I’ve posted previously about the culture of an organization and the various roles it plays in retention, trust, engagement level, and overall productivity of the company.  I’ve also said that culture is to an organization what character is to an individual.  But did you ever think about the connection between an ethical culture and effective compliance programs?

A strong ethical culture exists when doing the right thing takes precedence over getting the job done.  In short, HOW things are done matters most.  The Ethics Resource Council has published many fascinating studies on numerous topics related to ethics but one I found particularly interesting discusses the effectiveness of workplace compliance programs depending on the ethical culture.  This study also discusses the most important factor in establishing a strong ethical culture.

Compliance programs are meant to both reduce misconduct and increase reporting of misconduct.  If you have a strong ethical culture your employees feel less pressure to commit misconduct. Because they don’t feel pressured they are also far less likely to observe misconduct by others.  In strong cultures employees are much more likely to report misconduct and the retaliation rate drops considerably.  This means your compliance program is far more likely to be effective.   To me it seems as though a strong ethical culture is key to uniting the organization toward a common goal where those that want to break the rules are not welcome and should be reported.

So what is the most important component in creating a strong ethical culture in your organization?  The behavior and perceived behavior of top management and executives. 

Keep in mind that most of this is based on perception.  When considering ethics, perception is reality.  It doesn’t matter nearly as much WHAT is happening.  It’s all about what the employees THINK is happening.  The actions and perceived ethics of top management drive the culture and the culture has the largest impact on the critical components of compliance issues. 

To  implement effective compliance programs building and maintaining a strong ethical culture needs to be a business goal.   This has an impact on the risks and costs of misconduct (legal action, turnover, retaliation), as well as company reputation and employer brand.  Creating this culture has to start at the top and can be accomplished by transparency, communication, building trust, and walking the talk.

This is one situation where a top down business model is still the most effective.

Do you have effective compliance issues?  Do you have a strong ethical culture in your organization?