Make integrity, ethics, and compliance part of the promotion, compensation,

and evaluation processes as well. For at the end of the day, the most effective

way to communicate that ‘doing the right thing’ is a priority, is to reward it.

–Stephen Cutler, 2004 SEC Director of Enforcement

(as quoted in Thomson Reuters’ A Culture of Compliance)

A truism in the ethics and compliance field is that “culture trumps compliance,” but it is also true that compliance affects corporate culture—for the better—according to Thomson Reuters in its 2016 whitepaper A Culture of Compliance: How Compliance Can Affect Corporate Culture for the Better.

Many companies operate reactively to regulatory requirements, but they could instead use proactive compliance to competitive advantage, as described in the whitepaper (and below).

Companies that set the groundwork for a culture of compliance are ultimately more agile when responding to new regulatory changes. They can remain one step ahead of their competitors that have more disparate, reactive processes in place.

In a time where trust in financial institutions is lacking, an organization can come out on top by promoting its own strong ethical behaviors and internal compliance policies, especially as compared to competitors.

As the DOJ and regulators continue to provide more clarity around exactly what an “effective compliance program” entails, a company can only benefit from staying up to speed on new rulings and adapting its corporate culture to ensure the desired policies are in place.

How can companies achieve a culture of compliance? Thomson Reuters offers advice, as briefly summarized below.

Awareness—across the organization—of the regulatory environment and regulatory developments.

Communication—effective and continuous communication of expectations, policies, and procedures.

Education—ongoing, influential education about the organization’s internal policies and external regulations.

Effective technology—to include e-learning programs, mobile friendly elements, and tracking and reporting systems.

Incentives—reward desired behavior. Remember SEC director Cutler’s quote, above.

Incident reporting and case management—offer streamlined and flexible reporting options [ethics hotlines], to include an online web portal, automated phone system, live operator, or a combination of the three for a thorough incident reporting system.

“A culture of compliance goes beyond once-a-year mandated training. It embeds compliance into everyday workflow and sets the foundation and expectations for individual behavior across an organization,” according to Thomson Reuters. And regulators are looking for just such a culture of compliance.

Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines. Contact us for more information.

References

Thomson Reuters. A Culture of Compliance: How Compliance Can Affect Corporate Culture for the Better, 2016. https://risk.thomsonreuters.com/whitepaper/a-culture-of-compliance