For any business, it is essential to prioritize values-based behavior and ethical practices. Without a strong foundation in ethics and compliance, your organization can face reputational damage, legal and financial repercussions, and even failure.
Adopting a foundational compliance program will help your organization navigate the legal and regulatory landscape, avoid large fines and financial pitfalls, and build an ethical workplace culture where the business and its people can thrive by acting upon shared values. LRN research shows that the companies with the most ethical cultures outperform others by 40% across key business metrics including employee loyalty, customer satisfaction, adaptability, innovation and growth.
These are important considerations right now as businesses face economic headwinds, trade sanctions, supply chain disruptions, staffing shortages, and the like. In addition, the effectiveness of your ethics and compliance program is something the U.S. Department of Justice will take into account if your company ever finds itself faced with an action. The U.S. Sentencing Commission clearly outlines the impact in its guidelines, so it is important to build effective ethics and compliance program.
Measuring culture is an increasingly important aspect of a compliance program. Ethical culture refers to the values, attitudes and behaviors of individuals and organizations that influence ethical decision-making. Measuring ethical culture means taking a critical pulse, and it can help your company understand its organizational values and identify areas of improvement.
The process for building an effective and measurable program can vary depending on an organization’s growth, trajectory, industry and location, but the following are some essential elements you will need to address:
- Tone comes from the top. It is up to you and your leadership team to set expectations and model best behavior. If you are not treating all people in the organization with equal respect and fairness, acting with integrity, and taking a values-based approach to decision-making, you cannot expect anyone else to do so.
- Create a code of conduct document—or refresh an old one that no one remembers. A code of conduct should be a reflection of your company and your aspirations. It is a statement of your mission, vision and values, and defines how people in the organization are expected to comport themselves. Your code should be a visually engaging, readable and useful guide for employees to help them do the right thing. Pay particular attention to policies related to anti-discrimination, harassment and data privacy. If you make it searchable, web-based and mobile-enabled, employees can consult it on a regular basis to do things like check the parameters of conflicts of interest, or find an employee assistance hotline number.
- Nip toxic workplace culture in the bud by working to surround yourself with people of integrity. When hiring new employees, choose sharp thinkers who align with your mission and who will model best behavior alongside you. Prioritize people with a strong ethical compass who can create a positive and inclusive working environment by asking questions in the interview process that help reveal a person’s values. Take a hard look at all the touchpoints in the hiring process for your organization and ask if the process and the language you are using right now is truly a reflection of what your company stands for. Keep in mind that the fastest growing cohort of workers, Gen Z, will not work for firms whose visible values do not align to their own. You do not have to look far to find good examples. For example, Yvon Chouinard, the founder of the outdoor clothing and gear company Patagonia, has long been a vocal advocate for environmentalism and sustainability. The company’s mission statement, “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis,” is clear and attracts like-minded people.
- Assess risk and measure ethical culture early and often. Sync your human resources, legal, compliance, risk and information security teams around team training and survey activities to avoid flooding teams with too many disjointed corporate activities. Make compliance training less burdensome by tucking pulse surveys right into course modules so that you can gauge sentiment, identify problem areas, measure change over time and benchmark against industry peers. A good ethics and compliance management platform can help you find meaning in the data.
- Build your reporting muscle. Companies are beholden to stakeholders including investors, employees, customers, vendors and the planet. Government regulators are looking for more evidence that your company is both compliant and effectively engendering a culture of compliance at all levels of the organization. These are hallmarks of good governance. Metrics around environment, social and governance (ESG) are now sitting alongside financial statements as indicators of a business that is flourishing.
Measuring ethical culture can be challenging. However, an effective ethics and compliance program can be invaluable in providing the tools and resources needed to protect the business and fuel sustainable growth. By adopting a foundational compliance program and measuring your ethical culture, you can build a strong workplace culture, avoid reputational damage, and ensure that you are operating in an ethical and responsible manner at all times.