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

Note-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.