Complacency in compliance is a cancer on a company’s culture. Woody Allen said it best in Annie Hall:
A [compliance program] relationship, I think, is like a shark. You know? It has to constantly move forward or it dies. And I think what we got on our hands is a dead shark.
Here is the video clip of the scene: here
When a Chief Compliance Officer checks off the company’s ethical culture as satisfied by: (1) a corporate code of ethics; and (2) training on the corporate code of ethics, the company has a brewing or festering problem. The company’s culture is being ignored or allowed to deteriorate.
There is nothing worse than a CCO who has a narrow, check-the-box mentality when it comes to the critical corporate culture. A real and effective corporate culture is one that has been embraced and understood by every executive, manager, and employee at a company. It is evident from the pride of a company to the collaboration of key constituencies to promote overall success at the company.
Compliance and business leaders struggle with the problem of how to create a culture of compliance. The answer, which requires further definition, is fairly simple – you conduct yourself consistent with the culture. A CEO knows how to act to promote the company’s culture and needs to do so consistently and reliably.
Managers and employees are well aware of the CEO’s behavior. Everyone looks to the company’s leadership at the board and the CEO to demonstrate and exemplify the company’s values. When the board or the CEO fall short, you can rest assured that the impact on the overall corporate culture is significant.
Conversely, when the board and/or the CEO take affirmative steps to act in accordance with the culture, the power of communication, rumor, folklore, and internal reporting is powerful. What do I mean?
Symbolic acts by our leaders have forever been used as a galvanizing means of communications and influence. When a CEO stands in front of a town meeting of employees, recites relevant portions of the company’s code of conduct (or carries the code of conduct), and urges employees to report employee concerns, such actions have a powerful influence on a company. The research around this issue shows that the most important determinant of company culture is action – not training, and not simply having a code of ethical business conduct.
Knowing this, a CCO has to make sure that the CEO can carry out this function. A CEO has to understand the importance of his/her own actions to communicating and ultimately implementing an effective culture of compliance in the company. The motivation for such actions cannot be limited to avoiding government enforcement or shareholder litigation, but also to unleashing positive financial and productivity behaviors by company managers and employees.
CEOs and CCOs have a very tough assignment these days since cynicism is the prevailing tone of individual behaviors. The US public, for example, does not believe strongly in its government or its institutions. The same can easily be said for a company’s culture. CEOs and CCOs have to recognize this tone and overcome it by giving managers and employees something to believe in, something to dedicate themselves to, and hopefully bring meaning to their work, their careers and their future. It sounds like a tall order for CEOs and CCOs but, in my view, the audience is hungry for something to believe in, and company culture can be a powerful substitute for government and US institutions.