Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

Corporate cultural change: Consistent and visible enforcement

This is the second in a series of five posts suggesting best practices for implementing corporate cultural change.  For an overview of all the tips on this subject, check out this preview postLast week’s post discussed tone and conduct at the top.  Today’s post is about enforcement.  Next Monday’s post, on March 12, will discuss effective policies.  The fourth post in the series, on March 19, will focus on procedures to complement those policies.  Finally, on March 27, the fifth post in the series will discuss tips for going beyond training in order to create effective and engaging employee education initiatives to boost awareness and compliance culture.

Last week’s post discussed the importance of commitments by executive boards, senior management, and top leadership in organization to expressing tone and modelling conduct to enable change.  Once the path is cleared for institutions to follow, by the statements and actions that aim to define and promote the necessary change, effective and bold enforcement actions must follow.

Organizations need to move beyond the empty promises, false assurances, and routine public relations damage-control efforts of the past.  The most important way to do this is to protect people who have been harmed and punish those who have done harm by conducting diligent investigations and following up with enforcement actions.  Individuals must see that corporate systems take their disclosure and reporting seriously and will act upon on them with both punitive measures and constructive steps toward change.

The following are the characteristics of corporate enforcement initiatives which are consistent and visible and could best contribute to organizational integrity and justice:

  • Consistency – Enforcement actions must apply evenly in response to all substantive reports of wrongdoing.  Of course, disclosures must be treated with due diligence, but all credible reports must be seen through to demonstrate the responsiveness that injured employees need to expect in order to confidently come forward.  As society continues to confront ideas about power, consent, authority, and coercion, organizations must show that no individual is above the law or exempt from scrutiny.
  • Transparency –Organizations must demonstrate accountability by promoting the objectives of enforcement throughout all levels.  Fear of negative attention or scrutiny that will lead to criticism cannot dis-incentivize leadership from sharing results of investigations, when practical to do so.  Whenever possible with regards to the requirements of confidentiality or possible legal privilege that could apply, investigation results and enforcement decisions should be shared from the highest level.  This broadcasts the commitment to the organization’s values and shows that serious action will be taken with the community – the corporate organization, for example – in mind.
  • Engagement – Companies should apply both carrots and sticks in enforcement strategy and communication.  The “carrot” is recognition of positive progress, to capitalize on engagement potential.  Actively engaging with employees to discuss effective enforcement results, investigation discoveries, and lessons learned shows them how seriously their disclosures will be taken and how powerful their impact can be.  Stepping forward to report individuals’ misconduct or organizational abuse is a dangerous and scary experience.  It requires tremendous courage and sacrifice from whistleblowers and survivors for them to share their stories in the hopes of stopping abuse and setting positive change in motion.  These individuals should be treated with dignity and respect.  Engaging with employees shows them how seriously their disclosures will be taken, increasing the likelihood that people will report and disclose in the future, contributing to a culture of speaking up and speaking out.
  • Deterrence – Further to the above, the “stick” is the creation of bright line standards for violative behavior that will not be tolerated, to curb offenders.  Telegraphing that people who harm others and break rules will not evade detection and enforcement enhances the deterrence effect of enforcement actions.  When organizations fail to take action in response to misconduct and abuse, they violate survivors all over again by depriving them of justice and providing de facto protection to those who hurt them and the systems that allowed it.  Effective, visible, meaningful enforcement actions serve notice to offenders that their misdeeds will not be ignored or overlooked.
  • Organizational justice –  Change needs to feed-forward, not just by offering apologies for past wrongdoing, but with follow-through for real punishment of misconduct, addressing of violations, and changes to protect individuals and eliminate systemic loopholes or inadequacies where offenders hide and thrive.  Investigations have no impact when the results are just put on a shelf, documented in a file, and then forgotten.  In cases where misconduct is discovered, substantive structural changes should be made in order to address the root causes of the wrongdoing and encourage cultural change to react to this.  In the event that the investigation does not lead to a punitive action, conclusions from it should still be fed-forward into controls improvements and future compliance program efforts.  Organizational justice is fundamental to any corporate culture which treats its employees with compassion and has integrity as its purpose.

For more on conducting effective compliance investigations, check out this post.

Check back next week, Monday March 12, for the third post in this series of five, which will suggest best practices for creating and implementing concrete and values-based policies.

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