The findings of a recently-published report by NAVEX Global, which analyses the development and execution of ethics and compliance programmes by companies across Europe, the Middle East, Africa and Asia Pacific, reveal that improving organisational culture is the top objective for companies when it comes to structuring their corporate behaviour strategies. With 85% of respondents acknowledging the importance of programme development, the relevance of this finding across a broad range of industry sectors is clear.
But what are the main drivers behind this, and what are the legal consequences for firms who fail to establish a proper compliance programme?
NAVEX Global’s report finds that, for firms operating in banking and insurance sectors, navigating and complying with laws and regulations across jurisdictions was a top priority, with 53% of surveyed firms corroborating this statement. Certainly, these industries have faced far more frequently the effects of inadequate ethics and compliance programmes, with banks often finding themselves at the mercy of public and legal scrutiny.
There are many examples of staff that have “blown the whistle” on the banks for which they work experiencing disproportionate and unjust levels of retaliation from their managers and other colleagues. In some cases, whistleblowing reports have resulted in legal action being brought against employees, and in one extreme case, a whistleblower was handed down a five year prison sentence for reporting his concerns. The tendency for companies to protect themselves from legal action, to the detriment of their employees’ wellbeing, is evident. However, an increasingly scrupulous legal system and greater public interest in fair practice within financial services has lead many companies to settle their whistleblowing allegations and court proceedings to the tune of multi-million dollar payouts. Whilst companies’ predisposition to look after themselves, rather than their employees, has dominated previously, a new trend appears to be emerging, to the benefit of corporate culture.
Whilst it is clear that companies’ self-preservation has formerly been characteristic of culture and compliance programmes in the face of legal challenges, NAVEX Global’s report finds that companies are increasingly inclined to proactively tackle the root of misconduct issues as soon as a report is received, in order to protect themselves from the burdens that stem from legal intervention.
This transformation in compliance programme structure indicates firms’ recognition that resolving misconduct reports before an issue becomes the basis for a lawsuit is a greater priority than designing safeguards to support companies once an issue is raised in court. This is further supported by the report’s statistics, which reveal a decrease of 14% from 2015 to 2017 in the number of firms stating that the establishment of strong legal defences is a priority for their organisations.
NAVEX Global’s report demonstrates how the implementation of strong ethics and compliance programmes has resulted in a reduction in legal penalties for firms, in the face of legal proceedings. As a result, it is clear that greater diligence in the structuring of such programmes has benefitted firms, and minimised the impact of legal intervention on organisational performance.
Click here to view the full report.