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Biz Ethics in Focus: Study Offers Three Steps to a More Effective Ethics & Compliance Program—and Why It's Worth It

Compliance concept diagram There is no shortage of compliance policies in place in most organizations, yet ethics slip-ups continue to occur with amazing regularity, and many leaders struggle with how to influence their manager and employee behavior for the better.

One reason for the disconnect is that CEOs, generals counsel and chief ethics & compliance officers often don’t recognize that compliance requires going beyond checklists and rules, according to ethics and compliance firm LRN: Companies with the most effective ethics and compliance programs do a better job of defining their core values, translating them into specific behaviors and rigorously measuring their presence or absence—not just managing the elements of their compliance program like training courses or hotlines.

The research reveals that too few companies are stepping up accountability and taking a hard look at how their values are (or aren’t) influencing employee behavior. In LRN’s survey of 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%) say C-level executives consider ethical behavior a prerequisite for promotion.

LRN also reveals in its accompanying HOW Report that financial benefits tend to accrue to companies that cultivate ethical cultures. “When business leaders take responsibility for shaping values-based cultures grounded in ethical behaviors, they not only reduce compliance risk, they increase their chances of financial success of their companies,” said Mike Eichenwald, who leads the Advisory practice at LRN and advises companies on leadership and how to build ethical cultures, in a news release.

Instead of only focusing on managing their programs, and over-reliance on checklists and layers of rules, Eichenwald suggests business leaders take three steps to build more effective ethics and compliance programs:

  • Articulate a set of shared and sustainable values that truly reflect the best of what your company stands for and believes in. “Organizations, with CEOs and senior leaders at the forefront and in partnership with employees at every level, need to do work up-front to identify and delineate the beliefs that they expect to sit at their core,” says Eichenwald. “Then they can align people’s behavior — and their own — around a specific set of ideas, principles and commitments that reflect those beliefs.”
  • Define a set of behaviors that are consistent with your values—and that you expect to see from employees and managers at all levels of the organization. According to the LRN survey, 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 companies with ethical cultures, almost 90% of ethics officers have expressed their companies’ core values as specific behaviors in their Codes of Conduct.
  • Cut down on unnecessary rules that do not encourage the specific behaviors you want to see. Eichenwald notes that having a strong, values-based corporate culture can lead to a simpler, clearer and more effective compliance program than a checklist of rules and multiple layers of policy. “When it comes to ethics and compliance, less is often more,” he adds.

“The best way to measure the effectiveness of any ethics and compliance program is to look for the presence or absence of ethical behaviors across an organization — rather than keep an inventory of program elements, which may not generate the specific behaviors you want,” said Susan Divers, a senior advisor at LRN, in the release.

Download LRN’s 2016 Program Effectiveness Report here.

Download LRN’s HOW Report here.

Source: Marketwired; edited by Richard Carufel

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