Fostering a compliant business culture is about more than just penalizing noncompliant behavior. In fact, you'll get better results by simply incentivizing compliant behavior. In this way, you can create a workforce committed to a compliant business culture.
Charlie Munger’s famous quote “show me the incentive and I’ll show you the outcome,” can be a guiding principle when thinking about cultivating a culture of compliance within your organization. Put another way, adherence to the compliance program should be seen as a “carrot,” not a “stick.”
We will share 7 practical tips that can fast-track your path to creating an organization dedicated to compliance.
Tip #1 - Get your Board on board with compliance
Compliance messaging from the Board only strengthens the commitment from top management and has a trickle-down effect throughout the entire organization.
In the past, U.S. Corporate Integrity Agreements only obligated companies’ Compliance Officers to make periodic reports to their Board of Directors and left the compliance program responsibility mainly with the Senior Management. Lately, there has been a shift and the U.S. Office of the Inspector General (OIG) requires more and more Compliance Program involvement from the Board of Directors.
In a recent Roundtable Resource Guide, the OIG advocated for quarterly reporting by the Compliance Officer directly to the Board of Directors. It also encouraged the Board members to participate in Compliance Training programs.
Additional examples of Board involvement might include arranging for a compliance program review or Board resolutions memorializing the Board’s oversight of the compliance program and certifying that the organization has implemented an effective compliance program.
Tip #2 - Tone from the Middle
Inconsistent messages from leadership are worse than no messages at all. If an organization desires to promote ethical and compliant conduct, this conduct must also be promoted through the middle managers.
According to Kirk Hanson, if the behavior of the middle manager undermines the message from top leadership, it will be immediately apparent to lower level employees. Additionally, research suggests that middle-managers are fundamental in setting the tone for acceptable behavior at an organization.
Dr. Marsha Ershaghi Hames suggests helping middle managers understand how they matter, empowering employees to make ethical decisions and ensuring the adaptation of core messages as tips to create a compliant tone from the middle. Another practical idea is to consider equipping your managers with compliance-based questions so that when they interact with the employees, the managers can ask compliance-based questions and strengthen the compliance messaging.
Tip #3 - Be an Ethical Employer
Being an ethical employer is an important starting point to foster an ethical (and compliant) workforce. An ethical employer attracts ethical employees – people who support and believe in what you are doing and who want to work at your organization for those reasons.
Consider having ethics and values-based discussions at the interview stage with prospective employees – this sends the organization’s commitment to compliance and ethics message early on. A Google search shows a plethora of articles about how to choose an ethical employer and how to recognize when an employer is truly ethical versus just “talking the talk.” By capitalizing on the motivation of this potential workforce, the job of the compliance team will be made easier since the motivation for compliant and ethical behavior will already be present.
Tip #4 - Reward Compliant Behavior on a Regular Basis
If you can, make it easy and financially rewarding for employees to do the right thing. In many organizations, employees are penalized on their annual performance reviews for noncompliant behavior. For example, rewarding the reaching of sales targets regardless of the (ethical and compliant) cost. Instead of using compliance punitively, think about turning it into a reward.
Ensure that rewards and expectations do not undercut the organization’s values and principles by basing your compensation system on compliant and ethical behavior. This can be achieved by, for instance, giving employees who completed their compliance training by the deadlines “bonus” scoring on annual reviews.
Tip #5 - Compliance in the Business Units and Business People in Compliance
The most effective compliance officers are those who have an understanding of how your business works. They will be able to convey the compliance message to the business units in a different, more relatable way. Similarly, they will be able to identify risk areas within the business that someone who has only worked in compliance functions might not. Whenever possible, employ people who worked in your business units for compliance functions.
On the flip-side, you can empower business people to act as compliance ambassadors within the business units themselves. By identifying and recruiting those with a natural affinity for compliance to be the voice of compliance when the compliance officer is not part of the discussion, you will ensure that there is an additional point of contact and compliance messaging available at critical moments.
Tip #6 - “Sell” your compliance program with a positive spin
When discussing compliance, do so in such a way that is consistently highlighting how the program is in place to help and protect the business. Show real and relatable ways in which the program adds value, how it improves existing processes, and keep the language simple, clear and understandable for employees at all levels.
You might consider sending out a weekly “real-world compliance scenario” to anyone with customer interaction. From the responses, you will be able to determine whether further training is necessary while at the same time demonstrating to the business that you are helping them overcome their daily obstacles.
Tip #7 - Celebrate Compliance
The power of a positive attitude is often underestimated, but this is a genuinely powerful tool. If your compliance team is united in a relentlessly positive PR campaign towards the rest of the organization, it will help spread the message throughout the entire organization and help shift the narrative so that employees feel engaged and enthusiastic.
Make Compliance engaging. Have a team motto. Celebrate Compliance Week. Make the department a place where others want to be and want to know what’s going on there. Make your training interesting and something people want to participate in. Make it realistic and real world applicable for your business.
By implementing one or a combination of these 7 tips, you are on your way to fostering a positive outcome in your organization’s approach to ethics and compliance. As Maya Angelou said, “do the best you can until you know better. Then when you know better, do better.” And isn’t the ultimate goal of compliance to always try to do better?
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