There is an old greek proverb that says “A fish rots from the head”, meaning that a bad leader will have a profound effect on an organization. Or in other words the problems start at the top.
The Department of Justice issued new guidance on the “Evaluation of Corporate Compliance Programs” that takes this ancient adage to heart. One of the most striking aspects of the guidance is the heavy focus on senior leaders’ commitment to creating a workplace culture of integrity and fostering a robust compliance culture.
The DOJ makes clear that leadership responsibility and buy-in is not a nice to have, but a requirement for effective compliance culture.
“Beyond compliance structures, policies, and procedures, it is important for a company to create and foster a culture of ethics and compliance with the law. The effectiveness of a compliance program requires a high-level commitment by company leadership to implement a culture of compliance from the top. The company’s top leaders – the board of directors and executives – set the tone for the rest of the company.”
Developing a comprehensive and effective corporate compliance program is not an easy process, nor is it a process that is ever fully completed. But if you want to stop misconduct and mitigate risk—and create a thriving business—you need a robust, coordinated compliance strategy and program that has the commitment of the entire organization. Especially your leadership team.
Gaining meaningful and visible buy-in from leadership is critical to the success of your compliance efforts. But this involves more than leaders supporting policies and procedures. Leaders must model a workplace culture of corporate ethics and compliance.
But how should leaders go about setting this tone and creating a workplace culture of compliance and integrity? The DOJ instructs prosecutors to examine “whether the corporation’s employees…are convinced of the corporation’s commitment” to a culture of ethics. They must not only talk the talk, but walk the walk of corporate ethics.
Unfortunately, leadership modeling of corporate ethics and values is a challenge for many organizations. According to a recent survey from EVERFI and the HR Research Institute, only 50% of respondents agreed or strongly agreed that their leaders uphold the stated values of their organization. In order to build a culture of compliance, your leaders must prove that they are held to the same high standards that they hold their employees to.
8 Strategies for Creating a Culture of Compliance from the Top Down
- Have the board of directors and senior leaders unequivocally and repeatedly discuss the company’s ethical standards and their relation to business success
- Ensure all leaders model integrity in everyday decision-making and action – and hold them accountable for doing so
- Ensure leaders do not expressly or impliedly encourage employees to act unethically or overlook corporate compliance risks to achieve a business result
- Require the board and senior leaders to exercise reasonable oversight over the company’s compliance training program
- Empower all employees to respectfully call each other–and their leaders–out when they see words and actions not aligned with a culture of integrity
- Make integrity a part of the daily conversation. For example, leaders open meetings with a recent example of integrity in action
- Have leaders demonstrate their commitment by sharing examples of how they have navigated ethical challenges in the face of competing interests or business pressures
- Measure employees’ perceptions of senior leaders’ and middle managers’ commitment to a culture of integrity