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In the last of our series on compliance fundamentals and strengthening compliance programs, we touch on a crucial aspect: leadership and culture. In the compliance context we could see culture as the environment in which the compliance program sits and leaders as responsible for nurturing that culture. Much like a garden, organizational culture requires consistent attention.
Culture can seem to some to be a somewhat nebulous topic. But there are concrete (and conscious) steps and actions leaders can take to ensure that the culture is one which allows the program to flourish.
Beyond the compliance infrastructure - policies, procedures, etc. - it is crucial that the board of directors and senior executives show commitment to creating and maintaining a culture of doing the right thing, often referred to as "tone from the top." Having integrity and ethics in business means the organization operates consistently and honestly in line with a set of ethical values, applicable laws and regulations. It is about doing good and doing well at the same time.
Leadership teams have a pivotal role to play by leading by example, displaying the company's values in their day-to-day activities, and making Ethics & Compliance part of the organization's operations.
Leaders are responsible for building internal credibility and trust by "doing what they say and saying what they do." They must avoid mixed messages that lead to misalignment between the company's culture and purpose and the observed behaviors at the leadership level, which eventually create skepticism about Compliance . For example, leaders must apply disciplinary measures consistently across the organization, regardless of the status of the employee concerned. To do otherwise risks undermining the program and damaging the credibility of leadership’s stated support for compliance.
A true leader does not need to be the smartest person in the room, but one who listens to the organization's needs and creates the right environment to bring about the company’s values and purpose that will foster motivation, loyalty, and strong performance. All these combined factors will contribute to the long-term sustainable success of the company. Along these lines, external stakeholders are interested in companies' performance on non-financial matters. Efforts on ethics and integrity at all levels in the organization, starting from the top, contribute to building trust and recognition from stakeholders and society at large.
The elements of an effective compliance program we have discussed in this series of posts are connected. Leaders can set an example by communicating regularly and authentically to the organization about the importance of compliance and back those statements by allocating appropriate resources to the program and ensuring that the Compliance function has sufficient status within the hierarchy.
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