Company Culture: The Cornerstone of Strong Ethics & Compliance

Organizational Culture goes a long way in defining how productive it will be. This article is for a CHRO to develop the right culture that aligns to business strategy

Many multinationals have witnessed a spate of organizational crises at the beginning of the 2000s and vouch that a lack of compliance-oriented, ethical work culture always puts an organization at risk, think Enron and Bear Stearns. In a business environment, threats to organizational repute are hidden around every corner. A remedy to this is a stringent culture of compliance and ethics that top CHROs are now counting upon. A strong risk management program ensures bottlenecks are drastically reduced.

How to enforce a culture of integrity?

Two elements form the base of ethical culture —a high-end agreement related to what is usually valued and high-end recognition of these values. Further, a culture of integrity is mainly characterized by:

Accountability: Top leaders should hold themselves and their subordinates accountable for adhering to organizational policies as well as values.

Consistent, and persistent, messaging: Business essentials and operations-related directives should be aligned with the messages from the leadership level on compliance and ethics.

Organizational values: A range of clear values that shed light on a company’s commitment, among other things, to business ethics, integrity and legal and regulatory compliance.

Tone of the top level: Senior managers and executive leadership—across an organization—motivate business partners and employees to behave in ethical and legal ways and in line with policy and compliance requirements.

Rising to the challenges: Creating Ethics Programs At Organizations

The road to creating a stringent culture of integrity and an ethical program isn’t exactly smooth-sailing for CHROs. Most of them are likely to hit turbulent waters en-route. There’re, however, some ways to navigate through them with confidence and sincerity:

Describing the culture: The common perception among leaders is that they know their organizational culture inside out and are able to define it. However, there may remain a void between the top management’s perception of culture and vis-a-vis the rest of the organization. Cultural assessments, leveraging outside observers and surveys of the workforce, are believed to be the surest way to bridge this void.

Inculcating values and culture across the organizations: Executive leadership may put their best foot forward in forming a culture of integrity at the headquarters. However, communications and policies may lose their essence during translation, especially when they are going further from the headquarters. Put an active and ongoing attention to the organizational culture, especially if your organization is big in size with many far-flung outposts.

Imparting cultural values in mergers and acquTop CHROsisitions: When it comes to incorporating an acquired or merged organization, cultural fit emerges as one of the greatest stumbling blocks. As part of the due diligence process, a thorough cultural audit is, therefore, the norm, not the exception. A well-devised integration plan will do the rest.

Managing the flux of leadership: A rapid turnover of the top and senior leaders poses a serious challenge to maintaining a persistent identity as well as the set of values. Always make sure that every member in your organization lives and breathes its values. This is probably the easiest way to safeguard the values even at the time of transition.

Appealing to the multi-generational talent pool: Employee turnover can diminish the organizational culture. Always appeal to a cross-generational talent pool. Especially, if you intend to create an organizational culture strengthened with staying power, make sure that your organization does not promote a “one-size-fits-all” appeal but at the same time, banks on a set of persistent values that every generation can adopt.

An organization is all about a community tied with some shared values and aimed at meeting a common goal. Creating a culture of ethics and compliance helps not only in strengthening the organizations against dangerous undercurrents but also in creating strict loyalties with every stakeholder.