FCPA Compliance and Ethics Blog

July 30, 2014

Bringing It All Home, the Two Tough Cookies Wrap It Up For You, Part III

Tales from the CryptNote-I asked the Two Tough Cookies if they could put together a series of blog posts wrapping up the lessons they have seen and learned and written about in their series of Tales from the Crypt. They graciously put together a series of posts on the seven elements of an effective compliance program from their 10 tales of Business Conduct. Today, Part III of a Three Part Series…

Wrapping it all Up

So, now you’re ready to start your culture audit… Some key questions you want to ask before you start are:

  1. Do I have the support of Executive leadership? If not, go back to your E&C steering committee and work through the objections there first. It should be comprised of empowered executives who can understand the value of what you propose, and give you insight how to get buy-in across the organization. Give yourself MONTHS to get this accomplished, if not years. If they don’t understand the value of what you do, it will take a lot of mini-meetings to get your point across. If you don’t have an E&C steering committee, start by forming one, and include your CEO, CFO, GC, CHRO, IA, and top business line leaders. Also include global representatives if you have a global footprint. If you have an executive management council, they should be on your E&C steering committee, because they are the decision-makers. Be careful not to have overwhelming representation on the administrative side. And make sure the CEO has representation – if he or she doesn’t have time to manage for integrity, then you need to go elsewhere.
  2. Have you clearly articulated the ethical standards of your organization and the procedures to follow in order to meet those standards? If not, or if you’re not sure, start with a small sample survey of some key expectations and do a small focused study on what critical pieces are missing, and work to fix it. That’s your baseline, and you will then have metrics to measure against when you really start to change things for the better!
  3. What are the operational values – the values that define “how things really work around here”?

Your continuum looks like this depending on your ethical climate:

Aethical Compliance Emerging Ethical Integrity
Ego/Profit Rules Based Rules Plus Values Principled Performance

Organizations that are Compliance-oriented typically

  • Have a goal to prevent, detect, and punish legal violations
  • Channel behavior in lawful directions
  • Underlying model is deterrence theory
  • People are rational maximizers of self-interest, responsive to personal costs and benefits of their choices
  • May be seen as a rule-book, a constraint (especially if overemphasis on punishment)

Organizations that operate with Principled Performance (High-Integrity) typically

  • Combine a concern for law with emphasis on managerial responsibility
  • Define companies’ guiding values, aspirations and patterns of thought and conduct
  • Focus on Accountability, leveraging self-governance in accordance with a set of guiding principles and encouraging independence of thought with an introspective view on personal accountability. Each employee = Ethics Officer

Successful integration of Integrity in your organization is hard work. It takes guiding values and commitments that make sense and are clearly communicated. Company leaders are personally committed, creditable, and willing to take action on the values they adopt. The adopted values are integrated into the normal channels of management decision making and are reflected in the organization’s critical activities. It’s not enough to start every meeting talking about integrity, it has to be woven into every word and action of the leadership team, and done so authentically. The company’s systems and structures have to support and reinforce its values. Managers must be developed to ensure they have the skills, knowledge, and competencies needed to make ethically sound decisions, and resources must be made available on a non-discretionary basis to enhance those skills, knowledge and competencies. Continuing effort, investment, and integration is needed. Close enough is not good enough, and the work is never done.


Sample Gap Analysis of Culture Crawl Walk Run!
Organization Type Aethical Compliance Emerging Ethical Integrity
Work Climate Type Instrumental, Rules & Procedures Rules & Procedures, Law & Professional Codes Law & Professional Codes, Caring Independence
Policy Type None Code of Conduct Code of Practice Code of Ethics
Policy Control None Use of rules Seek advice, Act then disclose Use of guiding principles
Training Type None Orientation, General courses Seminars, Courses for some managers Courses for most employees, Personal interviews
Training approaches None or General Info Rules and guidelines, Lectures Decision-making frameworks, Case studies Cognitive approaches, Exemplary modeling
Top management commitment None Formal communications of legal aspects Some informal and formal means of communication Various informal and formal mechanisms, partnering
Communication None Orientation, one-time distribution, annual review Periodic distribution, Input into review Frequent distribution, Two-way communication
Enforcement Officer No one, Unimportant role Legal or HR Dept, Compliance Officer Sr. mgmt. committee, Ethics Officer, Supervisors Each employee, High-ranking employee(s)
Sanctions Ignored Arbitrarily enforced Semi-consistently enforced Consistently enforced
Rewards Keep job One-time story, award Special recognition Publicity, bonuses
Help/hot lines None 800 number, limited hours Third-party staff, feedback Follow-up, regular reports
Performance appraisal systems None Idea or suggestion only High-level managers only, Affects pay or bonuses All employees, affects pay, Affects promotions

Many thanks to the Two Tough Cookies for this great series!

This publication contains general information only and is based on the experiences and research of the authors. The authors are not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The authors, their affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Authors give their permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the authors.

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