-by to assist companies that take Compliance Management seriously.

Feedback is appreciated – contact me at schumacher@eitsc.com