In many organizations, employees and stakeholders view the Ethics and Compliance (E & C) team as the “compliance cops” who spend all their time finding ways to mete out punishment and impose stifling regulations that make it harder to transact business. In the best-case scenario, E & C is perceived as a necessary evil that organizations must institute as a “CYA” measure to avoid entanglements with regulators and enforcement bodies.
The Chief Ethics and Compliance Officer (CECO) often plays an unwitting role in the negative branding of the E & C office by focusing too much on the punitive aspects of the function. Their communications frequently exhibit a “do this, or else” tone that attempts to use fear as the primary motivator. And in many organizations, the CECO may come across as impersonal, aloof or inaccessible, which only adds to the negative perception.
Potential Consequences of a Negative E & C Brand
A heavy-handed approach to ethics can impact an organization in various ways. It can lead to the development of a culture of mistrust that fosters a silo mentality exemplified by a lack of interdepartmental cooperation. Individual employees may be more concerned about watching their backs than contributing to the achievement of organizational goals.
Negative E & C branding can also impede the development a “speak-up” culture that would otherwise help to detect ethical breaches in the early stages before they can escalate. Instead, individuals who witness acts of misconduct are reluctant to report what they see. In this type of environment, whistleblowers are viewed as pariahs and at are at high risk of experiencing retaliation if they choose to come forward. This can set the stage for a major ethics crisis that will cause serious, and perhaps irreversible damage to the organization’s reputation.
Benefits of Emphasizing the Positive E & C Aspects
Conversely, organizations that place a positive emphasis on ethics and compliance can experience numerous benefits. Employees and stakeholders will have a better understanding of how conducting themselves in an ethical manner will contribute to the long-term stability of the organization. Consequently, they are more likely to be motivated by a desire to do the right thing instead of attempting to avoid the repercussions of engaging in inappropriate behavior.
Additionally, CECOs will have a much easier time when promoting their agendas and attempting to create an ethical culture. Employees will be more receptive to E & C policies, procedures and training programs and will pay closer attention to the unveiling of new ethics initiatives. They will also be less reluctant to use hotlines and other available mechanisms to report misconduct – they will recognize the importance of preventing inappropriate behavior and have fewer concerns about retribution.
Steps You Can Take to Rebrand Your Organization’s Ethics and Compliance Function
Just as a company can rebrand its products and services or even alter its public image, it is possible to change the perception of ethics and compliance from a negative to a positive – while still keeping the ultimate goal of the office in mind – mitigating risk. Elements of an effective rebranding strategy include:
- Make It “Personal” – While many CECOs are good at creating rules and policies, they may fall short when it comes to communicating them in a positive, non-threatening manner. The most effective CECOs make a strong effort to become the “face” of the organization’s E & C function, keeping in mind that, at its core, ethics is more about people and interpersonal relationships and less about handbooks and policy manuals. This entails taking the time to interact with employees at all levels of the organization, as well as reaching out to third parties and other stakeholders to let them know of the availability of the E & C office as a resource for resolving ethical dilemmas.
- Focus on Delivering a Positive Message – While there is certainly a need to educate employees regarding the negative consequences of unethical behavior – both for themselves and the organization – dwelling too much on this will only instill resentment and fear. By emphasizing the many positive aspects of an ethical culture when communicating with employees, such as enhanced productivity, greater customer loyalty, reduced regulatory oversight and a more enjoyable work environment, they will begin to see the true value of the E & C function.
- Avoid Wasting Too Much of Employees’ Time – Workers tend to view any training activities that do not directly impact their job functions as unproductive and a waste of their valuable time. Employees will react more favorably to training – and ethics and compliance in general – if it is linked to their everyday roles and responsibilities. Trainers should also communicate clearly the purpose of the training and why it is important to the employees and the organization. Keeping training sessions brief and to the point will keep employees interested and engaged.
- Reposition Ethics and Compliance as a Valued Strategic Partner – The ethics and compliance function is typically viewed as an independent entity that is separate from the rest of the organization, which creates distance between the department and its employees. While CECOs do require a certain level of autonomy to operate effectively, they also must ensure the office is fully integrated into the organization’s daily operations. This requires making an ongoing effort to develop and maintain strategic alliances with top management throughout the organization. In addition, this can help to integrate ethics and compliance into all critical decision-making processes, ensuring that ethics will permeate the entire culture.
- Tie Ethics and Compliance to Job Performance – Only about 40 percent of organizations make ethics and compliance a component of the performance review process. However, linking ethical behavior to job performance provides an opportunity to incentivize employees to incorporate it into their daily activities. Employees will recognize that “doing the right thing” can help them increase their income and enhance their prospects of climbing the organizational ladder, which can reshape their attitude about ethics.
While altering the perception of ethics and compliance may not be easy, the potential rewards for your organization will make it worth the effort.