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Three Steps to a More Effective Ethics & Compliance Program

There’s a growing consensus among U.S. government regulators and ethics and compliance (E&C) experts around best practices for companies to promote ethical and compliant behaviors. For example, a recent publication from the U.S. Justice Department, Evaluation of Corporate Compliance Programs, highlights the importance of organizational justice. Itprominently features “analysis and remediation of misconduct” and the importance of a “root cause analysis” after an ethical breach as critical components of most highly effective compliance programs.

Despite an increasingly clear understanding, among regulators and practitioners alike, of what makes an effective compliance program, corporate slipups and scandals continue to occur regularly. That may be because many programs focus too much on layering on rules and regulations – and not on defining corporate values and the specific behaviors they want to see from managers and employees, and holding them accountable when they fall short.

To smart compliance experts, it makes sense that a lack of accountability and organizational justice relates directly to poor compliance efforts. And employees are quick to notice if executives or high performers are held to a lower standard of ethical behavior and escape responsibility for misconduct. We surveyed over 550 ethics, compliance and legal experts around the world, less than half (47%) of low-performing compliance programs analyzed the root causes of executive and employee misconduct to determine accountability. Even fewer (45%) said C-suite executives consider ethical behavior a prerequisite for promotion.

However, when corporate leaders take an active role in shaping compliance programs around shared values and clearly defined behaviors, they can reduce compliance risk considerably. The vast majority (84%) of high-performing corporate compliance programs communicate the organization’s expectations of behavior in a clear and concise manner, according to our survey.

We outline below three steps Generals Counsels, Chief Ethics Officers and their teams can follow for more effective ethics & compliance programs based on values and behavior, instead of relying on checklists and layers of rules.

First, articulate a set of shared and sustainable values that truly reflect the best of what the company stands for and believes in. Organizations, with senior leaders at the forefront and in communication with employees at every level, need to do the work up-front to identify and define the beliefs that sit at their core. Almost 90% of high-performing ethics & compliance programs connect employees with a clear sense of the organization’s purpose.

An effective ethics & compliance team will then define a set of behaviors that reflect those values that people at all levels of the organization should espouse. Clarity is key: About 80% of compliance officers agree that expressing core values in behavioral terms is an important part of the ethics and compliance process. And among the top quintile of ethical companies, almost 90% of ethics officers have expressed their companies’ core values as specific behaviors in their Codes of Conduct.

Finally, cut unnecessary rules altogether. E & C programs have the tendency to become complex litanies of rules and regulations that don’t actually relate to the behaviors companies want to see from managers and employees.  When it comes to ethics and compliance, less is often more. A strong corporate culture, based in values, can lead to a simpler, clearer and more effective compliance program than an arbitrary checklist of rules and multiple layers of policy.

Contributing Author

Susan Frank Divers

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Contributing Author

Mike Eichenwald

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